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Insurance to Get Cheaper? Big news for Policyholders

Sweta Mitra
By Sweta Mitra
2 min read
Published: 05 Mar 2026
Insurance to Get Cheaper? Big news for Policyholders

Insurance Update: If you think insurance has become expensive, this news is useful. Insurance regulator IRDA is implementing several major reforms over the next four to six months that will make insurance affordable and give you value for your money. These changes will have the biggest impact on the hefty commissions that insurance companies pay to agents and banks.

Bima Sugam will soon launch – a digital marketplace where you can compare policies from all insurance companies, similar to Amazon and Flipkart. Prices, features, claim settlement ratios – everything in one click. Once everything is open, companies will have to keep premiums low.

The Rs 1 lakh crore question

Just imagine, in FY2025, insurance companies distributed nearly Rs 1 lakh crore in commissions alone. This is the money that comes out of your pocket in the form of premiums. Both the RBI and IRDA have expressed concern about this. Now, the regulator is working to rationalize these distribution costs.

Scissors will be used at 30% cost

Currently, insurance companies spend 30% of your premium on distribution and administrative costs. Of this, 17-18% goes directly to banks, NBFCs, and agents. IRDA is now preparing to reduce this amount, especially in health insurance, where premiums have risen sharply. Regulatory IRDA is creating a consent-based data registry where all policy and claims data will be stored. This will speed up underwriting, curb fraud, and facilitate policy portability. This means lower costs, faster processing, and greater transparency.

IRDA is tightening its grip on insurance companies. Companies will now be required to openly disclose their products, returns, and claim settlement ratios. Once everything is public, companies will compete for better service and competitive pricing.

What will the common man get?

You will directly benefit from these reforms. Reducing commission costs could lead to stable or even lower premiums. Comparing policies on digital platforms will help you choose better and more affordable policies. You’ll know where your money is going, and digital infrastructure will speed up the claims process. The impact of these changes will be particularly evident in health and life insurance, where rising costs have put pressure on the middle class.

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