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Zerodha CEO warns regulatory risk is biggest threat after IRDAI commission changes
IRDAI’s consultation proposes commission limits by insurance type and distributor, alongside phased cuts to expense-of-management limits for both life and general insurers.
Zerodha founder and CEO Nithin Kamath said regulatory risk remains the biggest threat to regulated financial businesses after India’s insurance regulator, IRDAI, proposed changes to insurance commission rules, according to LiveMint.
On Wednesday, IRDAI issued a consultation paper on recalibrating the economics of insurance distribution. The proposal outlines reforms spanning insurance distribution structure, expenses, commissions, market conduct, transparency, and the use of digital infrastructure, and it would set different commission limits based on insurance type, product, and distributor.
The framework also includes phased reductions to expense-of-management (EoM) limits. For life insurers, IRDAI would lower the EoM cap to 15% of gross direct premium income within two years and 12.5% within five years.
For general insurers, IRDAI’s proposed EoM limit would decline to 25% within two years and 20% within five years, while the consultation also allows tied agents higher commissions than other distribution entities.