The call about a better health insurance deal is usually framed as serving you. IRDAI's consultation paper treats it as a distribution transaction it wants to price down. For individual health insurance, the proposed maximum commission for distribution entities is 15 percent on a first-time sale, 5 percent on a renewal and 5 percent on portability. For agents and associates the proposed limits are 20 percent, 10 percent and 10 percent respectively. The paper adds two lines that go further than the numbers: commission-led portability of health or motor policies should be discouraged, and single-premium products and products with tax incentives should have lower commissions.

Context: why renewals are priced down

IRDAI's stated principle is that commission should track the effort involved in selling and servicing. Renewing a familiar product is not the same task as acquiring a new customer, and health insurance is the example the paper itself gives. Portability gets the same low cap because a switch that exists mainly to pay a distributor a fresh commission is not, in the regulator's reading, a customer choice at all.

Implication: what a switch stops being worth

  • For distributors: moving an existing customer now earns about a third of a first sale for a distribution entity. The economics of calling you to port fall sharply.
  • For you, the risk flips from pressure to neglect: renewal commissions are the servicing income agents live on. When renewals pay 10 percent instead of 20 percent, existing customers can slide down the priority list. Track your own renewal date and do not assume a reminder call is coming.
  • Your right to port does not change. The draft alters what the person advising you is paid to recommend, not your ability to move cover between insurers.

Action

Do not port on price alone. Continuity of coverage, credit for waiting periods and your claim history travel with you only when the port is done properly, so ask for the porting certificate and the transferred benefits in writing. If the only argument for switching is a discount, treat that as the distributor's number, not yours. Comments on the paper close on October 25, 2026.