Regulator Shifts Incentives Toward Multi‑Year Policies with Commission Cap

IRDAI’s latest draft seeks to redesign the commission structure so that distributors and agents are motivated to keep policy‑holders on multi‑year payment plans rather than chasing one‑year premiums. The regulator emphasized that the commission model should reward the continuation of policies over several years. Accordingly, single‑premium savings policies would see a first‑year commission ceiling of 1% for firms and 2% for agents, while single‑premium pure term products could go up to 7.5% and 10% respectively. For multi‑year term policies, the first‑year ceiling could rise to 25% for firms and 30% for agents, reflecting the broader incentive to sustain longer contracts.