Insurers explore deferred commission model to cut costs amid IRDAI scrutiny

• Life and general insurers are exploring a deferred commission model to reduce high distribution and commission costs.
• A nine-member committee has been formed to recommend ways to lower distribution and commission expenses, holding its inaugural meeting.
• IRDAI is pressuring insurers to rein in expenses and make insurance products more economical, intensifying engagement with companies.
• The committee unanimously recommended a deferred commission structure, spreading payouts over early policy years (e.g., 8% over 5 years instead of 40% upfront).
• IRDAI is also scrutinizing general and health insurers' distribution and management costs, requesting five years of data for assessment.

Why It Matters: New commission rules aim to lower insurance costs for policyholders.