LIC Expects Limited Impact from Proposed IRDAI Commission Caps, Says CEO

Life Insurance Corporation of India (LIC) expects limited impact from the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed commission caps and distribution reforms. According to CEO and Managing Director R Doraiswamy, the insurer already operates within several of the proposed limits.

Doraiswamy indicated that insurers with higher distribution expenses could face greater pressure once the regulations are finalised. For LIC, some modifications or refiling of specific products may be required to comply with the revised framework.

“Coming particularly to LIC, LIC has not been spending too much on distribution and has been having its own internal caps on commission as well as other distribution costs,” Doraiswamy said in an exclusive interview with ANI. He added that LIC is more or less compliant in many areas, except for some product lines and premium-paying terms under regular premium plans.

The proposed reforms aim to reduce distribution expenses, which have increased substantially following the removal of commission caps and the shift towards overall expenses of management regulations. LIC has submitted its feedback to the regulator and expressed confidence that concerns of insurers and distribution partners will be considered before the finalisation of the regulations.

Discussing financial performance, Doraiswamy attributed the expansion in LIC’s Value of New Business (VNB) margin to 22.3 per cent to an improved product mix, higher ticket sizes in non-participating products, and an increased focus on protection and savings.

For FY2027, LIC’s growth priorities include expanding individual term insurance, savings, annuity, and unit-linked insurance products (ULIPs), alongside strengthening health-related offerings such as the launch of Health Shield, New Cancer Cover, and Jeevan Raksha. To counter rising competition from private life insurers, LIC aims to strengthen its distribution network, improve agent productivity, and establish a Bima Sakhi presence in every panchayat across the country, having already achieved coverage in approximately 66 per cent of panchayats.

On equity market volatility, Doraiswamy stated that LIC remains a long-term investor, focusing on sustainable value creation while managing investments in line with policyholder liabilities. Highlighting the broader insurance industry, he pointed to India’s relatively low insurance penetration compared with developed markets as a significant growth opportunity toward achieving the 'Insurance for All by 2047' mission.

Financially, LIC reported a 20.12 per cent year-on-year rise in standalone net profit to Rs 12,076.02 crore for the second quarter of FY2027, compared with Rs 10,053.39 crore in the corresponding quarter last year. Net premium income rose 16.24 per cent year-on-year to Rs 1,47,018.18 crore, while net investment income stood at Rs 1,14,983.77 crore.

"Regulatory changes often test the adaptability of large-scale financial institutions. LIC's existing internal caps on distribution costs place it in a stable position relative to peers with higher expenses. However, the requirement to modify or refile specific products highlights the ongoing need for financial institutions to stay agile as regulatory frameworks evolve." — Dr. Shishir Gupta, Founder & CEO, StartupLanes