The minister said India’s middle class has expanded at an average annual rate of 6.3% since 1995, following the country’s economic liberalisation. Citing OECD projections, she said India is expected to surpass China in the absolute size of its middle-class population between 2030 and 2035.

She also referred to World Economic Forum estimates showing a fundamental shift in India’s consumption patterns, with nearly 500 cities emerging as new centres of economic activity. “By 2036, 93% of all spending in India will be because of the middle class or the slightly affluent consumers,” she said. Emphasising that India’s growth is geographically broad-based, Sitharaman said the middle class is increasingly concentrated in tier-II and tier-III cities rather than only in metropolitan centres, leading to a wider distribution of wealth.

Listing the government’s initiatives to expand the middle class, the minister highlighted financial inclusion through Jan Dhan accounts, saying 248 million people have moved out of multidimensional poverty, citing World Bank and IMF estimates. She said the government-backed credit guarantee programme has enabled first-time entrepreneurs to access concessional loans without collateral, while widespread digital connectivity and digital payments have improved the creditworthiness of small businesses. Sitharaman also pointed to lower GST rates, investments in girls’ hostels, skill development in animation, visual effects, gaming and digital media, and university townships focused on training. FE

In the non-life segment, for an airline with a fleet worth $ 20 billion and annual premium of $ 30 million, insurance commission to brokers can range from 2.5-10%, according to sources. According to the IRDAI consultation paper issued two weeks ago, insurance intermediaries whose commission income exceeds a prescribed threshold will be required to make detailed annual disclosures to the regulator. These disclosures would include commission earnings, related-party transactions, profits generated from operations, and any dividend repatriation to promoters or parent entities.

The regulator believes that enhanced reporting will help monitor business practices and ensure that intermediary compensation structures remain transparent and aligned with policyholder interests.

The proposed framework also seeks to strengthen public accountability by mandating that such information be published on the websites of the intermediaries.

The latest proposal comes at a time when the regulator is planning to put a cap on commission earnings, a move that could disrupt the segment.

The total commission shelled out by 26 life and 28 non-life insurers crossed the Rs one lakh crore mark in FY25. The gross commission expenses of public sector general insurers, private general insurers, standalone health insurers and specialised insurers stood at Rs 9,335 crore, Rs 30,498 crore, Rs 7,365 crore and Rs 67 crore respectively for 2024-25, thus cumulatively amounting to a total gross commission expense of Rs 47,266 crore for the entire non-life insurance industry, according to the IRDAI Annual Report.

During 2024-25, life insurers paid a total amount of Rs 60,800 crore as commission.

The commission expenses ratio (commission expenses expressed as a percentage of premium) slightly increased to 6.86% in 2024-25 from 6.21% in 2023-24. While the IRDAI has not yet formally proposed a cap on commissions, it is reportedly working on a draft proposal to limit commission payouts by insurers to distributors, a move enabled by the January 2026 amendment to the Insurance Act that empowered the regulator to prescribe commission ceilings.

Cut-throat competition

Insurance distribution is widely regarded as one of the most fiercely competitive segments of the financial services industry. Commission earnings in the insurance sector — particularly among intermediaries such as agents, brokers, web aggregators, corporate agents and insurance marketing firms — have long been a subject of intense competition, especially in high-growth segments such as health, motor, corporate and retail insurance.

With many insurers offering products that are broadly similar in terms of coverage and pricing, intermediaries often place significant emphasis on commission structures, incentive payouts and other commercial arrangements when deciding which products to distribute. “As a result, insurers compete aggressively to secure access to distribution channels, frequently offering higher commissions, performance-linked incentives and other benefits to attract and retain intermediaries,” said an official.

Intense race for customers

Intermediaries generally favour products that generate recurring renewal commissions, prompting strong competition to acquire new policyholders and policy contracts from big corporate clients. There is also considerable mis-selling and under-cutting by insurers to get business.  The emergence of digital platforms, web aggregators and insurtech companies has further heightened competition by lowering customer acquisition costs, expanding market reach and increasing price transparency.

The statutory Inspection for Supervisory Evaluation (ISE 2025) of the bank was conducted by RBI with reference to its financial position as on March 31, 2025, it said, adding a notice was issued to the bank advising it to show cause.