The Insurance Regulatory and Development Authority of India’s (IRDAI) latest consultation paper has thrown the insurance sector into turmoil, affecting even insurers’ stocks. But it has a backstory. In 2023, IRDAI removed product-wise commission caps. It let insurer boards set payouts, subject only to an overall expense ceiling. The draft paper released on September 23, "Recalibrating Economics of Insurance Distribution", shows us how boards used that freedom. Between FY23 and FY25, motor premiums grew 34%, while motor commissions grew 259%; in retail health, premiums rose 53% and commissions 118%. On health cover sold alongside loans, payouts to lenders run around 40% of the premium, and about 28% on credit life. So, those who sold the products kept........

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