Commission Transparency With Commercial Clients: How Brokers Should Run the Remuneration Conversation Before Regulation Forces It

Four regulatory developments have converged to make broker remuneration a topic your commercial clients will raise, with or without your help. The IRDAI (Payment of Commission) Regulations, 2023, effective April 2023, removed product-wise commission caps and moved commission-setting to each insurer's board-approved policy, subject to the overall expenses-of-management ceiling. The IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, in force from 1 April 2024, set that ceiling at roughly 30 percent of gross written premium for general insurers and roughly 35 percent for standalone health insurers. The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, whose intermediary provisions took effect on 5 February 2026, restored IRDAI's statutory power to cap distributor commissions and introduced perpetual intermediary licences and 100 percent FDI in intermediaries.

The fourth development is the one that changes client behaviour. The draft IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026, released for comment in June 2026 and still a draft, would require intermediaries to disclose intermediation revenue and other income received from insurers in a separate schedule to their financial statements, file audited financials with IRDAI by 30 September each year, and publish those financials on their own website. Firms above INR 10 crore of commission income would face stricter disclosure. On top of that, business press reporting in early July 2026 indicates IRDAI is preparing a wider commission-rules overhaul aimed at curbing mis-selling, with a consultation paper expected around the end of July 2026 according to Chairperson Ajay Seth. Staggered trail commissions, effort-based remuneration, and product-wise or tenure-wise caps are all reportedly under discussion.

None of the draft or consultation items is in force today. But your clients' CFOs and procurement teams read the same press coverage you do. A broker who initiates the remuneration conversation controls the framing: remuneration in exchange for defined servicing. A broker who waits gets asked the question cold in a procurement review, usually framed as a cost to be cut.

Before deciding what to disclose, be precise internally about what you earn on an account. For a typical commercial placement, broker remuneration can include four components: base brokerage paid by the insurer on the placement, additional or reward remuneration linked to portfolio outcomes with that insurer, fees charged directly to the client for advisory or claims work, and reimbursements for specific services. Under the 2023 commission framework, the insurer-side components are set by each insurer's board-approved commission policy rather than by a product-wise regulatory cap, which is exactly why rates now vary meaningfully between insurers on the same risk.

The existing code of conduct under the IRDAI (Insurance Brokers) Regulations, 2018 already obliges a broker to disclose brokerage on a client's request. Treat that as the floor, not the standard. A defensible proactive disclosure to a commercial client covers three things:

• The fact and basis of remuneration: that you are remunerated by commission from the insurer on this placement, and whether any fee is charged in addition.
• The amount or rate on this client's placement, per line, once terms are bound. Ranges are acceptable at quotation stage; exact figures should follow at binding.
• Any portfolio-level income streams (reward or additional remuneration arrangements) described in category terms, with a statement of how you manage the conflict, since these cannot usually be attributed to a single account.

Do not disclose selectively, quoting the base rate while staying silent on reward income when asked about total remuneration. If the draft 2026 disclosure schedule is finalised, your aggregate intermediation revenue will sit in a published audited schedule on your own website, and a client who reconciles what you told them against what you published will remember the gap far longer than the number itself.

The format matters as much as the fact of disclosure. Two documents carry most of the load in commercial broking: the placement proposal or quote comparison, and the renewal or stewardship report.

In the quote comparison, add a remuneration line under the premium table rather than burying it in terms and conditions. Working language that broker firms are using in 2026 looks like this: "Our firm will receive brokerage from the insurer on this placement. Based on the quotes presented, brokerage ranges from 10.0 percent to 12.5 percent of premium excluding GST depending on the insurer selected. Exact remuneration will be confirmed on binding. We may also receive portfolio-level remuneration from insurers, which is not attributable to individual placements; our conflict-of-interest policy is available on request."

Three formatting decisions are worth standardising across the firm:

1. Per-insurer rates in the comparison table. If insurer A pays 12.5 percent and insurer B pays 10 percent on the same fire risk, showing both alongside premium and coverage differences is the strongest possible evidence that your recommendation was not commission-led. Firms that hide the differential invite exactly the suspicion the disclosure was meant to remove.
2. Rupee amounts, not just percentages, for large accounts. On an INR 4 crore property programme, "11 percent" and "INR 44 lakh" land very differently. Sophisticated clients will do the multiplication anyway; doing it for them signals confidence.
3. A standing remuneration annexure in every proposal above a defined premium threshold, so disclosure does not depend on which account executive drafted the document.

Keep the proposal disclosure factual; connect remuneration to service value in the stewardship report, not the quote comparison.

The annual stewardship or renewal report is where proactive disclosure earns its keep, because it lets you present remuneration next to the work delivered. The reported direction of IRDAI's thinking in the July 2026 coverage, remuneration weighted toward advisory, documentation, and claims servicing effort rather than passive placement, is also a preview of how clients will evaluate brokers. A stewardship report that already itemises effort makes the same case commercially that effort-based remuneration would make in regulation.

A remuneration section in a stewardship report for a mid-size corporate account should contain: total brokerage earned across the client's programme for the policy year, split by line (property, marine, liability, group health, and so on); fees invoiced, if any; and a service record against it, including claims handled with amounts settled, endorsements processed, uninsured-exposure reviews delivered, and market exercises run. For a client paying INR 1.8 crore of premium across five lines, that section might show INR 19 lakh of brokerage against 34 endorsements, two claims totalling INR 62 lakh settled, and a full remarketing of the property line that reduced rate by 8 percent.

In this format the remuneration number arrives pre-contextualised: any challenge has to engage with the service record rather than a bare percentage. Brokers who have run it for two renewal cycles report that fee conversations start from "what should the number be" rather than "why are you paid at all."

Commission disclosure naturally leads some clients to ask for fee-based terms. Moving an account to a fee agreement is the right answer in specific situations, and a margin-destroying reflex in others.

The accounts that suit fees share three markers: annual premium large enough that commission income is visibly disproportionate to placement effort (in practice, usually above INR 1 crore of premium on commercial lines); heavy non-placement service demand such as claims advocacy, multi-location endorsement traffic, or captive and retention studies; and a procurement function that will re-tender the account every two to three years regardless. On such accounts a fee locks in revenue independent of premium movement, survives a soft market, and removes the perception issue entirely.

A worked example. A manufacturing client pays INR 2.6 crore of premium across property, marine open cover, and liability lines, generating blended brokerage of about 10.5 percent, roughly INR 27 lakh. Placement effort justifies perhaps half of that; the rest is effectively paying for claims and endorsement servicing that is invisible to the client. Restructured as a fee agreement: the broker charges an annual fee of INR 19 to 21 lakh plus GST, and placements are made with the insurer's agreement to issue net of brokerage or with commission rebated to zero at source by the insurer's commission policy for that account. The client's total cost falls, the broker's revenue becomes contractual rather than contingent on premium, and the service scope gets written down for the first time.

Two cautions. First, Section 41 of the Insurance Act, 1938 prohibits rebating: you cannot collect commission and pass part of it back to the client. Net-of-commission placement requires the insurer to structure the premium accordingly; it is not something the broker can engineer unilaterally after binding. Second, fee income attracts 18 percent GST invoiced to the client, which the client's finance team can usually offset as input credit on commercial covers, but confirm their position before proposing numbers. Put the fee, scope, exclusions, term, and termination mechanics in a written mandate or service agreement signed before the placement cycle begins.

Once remuneration is visible, procurement teams respond in predictable patterns. Four recur constantly, and each has a defensible answer.

"Rebate the commission to us." The direct answer is that rebating is prohibited by Section 41 of the Insurance Act, 1938, and exposes both parties. The constructive answer is the fee route described above: a net-of-commission structure agreed with the insurer plus a transparent fee, which achieves the economic outcome lawfully. Never split the difference informally; informal rebates are exactly what strengthened commission powers under the 2025 Act are positioned to police.

"Disclose every rupee you earn from every insurer." Account-level remuneration on the client's own placements: yes, disclose it fully. Firm-level portfolio arrangements: disclose their existence and category, and point to the audited disclosures that will exist if the draft 2026 regulations are finalised. You are not obliged to hand one client a schedule of your economics on other clients' business, and no draft rule proposes that.

"Your 11 percent is above market; broker X quoted 6." Ask what service scope sits behind the comparator number. A placement-only rate and a full-service rate are different products. This is where two years of stewardship reports with itemised claims and endorsement records become the negotiating asset: you are defending a price with a delivery record, not an assertion.

"We will decide commission in the RFP." Increasingly common in broker RFPs run by large corporates. Engage, but insist the RFP scores service scope alongside remuneration, and decline scopes that are not deliverable at the quoted number. Throughout, one principle: the number you defend must match the number you disclosed. Procurement forgives a high number with a service case far more readily than a low number that turns out to be partial.

If the consultation paper expected at the end of July 2026 arrives on schedule, remuneration will dominate trade coverage through the second half of FY2026-27, and every renewal meeting will carry the question.

Five concrete steps for a principal officer to complete within the quarter:

1. Build the firm's remuneration fact base. For your top 50 accounts, compile premium, brokerage by line, reward income attribution category, fees, and the service record. You cannot run disclosure conversations on numbers your own MIS cannot produce.
2. Issue standard disclosure language for proposals, comparisons, and stewardship reports, approved by compliance once, so individual account executives are not improvising regulatory statements.
3. Write the talk track and FAQ for client-facing staff: what is in force (the 2023 commission regulations, EOM 2024, the 2025 Act), what is draft (the June 2026 intermediary amendments), what is only reported (the commission overhaul and possible trail structures), and what the firm's position is on each.
4. Define the fee-migration shortlist. Identify the 10 to 20 accounts that meet the fee criteria and sequence proactive conversations before those clients read about trail commissions and draw their own conclusions.
5. Log every disclosure. Record in the CRM what was disclosed to whom, when, and in which document. If disclosure obligations tighten, the firms that can evidence a pre-existing practice will carry the lightest remediation burden.

Brokers who treat transparency as a service feature convert a regulatory threat into a retention tool. Those who wait will make the same disclosures anyway, later and from a weaker position.