While pointing towards the prolonged implementation timeline outlined in the latest regulatory overhaul proposed by the Insurance Regulatory and Development Authority of India (IRDAI), author and financial educator Monika Halan noted that the insurance industry will not do anything unless there is a hard deadline which is closed.
 
Speaking exclusively to ANI in an interview, Halan argued that the proposed transition period offers insurers too much leeway to delay critical consumer protection measures.

“It’s a long road ahead. There is nothing going to happen. In any case, the glide path is 2 years and 5 years. I think it is too long. If the regulator understands that mis-selling and bad sales are happening, I think the industry should be given 6 months, not 5 years, because the industry will not do anything unless there’s a hard deadline which is closed,” Halan said.
 
She noted that the resistance from entrenched market players is already underway to dilute the proposed changes.
 
“It’s a very long road ahead because it’s a very well-funded entrenched industry which is already lobbying with the Ministry of Finance with other power centers in Delhi to roll this back. It’s a hard fight and I am just hoping that the powers understand how important it is for the financialization of India and how important it is that a regulated product in India is not open to such rampant cheating,” she said.
 
Halan, however, welcomed the fundamental shift in the stance of the insurance regulator under Chairman Ajay Seth, observing that policyholders are finally being prioritized after decades of neglect.
 
“Every rupee of premium in this industry comes from your pocket and my pocket. The entire industry is based on our money, policy holder’s money. And for 27 years, the policy holder has been the last in the mind of the insurance regulator,” she said.
 
She pointed out that high commissions and aggressive distribution models have suppressed genuine growth, resulting in declining life insurance penetration and stagnant general insurance volumes.
 
“I am a person who believes in markets. I believe in free enterprise. I think profits are good, but profits that are built on the tears of policy holders are just bad for the country. Like on our journey to Viksit Bharat, you cannot have millions of people who have been cheated out of their money,” she stated.
 
The IRDAI recently released a public consultation paper on “Recalibrating Economics of Insurance Distribution,” proposing a structural overhaul that includes a three-tier architecture of Insurance Distribution Entities, Insurance Distribution Persons, and Market Infrastructure Institutions, alongside lower expense caps and reformed commissions. The paper remains open for stakeholder feedback until October 25. 

For life insurers, the Expense of Management (EoM) ceiling would be set at 15 per cent of Gross Direct Premium Income (GDPI) within two years and 12.5 per cent within five years. For general insurers, the limit would progressively decline from 30 per cent of Gross Written Premium to 20 per cent of domestic GDPI over five years.