IRDAI to examine LIC agents’ demands as LIAFI opposes key distribution reforms ahead of October 25 deadline
The Insurance Regulatory and Development Authority of India (IRDAI) is set to examine seven key demands from the Life Insurance Agents’ Federation of India (LIAFI) as the agents’ body pushes back against nearly every major proposal in the regulator’s planned overhaul of insurance distribution norms. The review comes just ahead of the October 25 deadline for stakeholder feedback on the consultation paper titled “Recalibrating Economics of Insurance Distribution.”
LIAFI has opposed core elements of the proposed framework, including commission caps, public disclosure of individual agents’ payouts, and provisions that would allow recovery of commissions in cases of alleged mis-selling. The federation has instead sought higher first-year and renewal commissions, arguing that the draft changes risk further squeezing agents’ already modest earnings.
Specifically, LIAFI has proposed a graded first-year commission structure linked to the premium-paying term: 27 percent for policies of five to nine years, 30 percent for 10–14 years, and 35 percent for terms of 15 years and above. For renewals, it has asked for 7.5 percent from the second to the sixth policy year and 6 percent from the seventh year until maturity. The body says agents’ responsibilities go well beyond the initial sale and include premium collection, servicing, policy revival, nominations, and claims.
The demands come against a backdrop of limited earnings. LIC agents earn an average monthly commission of ₹16,774, while LIC’s commission expenditure declined 4.55 percent in FY26. Individual agents account for around 93 percent of LIC’s life insurance business. LIAFI has pointed to rising costs of travel, communication, digital tools, customer meetings, and office maintenance, and has noted that commissions on some LIC policies dropped to as low as 7 percent from October 2024 after earlier regulatory changes.
The federation has also strongly opposed automatic commission clawbacks based solely on a complaint, policy surrender, lapse, or cancellation. It has called for equal scrutiny of banks, brokers, and corporate agents, and has requested grandfathering and transition provisions so that existing business and ongoing servicing responsibilities are protected. Secretary General B. Markandeyulu has stressed that “any substantial reduction in the earnings potential of agents could discourage new entrants and adversely affect the existing agency force.”
Notably, IRDAI has received the representation and will factor the demands into its final guidelines. However, the regulator is unlikely to reverse the broader direction of the reforms, though it may tweak specific provisions based on feedback.
With the feedback window closing on October 25, the coming days will show how far IRDAI is willing to adjust commission levels, disclosure rules, and clawback provisions to address agents’ livelihood concerns while still advancing its goals of lower costs, reduced mis-selling, and better value for policyholders. The outcome will matter for the large agency force that continues to drive the bulk of life insurance sales, particularly for LIC.
Aachal Maniyar is a Senior Content Producer at LiveMint, where she covers US sports with a focus on major leagues, marquee events, and athlete-driven stories, while also reporting extensively on cricket and global sports. With over five years of first-hand journalism experience, she combines sharp editorial judgment with real-time sports storytelling across platforms. <br><br> Her reporting journey spans leading newsrooms including Thomson Reuters, India TV, BTVI, ET NOW, and CNBC TV18, where she has worked across breaking news, live match coverage, feature writing, interviews, video scripting, and anchoring. This multi-platform exposure has shaped her ability to deliver context-rich sports and business journalism tailored for both television and digital audiences. <br><br> Aachal has conducted and produced exclusive interviews with athletes and public figures such as India cricketer Dhruv Jurel, Indian women’s hockey captain Savita Punia, and industrialist Ratan Tata, along with several emerging and established sports personalities. Her body of work includes in-depth explainers, athlete profiles, emotionally resonant fan narratives, and data-backed match analysis across cricket, Olympic sports, and international competitions. <br><br> She holds a Master’s degree in Journalism from Symbiosis Institute of Media and Communication, Pune, and believes in reporting that is grounded in accuracy, clarity, and credibility. Her philosophy is simple: sports journalism should go beyond scores and statistics, capturing the human stories, pressure moments, and decisions that shape the game and the people who play it.
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