Expenses of Management (EoM) regulations

What are the Expenses of Management regulations?

Expenses of Management (EoM) are an insurer's total costs of running its business, including commission and other payments to distributors, salaries, rent, technology and marketing. The EoM regulations are the IRDAI rules that cap these costs as a share of premium, so that policyholders do not pay for an insurer's overspending. The current rules are the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, in force from 1 April 2024.

Under these rules commission no longer has its own product-by-product cap. Each insurer decides commission through a board-approved policy, as long as total expenses, commission included, stay within the overall EoM limit.

How the EoM limits work in India

The 2024 regulations were the first of IRDAI's consolidated regulations. They merged three 2023 regulations: one on EoM for life insurers, one on EoM for general and health insurers, and the IRDAI (Payment of Commission) Regulations, 2023.

The main features are:

• Board-approved commission policy. Insurers set commission structures by product and channel, considering the structure of commission payable, and must report commission paid to IRDAI.
• Business plan. The board must approve a business plan and monitor EoM against it during the year.
• Annual return. The insurer files an EoM return, with a statutory auditor's certificate, once its board has adopted it.
• Forbearance and action. An insurer that exceeds the limit must explain and seek forbearance. In IRDAI's FY 2024 to 25 annual report, 23 insurers (8 life, 15 non-life) had exceeded EoM limits. In August 2026, IRDAI barred Edelweiss Life, Pramerica Life, ACKO General and Niva Bupa Health from opening new places of business for six months over FY 2024 to 25 breaches.

A May 2024 master circular sets out the reporting formats and board processes.

Proposed changes in 2026

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 gave IRDAI back the legal power, under section 40 of the Insurance Act, to specify limits on commission or reward to agents and intermediaries.

On 23 September 2026, IRDAI released a consultation paper, "Recalibrating Economics of Insurance Distribution", which proposes:

Comments were due by 25 October 2026. These are proposals, not final rules.

What EoM means for distribution

EoM is the budget that pays for distribution. When the limit tightens, channel economics change first.

• Commission is a board decision within a ceiling. Since 2023, insurers have been free to pay more commission on one product and less on another, or more to one channel, as long as the total fits. Press coverage of IRDAI's 2026 paper reports that it found distributor payouts, especially to corporate agents and brokers, growing much faster than premiums after this freedom was introduced.
• Rewards outside commission count. Incentive trips, marketing support paid to a partner, and payments routed through group companies all sit inside EoM. The 2026 paper proposes to treat every form of remuneration, monetary or not, as commission.
• Breaches limit growth. An insurer barred from opening new offices cannot expand its branch network for that period. Partners of insurers close to their EoM limit should expect tighter payouts, delayed incentives or pressure to shift mix.
• Lower limits favour efficient channels. If the 2026 proposals are adopted, life insurers would have to run at a much lower expense level. Channels with high acquisition cost, such as new agency branches and high-payout banca deals, would need redesign. Digital and assisted channels with low cost per policy would gain.
• Plan on persistency. Renewal premium carries a lower expense allowance but costs little to collect. Insurers and partners who keep persistency high build room within EoM to spend on acquisition.