The Insurance Regulatory and Development Authority of India (IRDAI) has approved a series of reforms that promise to make insurance selling more transparent, improve accountability among insurance distributors and strengthen policyholder protection.
The reforms, approved during the regulator’s 137th Authority Meeting, are part of the implementation of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
While some of the changes are aimed at making it easier for insurers and intermediaries to do business, several measures directly affect policyholders by improving transparency, grievance redressal and accountability in the insurance ecosystem.
Here’s a look at the key changes and what they mean for insurance buyers.
Perhaps the biggest change from a policyholder’s perspective is the mandatory tagging of the authorised salesperson to every insurance proposal, policy and certificate of insurance.
According to IRDAI, the reform is aimed at enhancing “accountability and traceability across the insurance distribution process, strengthens regulatory oversight and promotes greater transparency for policyholders.”
In simple terms, every insurance policy will now be linked to the authorised person who sold it.
This creates a clear trail of responsibility. If a customer later alleges mis-selling, incorrect advice or non-disclosure of important policy terms, insurers and regulators can identify the authorised salesperson involved much more easily.
The move is expected to improve accountability across insurance agents, brokers, corporate agents and other intermediaries, while making the sales process more transparent for customers.
IRDAI has also approved the IRDAI (Policyholders’ Education and Protection Fund) Regulations, 2026.
The regulations operationalise the Policyholders’ Education and Protection Fund (PEPF), constituted under Section 16A of the IRDA Act following the amendments introduced through the Sabka Bima Sabki Raksha Act.
According to the regulator, the fund will establish “a dedicated institutional mechanism to promote insurance awareness and literacy initiatives, strengthen grievance redressal mechanisms, leverage technology to improve policyholder services, facilitate tracing and recovery of unclaimed insurance amounts, and support other initiatives aimed at empowering and safeguarding policyholders.”
For policyholders, this could mean better awareness about insurance products, improved support for resolving complaints and greater efforts to identify and return unclaimed insurance money to rightful beneficiaries.
Beyond tagging salespersons, IRDAI has strengthened governance and business conduct requirements for insurance intermediaries.
The regulator said the amendments align the regulatory framework with the Sabka Bima Sabki Raksha Act and the Foreign Investment Rules while strengthening governance “through enhanced disclosure and accountability requirements.”
Although many of these requirements are aimed at intermediaries rather than consumers, stronger disclosure norms could improve transparency in the way insurance products are marketed and sold.
IRDAI added that the reforms will reduce compliance burden while enabling intermediaries, third-party administrators (TPAs) and surveyors to focus on delivering “better and more accessible services to policyholders.”
Another significant reform is the introduction of perpetual registration for insurance intermediaries.
Instead of periodically renewing their registration, intermediaries will now operate under a perpetual registration system supported by an annual fee regime.
According to IRDAI, the move is intended to streamline regulatory compliance and reduce administrative burden.
While customers may not notice an immediate change, the regulator believes simpler compliance requirements will allow intermediaries to spend more time serving policyholders instead of completing regulatory formalities.
The Authority has also approved the IRDAI (Manner and Procedure for Imposition of Penalties) Regulations, 2026.
According to IRDAI, the regulations establish “a transparent, uniform and proportionate framework for enforcement” under the Insurance Act, 1938 and the IRDA Act, 1999.
The framework introduces a structured process for initiating proceedings, issuing show-cause notices and passing reasoned orders.
IRDAI said this will promote “consistency, fairness and transparency in regulatory actions” while enhancing regulatory certainty and strengthening public confidence in the insurance sector.
Although these provisions primarily apply to regulated entities, a more transparent enforcement framework is expected to improve overall regulatory discipline in the insurance industry.
The Authority also approved amendments to regulations governing insurers’ actuarial, finance and investment functions, along with rules relating to registration, capital structure, transfer of shares and amalgamations.
According to IRDAI, these reforms provide insurers with greater operational and financial flexibility through liberalised investment norms, a facilitative framework for capital infusion and corporate restructuring, while strengthening actuarial oversight and financial governance. The regulator said the measures are aimed at improving ease of doing business, facilitating capital formation and supporting the long-term growth of insurers without compromising policyholder interests.
The Authority also approved the registration of ProTec General Insurance Limited, making it the fourth insurer to receive a licence in 2026.
It further noted that two insurers have already increased foreign shareholding beyond the earlier 74% limit after the implementation of the Sabka Bima Sabki Raksha Act, reflecting growing investor confidence following the introduction of 100% foreign direct investment in the sector.
The reforms signal a greater regulatory focus on accountability and consumer protection across the insurance distribution chain.
The mandatory tagging of authorised salespersons could make it easier to establish responsibility in cases of mis-selling or disputes.
At the same time, the new Policyholders’ Education and Protection Fund is expected to improve insurance awareness, strengthen grievance redressal and support the recovery of unclaimed insurance money.
While several of the reforms are designed to simplify compliance for insurers and intermediaries, the regulator believes they will ultimately translate into better service, greater transparency and stronger safeguards for policyholders as the insurance sector continues to expand.
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