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Irdai cracks down on insurers breaching expense limits
The Insurance Regulatory and Development Authority of India has barred Edelweiss Life Insurance, Pramerica Life Insurance, ACKO General Insurance, and Niva Bupa Health Insurance from opening new branches for six months after…
The Insurance Regulatory and Development Authority of India has barred Edelweiss Life Insurance, Pramerica Life Insurance, ACKO General Insurance, and Niva Bupa Health Insurance from opening new branches for six months after they breached expense of management limits for FY25. The regulator's annual report shows 23 insurers exceeded the limits last year.
Industry officials say the action signals Irdai's determination to enforce cost controls, though the short-term business impact is limited because affected firms already have pan-India networks. The EoM ceiling for general insurers is 30% of gross written premium, while standalone health insurers can spend up to 35%. For life insurers, limits vary by product category.
The process from year-end to final decision takes over a year, with hearings conducted around November-December. Insurers that remain non-compliant may face similar restrictions. Niva Bupa has stated it is compliant with EoM norms for FY26 and the first quarter of FY27.
Indian Opinion Analysis
Irdai's move targets a persistent industry problem: high commission and operating costs eroding policyholder funds. With 23 insurers exceeding limits in FY25, the regulator is shifting from leniency to deterrence. The six-month branch freeze is a warning shot, repeat offenders could face steeper curbs on executive pay or product approvals. Watch for further Irdai orders in the coming months as the FY25 review cycle concludes. The real test is whether insurers can cut distribution costs without sacrificing growth.
Source: rediff.com
This story was synthesised by AI from the source linked above.
