Proposed commission caps may drive consolidation in insurance distribution: Acko CEO

New-age insurance company Acko’s founder and chief executive, Varun Dua, said the changes to insurance distributor commission norms being explored by the sector regulator could lead to increased consolidation among intermediaries.

Dua’s remarks come at a time when the Insurance Regulatory and Development Authority of India (IRDAI) is reportedly working on proposals to cap commissions paid by insurers to distributors.

While the IRDAI has not officially proposed any caps, speculation about it happening soon gained traction after the government amended the Insurance Act in January 2026, giving the regulator the power to prescribe commission limits.


“People with less scale, or those who are unable to think long term, are likely to get weeded out,” Dua told ET. “This also professionalises the distribution ecosystem. People who are serious about the business will understand that they need to acquire more customers and operate more professionally. Over time, the industry will consolidate and become more professional.”

On June 3, Yashish Dahiya, group chairman of PB Fintech, which runs Policybazaar, told ET that commission caps posed an existential threat to insurance distributors, arguing that the move could fundamentally alter the economics of the business.

Dua, however, said commission caps could have broader implications for insurance distribution by pushing players to seek growth in newer markets and expand coverage to a larger customer base.

Acko offers general, health and life insurance products directly to consumers, bypassing traditional agents and intermediaries. In FY25, Acko reported a 35% increase in operating revenue from the previous year to Rs 2,837 crore. Its net loss reduced sharply to Rs 424 crore from Rs 670 crore in FY24. The company has not yet filed its financial statements for FY26.

According to general insurance industry data, Acko processed Rs 286 crore in insurance premiums in April 2026.

Dua also said that lower commissions could encourage distributors to acquire customers in smaller towns, as insurance products become more affordable.

“What’s happening at the larger level is that insurance companies and distributors are competing in the same market, which is concentrated in the top 20-30 cities. Commissions there continue to rise because everyone is trying to acquire the same customer,” Dua said.

“As a result, more agents, brokers, platforms and insurers are increasing commissions to win that customer. But very few of these players are going into tier-III and tier-IV markets because the product isn’t affordable for customers there. There is a case to be made for products becoming cheaper so that a broader section of the population can get covered.”

Acko received its regulatory licence in 2017 and commenced operations in the following year. Its investor base includes General Atlantic, Multiples PE, Accel Partners, Elevation Capital and Canada Pension Plan Investment Board, which have collectively invested more than $583 million in the company.

ET had reported on April 27 that Acko has appointed merchant bankers for an initial public offering to raise $250 million.

Dua also said that the proposed regulations should differentiate between insurance products, with motor insurance attracting the lowest commissions and health and life insurance offering the highest payouts to distributors.

He said that while the industry may face short-term disruption, the insurance sector remains large enough for distributors to build sustainable businesses.

“Somewhere along the way, the industry will adjust. Distributors will come to terms with lower commissions. We saw this happen in mutual funds as well, but the industry did not stop growing. Players found other ways to do business and started doing the right things. Mutual funds also have trail commissions. If you’ve done a good job as a distributor, you make a lot of money over the years, even if not immediately,” he said.

Due said the regulator’s efforts in the past to curb unprofessional practices in the industry did not work. “There will be implementation challenges and some short-term turbulence, but the industry will settle down after a year or two,” he said.