IIFL Capital has run FY26 expense ratios against the caps in IRDAI's September 23 consultation paper, and the result splits the industry cleanly. Only LIC, SBI Life and New India Assurance already sit below the proposed FY29 ceilings. LIC's gross commission of Rs 24,440 crore and operating expenses of Rs 39,510 crore on gross premium of Rs 5.37 lakh crore work out to an EoM ratio of 11.9 percent against a 15 percent FY29 life limit. SBI Life is at 10.6 percent. New India Assurance, at 21.7 percent, is the only general insurer in the sample inside the proposed 25 percent FY29 ceiling.
The gap table
Under the draft, life insurers move to 15 percent of gross direct premium income in two years and 12.5 percent in five; general insurers move from 30 percent of gross written premium to 25 percent in two years and 20 percent in five, with annual reductions beginning FY2027-28 and the calculation basis shifted to domestic GDPI. Against those targets, FY26 ratios show:
- Life, widest gaps: Tata AIA 26.7 percent, BLIC 25.9 percent, Max Life 25.1 percent against the 15 percent FY29 limit.
- General, widest gaps: Go Digit 40.5 percent, Acko 38.7 percent, Aditya Birla Health 37.9 percent against the 25 percent FY29 limit.
- Comfortable: SBI Life 10.6 percent, LIC 11.9 percent, New India Assurance 21.7 percent.
Implication: how compliance actually happens
EoM caps bite through behaviour, not arithmetic. Insurers above the line have to cut commission, branches, or both, and IRDAI has an enforcement precedent for breaches of the existing framework: earlier this year it barred Niva Bupa and Acko from opening new branches for six months over EoM violations. The draft also adds cost audits for insurers and for distribution entities with insurance revenue above Rs 100 crore, plus public disclosure of key accounting parameters above Rs 50 crore, so the gap is not just a target but a monitored one. For investors, the gap table is a proxy for which balance sheets must slow distribution spend, and for which management teams will argue for a longer glidepath during the consultation.
What to watch
The consultation closes on October 25, 2026. Watch two variables: whether the final notification keeps the five-year pace or extends the transition, and whether insurers already below the line lobby to keep their own long-term target at 10 percent, as the paper contemplates, which would hold even the leaders to further cuts.