Will Insurance Get Cheaper? IRDAI Consultation Paper Explained

In September 2026, IRDAI released a consultation paper on how insurance is sold in India. The numbers in it explain a lot: how a 90-year-old customer could be sold a policy that matures in 2144, why commissions on some policies run far higher than most buyers realise, and why that cost ends up in your premium. In this video we break down how insurance companies make money and how commissions push up what you pay, what the paper shows about commissions in life, health and motor insurance, why so many life insurance policies are surrendered or lapse before the fifth year, and how overriding commissions and bank-promoted insurers fit in. We then go through the three changes the paper proposes: tracking mis-selling back to the agent, capping commissions to bring premiums down, and making it easier to buy car insurance outside the dealership through platforms like Bima Sugam. We also look at how SEBI fixed a similar problem in mutual funds with direct plans and trail commissions, and what these proposals could change for you the next time you buy insurance through an agent, a bank, a car dealer or online. Source: IRDAI consultation paper on insurance distribution and commissions, 23 September 2026. ___________________________________________________________ 0:00 How was a 90-year-old sold a policy that matures in 2144? 0:45 What is IRDAI's new consultation paper about? 1:46 Why did IRDAI bring out this paper? 1:59 How do insurance commissions raise your premium? 2:54 How fast have insurance commissions grown? 3:14 How much commission is paid on life, health and motor insurance? 5:22 How will IRDAI stop insurance mis-selling? 5:35 Why are so many life insurance policies surrendered? 6:49 How will mis-selling be tracked back to the agent? 7:32 Will commission caps make insurance cheaper? 7:55 What are overriding commissions? 8:11 What is the expense of management limit? 9:18 Why do banks push insurance on their customers? 9:54 What commission caps has IRDAI proposed? 10:26 Can your car dealer force you to buy their insurance? 10:51 How will Bima Sugam help you buy car insurance? 11:30 What can insurance learn from SEBI's mutual fund reforms? 12:22 How do trail commissions align agents with investors? 13:26 Should you buy insurance directly or through an agent? ___________________________________________________________