IRDAI's Proposed Commission Disclosure on Large Commercial Policies (Reportedly Above Rs 50 Crore): What CFOs Will See at Renewal

On 23 September 2026 IRDAI released a two-part consultation paper titled Recalibrating Economics of Insurance Distribution, with comments due by 25 October 2026 (BusinessToday, 25 September 2026; Sarthak Advocates Insurance Law Brief). Most of the early coverage focused on what the paper means for agents, brokers and bancassurance partners. This piece looks at it from the other side of the table: the CFO, treasurer or risk manager who signs off on a large commercial renewal.

For that reader, one proposal stands out. Specified commercial insurance policies would carry a commission disclosure, so the customer can see the distribution cost built into the premium it pays (BusinessToday, 25 September 2026; Asia Insurance Post, 23 September 2026). Today the commission on a large property or liability programme sits inside the quoted premium, and the buyer usually learns its size only if it asks the broker directly and the broker chooses to answer.

Three further proposals shape how useful that disclosure would be:

• A wider definition of commission. All distributor remuneration, including rewards, incentives and non-cash benefits, would count as commission (Medianama, 30 September 2026).
• A per-policy record. Insurers and distributors would keep a record of the commission paid or received on every policy, accessible to IIB and PIR (Coverfox summary of the paper, September 2026).
• A threshold. Secondary summaries put the scope at commercial policies above a stated sum insured. That number is discussed, with a caveat, in the next section.

Nothing here is in force. It is a consultation paper, and the final rules may narrow, widen or drop any of these elements.

Coverfox's summary of the paper says commission disclosure would apply to commercial policies with a sum insured above Rs 50 crore (Coverfox news, September 2026). The primary news coverage we have seen describes the scope more loosely, as specified commercial policies (BusinessToday; Asia Insurance Post).

Why the framing matters for a buyer:

1. Per policy versus per programme. A manufacturing group with ten plants may buy one fire policy with a total sum insured of Rs 400 crore, or ten policies of Rs 40 crore each. If the test is per policy, the structure of the placement decides whether disclosure applies.
2. Which lines count. Property programmes cross Rs 50 crore easily. Liability, D&O and cyber limits are usually smaller, and if the test is sum insured rather than premium, many liability placements may sit below the line even where the premium is material.
3. Package and multi-section policies. Where one document carries property, business interruption and liability sections, it is not yet clear whether the threshold reads off the combined figure or each section.

The practical point for a CFO: list your policies by sum insured now, and mark which ones would plausibly fall in scope under each reading. That list is also useful for the comment you may want to file.

The paper's purpose, as reported, is to let customers see the distribution cost inside the price. The format has not been fixed, so the following is an illustration of what a buyer should expect to see, not a prescribed template.

The minimum useful disclosure

On a policy schedule or premium note, a disclosure that a finance team can actually use would show:

• Gross premium before taxes, as it does today.
• Commission amount in rupees, not only a percentage, so it can be compared across insurers on the same programme.
• Commission as a percentage of premium, for benchmarking across years.
• Recipient, meaning the broker or other distributor that receives it.
• What the figure includes, which, under the proposed definition, would be cash commission plus rewards, incentives and non-cash benefits.

Where it gets complicated

Co-insured and layered programmes carry more than one insurer, and each may pay a different rate to the same broker. A single blended figure is less useful than a line per insurer share. Multi-year policies and mid-term endorsements raise the same issue: the buyer wants to know the commission on each premium movement, not only at inception.

If your broker places a programme with a lead insurer and several followers on a co-insurance basis, ask now whether it can already produce a per-insurer commission schedule. If it cannot, that is a gap the final rules may force it to close.

A disclosed commission line changes the renewal conversation in one specific way: the buyer can separate the price of risk transfer from the price of distribution. Today those two numbers arrive as one premium.

Three uses for the figure

1. Compare quotes on a like-for-like basis. If two insurers quote close premiums but carry different commission loads, the buyer learns which one is pricing the risk more keenly. That informs which insurer to lead with and how to frame the next round.
2. Test the broker's remuneration against its work. A disclosed rupee figure can be set against the service the broker delivered in the year: claims support, market submissions, risk engineering coordination, wording negotiation. If the remuneration rose because the premium rose, while the service did not change, the buyer has a basis to raise it.
3. Open the fee conversation. Some large buyers already ask brokers to work on a fee, with premium quoted net of commission. Our explainer on net premium pricing and broker fees on large accounts walks through the mechanics. A visible commission figure gives both sides a starting number for that discussion.

Track the disclosed figure across at least two renewals before drawing conclusions. A single year's commission can move for reasons unrelated to broker performance, including a change in lead insurer, a large rate movement, or a change in programme structure.

What the number will not tell you is whether the premium net of commission is a fair price for the risk. That still depends on loss history, risk quality and market capacity, and on the broker's skill in presenting the risk to underwriting teams.

A buyer does not need to wait for final rules to get most of this information. The broker appointment letter, or a separate service agreement, can require it contractually now.

Clauses worth considering for the next appointment cycle:

• Per-policy commission statement. The broker provides, at each placement and endorsement, the commission received from each insurer in rupees and as a percentage.
• All-inclusive definition. The statement covers all remuneration from insurers connected with the client's business, including rewards, incentives and non-cash benefits. This mirrors the definition reported in the consultation paper (Medianama, 30 September 2026) and closes the gap regardless of how the final rules land.
• Annual reconciliation. Once a year, the broker reconciles the commission statements against the policies placed and flags any remuneration it received that is not tied to a specific policy.
• Change notice. The broker notifies the client if its remuneration arrangement with any insurer on the programme changes during the policy year.

Our piece on broker service agreements and stewardship reports covers how to pair these disclosure clauses with service standards, so the commission figure is read against measurable delivery.

A buyer should expect some brokers to resist an all-inclusive clause before the rules are final. That resistance is itself useful information when choosing between brokers.

Disclosure on the policy is only as complete as the definition behind it. Two categories of remuneration sit outside the ordinary per-policy commission line in most markets.

Overrides and volume-linked payments

These are payments an insurer makes to a distributor based on the total business placed, growth targets or portfolio performance, rather than on a single policy. They do not attach naturally to any one client's policy. A per-policy disclosure that shows only the base commission would leave them out.

Non-cash rewards

Travel, events, training support and similar benefits have a value to the distributor but no line on a premium note.

The consultation paper's proposed definition would count all distributor remuneration, including rewards, incentives and non-cash benefits, as commission (Medianama, 30 September 2026). If that definition survives into the final rules and applies to the policy-level disclosure, the buyer sees a fuller picture. If the final rules narrow the definition, or apply the broad definition only to regulatory limits while the customer disclosure covers base commission alone, the visible figure will understate the true distribution cost.

For context on how Indian remuneration compares with other markets that already require some disclosure, see our comparison of broker commission in India, the UK, the US and Singapore.

Comments on the paper are due by 25 October 2026. Distribution consultations naturally draw most of their responses from insurers and intermediaries, whose economics are directly at stake. A short, specific submission from a buyer adds a perspective the record might otherwise lack.

Points a CFO or risk manager could make, depending on the company's view:

1. Scope. Whether the threshold should be per policy or per programme, and whether it should cover liability, D&O and cyber placements where sum insured is lower but premium is significant.
2. Format. That disclosure should be in rupees and percentage, per insurer on co-insured programmes, and repeated on endorsements.
3. Definition. That the customer disclosure should use the same all-inclusive definition as the regulatory one, so overrides and non-cash benefits are visible.
4. Timing. That disclosure should be available before binding, at quote stage, so it can inform the placement decision rather than arrive after it.
5. Access. Whether buyers below the threshold should be able to request the same information.

Before drafting, obtain the paper from IRDAI's website and confirm the comment format and address it specifies. Keep the submission factual and tied to your own buying experience. If your company belongs to an industry association that is preparing a joint response, coordinate so the points are consistent.

If your company does not plan to comment, the minimum action is to brief the audit committee or board risk committee that the proposal exists, and to note that the renewal calendar for 2027 may need to absorb a new disclosure format. Our earlier analysis of IRDAI's Rs 10 crore intermediary disclosure draft shows how a separate, firm-level disclosure proposal was read by the market.