Insurance Regulatory and Development Authority of India (Irdai) Chairman Ajay Seth highlighted significant concerns about the insurance sector's commission structure at the authority's 133rd meeting held in December 2023. According to the minutes released on Thursday, Seth stated that the sharp rise in commissions across the insurance industry suggests the sector remains structurally high-cost, with growth still heavily reliant on expensive intermediary-driven distribution rather than cost-efficient digital transformation. This structure warrants regulatory attention and intervention, as reported by Business Standard.
Seth emphasized that high front-loaded acquisition costs erode policyholder value in long-term products, leaving low asset build-up in early years and minimal surrender value on early exit. As reported by Business Standard, this cost structure undermines trust and persistency, as early exits effectively wipe out the policyholder's principal while weakening the sector's overall value proposition. The chairman also highlighted the need for regulatory attention in other areas including weak core profitability marked by persistent underwriting losses across segments among non-life insurers, particularly public sector general insurers.
According to the IRDAI data, the insurance industry's premium growth has moderated sharply into single digits, lagging nominal GDP growth and indicating normalization after the post-Covid surge. Total premium collections stood at ₹8.02 trillion up to November 2025, reflecting a growth rate of 9.86 per cent over the previous year. As reported by Business Standard, life insurance continued to dominate with collections of ₹5.8 trillion and growth of 10.48 per cent, while general insurers collected ₹2.22 trillion in gross direct premium, up 8.29 per cent year-on-year.
The sector's financial stability indicators showed mixed trends, with assets under management of insurers rising to ₹78.48 trillion as of September 2025, compared with ₹72.08 trillion a year earlier. According to the IRDAI data reported by Business Standard, around 59 per cent of investments remain parked in government securities, while nearly 30 per cent are in approved investments. The chairman also noted that there are nearly eight applications pending for insurance registration in the R1 stage, with six applications received within the last 2-4 months under examination.
Seth outlined regulatory priorities aimed at strengthening governance, policyholder protection, and sector resilience. As reported by Business Standard, the authority will issue a draft consultation paper on the implementation of Indian Accounting Standards (Ind AS) in the country's insurance sector. Additionally, seven applications requesting approval for transfer of shareholding of non-life insurers and five applications of life insurers have been approved in this financial year till date. The chairman also highlighted concerns about growing dependence on cross-border reinsurers and rising outward premium flows implying higher foreign exchange outgo.
