Policybazaar Faces Major Setback: Commission Formula to Change from December 1

Balasahana Suresh
Policybazaar, one of India’s leading insurance aggregator platforms, is set to see a major change in its commission structure from December 1, 2025. This move has significant implications for insurance intermediaries, agents, and customers.

1. Why the Commission Change Is Happening

· Rising Costs for Insurance Companies: Following recent GST reforms, insurance companies are facing a 10–12% increase in operational costs.

· IRDAI’s Expense Limit: The Insurance Regulatory and Development Authority of india (IRDAI) caps insurer expenses at 30% of premiums, putting additional pressure on commission payouts.

· Impact on Aggregators: Platforms like Policybazaar, which earn a commission from insurers for each policy sold, will see reduced earnings per sale.

Essentially, insurers are cutting commissions to balance costs while staying compliant with IRDAI rules.

2. What Will Change in Commission

· Old Structure: Policybazaar earned a standard percentage commission on each policy sold, regardless of the premium or product type.

· New Structure (From Dec 1):

o Commission will now be product-specific and capped

o High-cost plans may offer lower percentage commissions

o Life insurance, health insurance, and general insurance may have different slabs

Aggregators will need to adjust business strategies and focus on volume or alternative revenue streams.

3. Impact on Customers

· Premium Prices: Likely no immediate effect on premiums, as commissions are paid by insurers, not customers.

· Platform Recommendations: Aggregator platforms may promote products with higher commission margins, potentially affecting neutral advice.

· Policy Selection: customers may need to compare plans more carefully rather than relying solely on platform recommendations.

Awareness is key: always check benefits, coverage, and premium before buying.

4. Impact on Insurance Agents and Aggregators

· Lower Earnings: Agents and wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW">digital platforms will data-face reduced income per sale.

· Shift in Strategy: Some may focus on volume sales, cross-selling, or advisory services.

· Competition Intensifies: Platforms may introduce new tools or offers to retain customers.

The insurance distribution ecosystem will need adaptation to sustain growth.

5. What Experts Suggest

· For Platforms: Diversify revenue by offering value-added services or subscriptions

· For Agents: Focus on building long-term customer relationships rather than just commissions

· For Customers: Compare multiple policies and read terms carefully before buying

Smart planning and careful evaluation will mitigate the impact of commission cuts.

6. Conclusion

The upcoming commission change from December 1 signals a major shift in India’s insurance distribution landscape.

· Platforms like Policybazaar will earn less per policy

· Agents and intermediaries must adapt to sustain income

· customers should stay informed and compare options

While challenging for the industry, this change also encourages more transparency, smarter choices, and efficiency in insurance distribution.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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