Why intermediary rules exist in the first place
Most Indians don't buy insurance directly from an insurer's website. They buy it from an agent who visits their home, a broker who compares plans over a phone call, or a web aggregator that shows quotes side by side, or increasingly, from a bank staffer who bundles a policy with a loan. All of these people and platforms are "intermediaries" — they sit between you and the insurance company, and IRDAI (the Insurance Regulatory and Development Authority of India) regulates them separately from the insurers themselves.
The reason this layer of regulation keeps getting tightened is simple: intermediaries are paid commissions, and commissions create incentives. An agent who earns more for selling you a ULIP than a term plan has a reason to push the ULIP, even if a term plan suits your needs better. Every round of intermediary rule changes is essentially an attempt to narrow that gap between what's profitable for the seller and what's useful for the buyer.
What these rules typically cover
When IRDAI revises intermediary regulations, the changes usually fall into a handful of buckets. You don't need to memorise the clause numbers — you need to know what each bucket means for the person sitting across the table from you.
- Who can call themselves an agent, broker, or corporate agent, and how many insurers they're allowed to represent
- How much commission an intermediary can earn on different products, and how transparently that commission must be disclosed
- Minimum qualification, training and continuing education requirements for agents
- Rules around "point of sale" persons who sell simple standardised products with lighter paperwork
- How web aggregators and insurance marketplaces must display comparisons — no hidden ranking by commission size
- Grievance redressal timelines when an intermediary mis-sells or misrepresents a product
Each of these has a direct, practical effect on what happens in the ten minutes before you sign a proposal form.
Commission disclosure: the part that matters most to your wallet
Commission structures explain a lot of odd-seeming sales behaviour. Traditional endowment and money-back policies have historically paid agents far higher first-year commissions than term insurance or health insurance. That's a big reason why so many households end up with a low-cover endowment plan instead of a high-cover term plan — the product that pays the agent better gets pitched harder.
Newer intermediary norms push insurers and distributors to disclose commission as part of the sales process rather than burying it in the fine print of the policy document. In practice, this means you can — and should — simply ask: "How much commission do you earn on this policy compared to a term plan?" An intermediary operating under updated disclosure norms is required to answer that honestly. If they dodge the question, that itself is a signal to slow down.
Bancassurance and the "single insurer" problem
A large chunk of Indian insurance is sold through banks — a corporate agency tie-up known as bancassurance. Historically, many banks pushed products from just one or two group-affiliated insurers, regardless of whether that insurer's product was competitive. Regulatory changes over the past few cycles have nudged this toward allowing bank customers to be shown options from multiple insurers rather than a single default choice.
For you, the practical takeaway is this: if your bank relationship manager offers you a policy alongside a loan or FD renewal, you are not obligated to buy it there, and you're increasingly entitled to ask whether the bank can show you alternatives from other insurers under its panel. A policy bundled with a home loan should be compared on its own merits — cover, premium, exclusions — exactly as you would compare one bought independently.
What changes for online aggregators and marketplaces
Web aggregators — the comparison sites where you enter your age and see ten health insurance quotes lined up — are held to specific display rules. They cannot rank plans purely by which insurer pays the aggregator more; they must show a standardised set of comparison parameters like sum insured, waiting periods, claim settlement ratio and network hospitals in a consistent format. Tightened intermediary rules generally strengthen this requirement and extend it to newer digital-first distribution models, including insurance sold through fintech apps.
If you're comparing online, look past the headline premium. Check whether the platform discloses its own commission or preferred-partner arrangements, and whether the comparison table lets you sort by claim settlement ratio rather than just premium. A platform that only lets you sort by "cheapest first" is optimising for a quick sale, not necessarily for your best outcome.
Grievance redressal — the safety net most people forget exists
One quieter but important part of intermediary regulation is the timeline within which a broker or agent must resolve or escalate a complaint before you're pushed to the insurer's own grievance cell, and eventually to the Insurance Ombudsman. Updated rules usually tighten these timelines and require intermediaries to maintain proper records of every sale, including what was disclosed to you and when.
This matters most at claim time. If an agent verbally promised something that isn't in the policy document — say, coverage for a pre-existing condition after a shorter waiting period than actually applies — a documented sales trail makes it far easier for you to dispute a claim rejection. Always ask for the benefit illustration and sales brochure in writing, and keep the intermediary's ID and license number noted against your policy file.
A practical checklist before you sign
Regardless of which specific version of intermediary rules is in force when you're reading this, a few habits protect you regardless of the fine print regulators eventually settle on.
- Ask the intermediary for their IRDAI license or registration number and verify it exists
- Ask directly what commission they earn on this product versus alternatives
- Insist on a written benefit illustration, not just a verbal pitch
- If it's a bank-sold policy, ask whether other insurers on the bank's panel offer a comparable product
- Compare claim settlement ratio and exclusions, not just the premium quoted
Intermediary regulations exist to reduce mis-selling at the structural level, but no rule can fully substitute for asking the right questions at the point of sale. Treat every policy pitch — whether from a neighbourhood agent, a bank counter, or an app — as a comparison exercise first and a purchase decision second.
