Recalibrating Insurance Distribution

What IRDAI's 2026 Proposals Could Mean for Talent and Role Design

On 23 September 2026, the Insurance Regulatory and Development Authority of India (IRDAI) released a two-part public consultation paper titled Recalibrating Economics of Insurance Distribution. The proposals examine much more than commission rates. They cover the structure and economics of distribution, Expenses of Management (EoM), remuneration across products and channels, transparency, safeguards against mis-selling and the role of digital infrastructure in the insurance ecosystem. Public comments have been invited until 25 October 2026. Read more about IRDAI's September 2026 consultation.

The distinction between consultation and regulation is important. IRDAI Chairman Ajay Seth has made clear that the proposals are not final and that stakeholder feedback will be considered before draft regulations are taken forward. Read Ajay Seth's comments on the consultation process.

For employers, that means there is no case for reacting as though every proposal is already law. There is, however, a strong reason to examine an underlying workforce question now: if the economics and architecture of insurance distribution are being reconsidered, should the jobs inside that system continue to be designed, measured and recruited in the same way?

The talent question goes beyond commission caps

Much of the immediate debate has focused on proposed commission limits and EoM changes. Those issues matter because distribution economics influence how insurers, banks, brokers, agents and digital platforms reach customers across India. Yet the consultation also recognises that different products and channels require different levels of selling and servicing effort.

IRDAI's proposed approach differentiates remuneration according to factors such as product type, channel, complexity and the effort involved in distribution. Read more about the proposed effort-based commission framework.

That distinction has a direct workforce implication. Employers need to be clear about what each distribution role is actually expected to accomplish. One role may focus heavily on new customer acquisition and product explanation, while another creates more value through renewals, servicing or portfolio management. Agency-development roles may depend on recruiting and activating advisers, while bancassurance positions may require the management of institutional relationships across an insurer and its banking partner. Senior leaders may be accountable for the commercial performance and economics of an entire channel rather than individual sales.

These differences are often blurred when recruitment begins with a familiar job title instead of the underlying business requirement. Titles such as Relationship Manager, Agency Development Manager, Channel Manager or Regional Business Head can mean very different things depending on the insurer, product, geography and distribution model.

The better starting point is not simply, "Do we need an insurance salesperson?" It is, "Which part of the distribution system does this person need to improve, and what evidence would show that they can do it?"

A changing distribution architecture makes role clarity more important

IRDAI has also proposed simplifying India's fragmented distribution framework into three broad categories: Insurance Distribution Entities (IDEs), Insurance Distribution Persons (IDPs) and Market Infrastructure Institutions (MIIs). The stated objective is to reduce regulatory fragmentation, create greater consistency between entities performing similar functions and widen consumer choice. Read more about the proposed IDE, IDP and MII structure.

This should not be interpreted as evidence that one distribution channel is about to replace another. IRDAI has said that the reforms are not intended to dismantle existing networks, but to create a more flexible and efficient system. Read IRDAI's clarification on existing distribution channels.

For employers, greater flexibility can make hiring more demanding. A professional who has succeeded in a concentrated product environment may have deep expertise in one insurer's portfolio and processes. Someone operating across a broader product or partner environment may need stronger comparison skills, greater judgement around suitability and the ability to navigate more complex commercial relationships.

Years of insurance experience alone therefore do not establish readiness for every distribution model. Employers need to understand whether the candidate's previous environment resembles the problem they are being hired to solve and, where it does not, whether the candidate has demonstrated the ability to adapt.

Acquisition, servicing and channel development should not be treated as identical work

One of the useful ideas behind the consultation is that selling and servicing can involve different levels and types of effort. That same distinction should exist inside workforce design.

An acquisition-heavy role may require prospecting discipline, needs discovery, product explanation and conversion capability. A servicing-heavy role may depend more on documentation, renewal management, responsiveness and problem resolution. Agency-development positions may create value through adviser recruitment, activation and coaching rather than through personal policy sales. Partner-channel roles may depend heavily on influencing people whom the insurer does not directly manage.

At senior levels, the responsibility changes again. A Distribution Head may be accountable for growth, productivity, partner performance, team capability, cost and the resilience of the channel through other people rather than through individual selling.

When employers combine all of these responsibilities into a single job description without identifying the priorities, recruitment becomes less precise. A candidate can appear to match because they recognise the terminology, while the employer still lacks evidence that they have owned the part of the role that matters most.

This is where the current regulatory discussion becomes useful for talent leaders. If the industry is examining whether remuneration reflects genuine distribution effort, employers should also ask whether job design reflects genuine distribution responsibility.

Performance measures should match the mandate

Premium generation will remain a fundamental commercial measure across many insurance roles. The question is not whether revenue stops mattering, but whether premium alone captures the contribution expected from every position.

A new-business role may legitimately be measured heavily on acquisition. A portfolio role may require a broader view that includes renewals and retention. An agency leader may need to demonstrate that recruited advisers become productive rather than simply increasing headcount. A bancassurance leader may need to show effective partner activation and relationship quality. A Distribution Head may need to balance growth with productivity, cost, channel mix and customer outcomes.

IRDAI has linked the proposed reforms to broader objectives including affordability, distribution reach, transparency and more sustainable distribution economics. Read more about IRDAI's objectives around cost and distribution access.

That creates a useful test for employers: does the scorecard attached to a role reinforce what the job description says the person is responsible for? If an organisation says a role owns long-term customer relationships but rewards it almost entirely on short-term acquisition, the economic signal is likely to dominate. If a manager is expected to develop a team but is consistently rewarded for personally rescuing sales, the organisation may be encouraging dependence rather than capability.

The same principle applies to senior hiring. If a Distribution Head is responsible for the economics of a channel, an interview focused almost entirely on historical premium figures is incomplete.

Incentive design is also workforce design

Several of the proposals address the relationship between incentives and behaviour. Reported measures include restrictions on compulsory bundling of insurance with credit, controls on volume-linked or reward-linked incentives for bank and NBFC employees selling insurance, greater transparency around distributor remuneration and stronger accountability in cases of mis-selling. Read more about the proposed safeguards around incentives and distribution conduct.

This is not only a regulatory or compensation issue. Incentive systems tell employees what an organisation values.

If the strongest economic message attached to a role is simply to complete the transaction, language elsewhere about suitability or long-term customer relationships may have limited influence on behaviour. That does not mean sales incentives are inherently problematic. Insurance distribution needs commercially productive people, and strong performance should be rewarded. The issue is whether the incentive system supports the behaviour the role is supposed to produce.

This is particularly relevant in bancassurance and lending-linked distribution, where employees may be exposed to several commercial objectives at once. If organisations want customer outcomes, regulatory discipline and commercial performance to coexist, those expectations need to align across job design, training, performance measures and rewards.

Greater accountability raises the importance of judgement at hiring stage

IRDAI has also proposed stronger traceability around the individual responsible for a sale. Reported measures include linking salesperson identity to policies sold and allowing commission clawbacks where mis-selling is established. Read more about the proposed seller-level accountability framework.

If measures of this kind move into final regulation, the talent response should not be limited to another compliance module after recruitment. It strengthens the case for assessing judgement before a person is hired.

A customer-facing candidate should be able to explain how they understand customer requirements, communicate product conditions and limitations, maintain appropriate documentation and respond when the easiest product to sell is not necessarily the most appropriate one.

For managers, the assessment should go further. Employers need to understand how candidates have supervised sales quality, handled complaints, identified unusual patterns in a branch or team and responded when performance pressure created poor behaviour. A capable manager should be able to distinguish a coaching problem from a process failure, an incentive problem or an individual conduct issue.

This is more useful than asking whether someone is simply "familiar with IRDAI guidelines". Regulatory awareness matters, but operating judgement matters more when commercial pressure and customer needs collide.

Wider product choice changes what product knowledge means

The proposed reforms also seek to create greater flexibility and customer choice across the distribution ecosystem. For talent teams, that changes the meaning of strong product knowledge.

In a narrow environment, a professional may develop deep knowledge of one insurer's products, documentation and processes. In a broader environment, capability increasingly includes comparison. The person needs to understand which product differences matter to the customer's requirement, how exclusions and conditions affect suitability and how alternatives should be explained.

That requires more than memorising additional products. It requires disciplined product comparison and judgement.

For managers, the challenge is greater because they need to coach and supervise teams operating across a broader product environment. A candidate coming from a concentrated model may still be highly suitable, but employers should test whether the person can move from product familiarity to comparative decision-making rather than assuming the transition will happen automatically.

Senior distribution leaders need to understand channel economics

The consultation places the economics of distribution directly under scrutiny, including remuneration, insurer expenses and stronger cost oversight. Read more about the proposed expense-control and cost-audit framework.

For senior hiring, this means premium growth should not be the end of the conversation.

A Regional Business Head or Distribution Head does not need to perform the work of an actuary or finance controller, but they should understand how expensive the channel is to operate, how quickly teams or partners become productive, how concentrated business is across key relationships and where servicing requirements consume disproportionate resources.

A large premium figure tells an employer something important, but it does not explain how that result was generated. One leader may have worked within a favourable partner structure, while another may have rebuilt a weak channel or developed a difficult geography. Without understanding the operating context, employers can end up comparing numbers without comparing the leadership challenge.

Senior interviews should therefore explore the mechanics behind growth: how the channel was structured, what constrained performance, where investment was required, how productivity was measured and what trade-offs were made between growth, cost and sustainability.

India's underserved markets need a different view of efficiency

Any discussion about distribution efficiency also needs to recognise the diversity of the Indian market. Selling insurance in a major metropolitan area does not involve exactly the same effort as building penetration in a smaller city or rural market where insurance familiarity and distribution infrastructure may be weaker.

IRDAI has proposed additional remuneration for business sourced from underserved areas to recognise the greater effort involved in last-mile distribution. Read more about IRDAI's proposed approach to underserved markets.

The talent implication is significant. A professional developing a low-penetration district may need local-market knowledge, regional-language capability, community credibility and partner-development skills that are less central to a digitally led metropolitan acquisition role. They may spend more time explaining insurance, resolving documentation issues and building trust before meaningful scale appears.

Employers should therefore be careful about applying one national productivity benchmark or one standard competency framework across every distribution environment. Efficiency matters, but it must be interpreted in the context of the work required to create access.

Digital infrastructure changes where human value is created

The wider regulatory agenda also includes digital infrastructure such as Bima Sugam and the proposed Public Insurance Registry. IRDAI has described these initiatives as ways to improve transparency, interoperability and customer access across the ecosystem. Read more about the proposed Public Insurance Registry.

Greater digitalisation does not mean human distribution becomes unnecessary. The more useful question is where human involvement adds value.

Technology may increasingly handle parts of product discovery, comparison, documentation and servicing for straightforward transactions. Human judgement may remain more important where the product is complex, the financial decision is significant or the customer needs detailed explanation and support.

That means future-facing job descriptions should not simply add "digital skills" to a list of existing competencies. The stronger capability is knowing how to work within a hybrid distribution journey in which technology handles some activities while people add value through judgement, explanation, relationship management and problem resolution.

Employers can improve role design before the consultation ends

Because the consultation is still open, employers should not rebuild organisational structures on the assumption that every proposal will survive unchanged. Industry stakeholders are already expressing different views about the likely impact. The Insurance Brokers Association of India has warned about possible effects on distributor viability, employment and reach, while IRDAI has argued that the reforms could widen participation and improve sustainability. Read the Insurance Brokers Association of India's concerns.

HR and business leaders do not need to resolve that debate before examining their own workforce. They can already ask whether the economic purpose of each role is clear, whether responsibilities and incentives point in the same direction and whether the outcomes used to assess performance are genuinely within the employee's control.

They can also examine whether different roles require different levels of product breadth, customer judgement, partner management or commercial understanding. For senior positions, the assessment should include productivity, cost, partner concentration and the operating economics behind growth. For customer-facing roles, interviews should test how candidates make decisions, not simply whether they know the language of compliance.

The larger principle is straightforward: organisations should understand the work before they recruit the person.

Candidates should make their distribution experience easier to understand

The same need for clarity applies to insurance professionals considering their next move. A CV that says only "responsible for insurance sales, channel management and target achievement" gives an employer very little insight into the environment behind those claims.

Candidates should make clear whether they acquired customers directly, managed an existing portfolio, recruited and activated advisers, developed partner channels, activated bank branches, led regional teams, managed renewals or expanded into new geographies.

For senior professionals, context matters even more. Team size, geography, channel, type of distribution partner, product environment and level of decision authority help explain what the headline numbers actually represent.

The objective is not to fill the CV with technical terminology. It is to make genuine distribution capability visible.

Defining distribution work more clearly

IRDAI's September 2026 consultation raises important questions about what insurance distribution costs, how different channels should be remunerated, how incentives influence conduct and how digital infrastructure should evolve. The final framework may change as consultation progresses.

For employers, however, the workforce question does not need to wait.

The more important issue is whether the organisation can clearly explain what value each distribution role is expected to create and whether the job description, performance measures, incentives and hiring process reflect that contribution. Acquisition, servicing, agency development, partner management, geographic expansion and distribution leadership can all contribute to growth, but they should not automatically be treated as the same kind of work.

At PharmaSolution Placement, we believe that greater clarity in role design can help employers recruit against the actual business requirement rather than a familiar title. It can also give candidates a better opportunity to demonstrate the experience that is genuinely relevant to the mandate.

The final form of IRDAI's reforms may change. The case for more precise workforce architecture does not need to. When insurers define roles around the value people are expected to create, hiring becomes more focused, performance expectations become clearer and organisations are better positioned to adapt when distribution economics change.

How we can help

PharmaSolution Placement is a specialist Indian recruitment firm focused on the Pharmaceutical and Insurance sectors. We work with employers across specialist, front-line, management and leadership hiring requirements while helping professionals explore opportunities aligned with their experience and career direction.

Insurance professionals can explore current opportunities or submit their CV. Employers reviewing Insurance sales, distribution or leadership requirements can submit a hiring requirement or contact PharmaSolution Placement.