After the recent announcements announced by the Insurance Regulatory and Development Authority of India (IRDAI), India’s insurance sector is set to undergo further significant changes. The IRDAI has introduced the following new regulations aimed at offering insurers flexibility in managing their expenses and promoting ease of doing business:

Per the 2023 Non-Life EoM Regulations and the 2023 Life EoM Regulations (collectively “2023 EoM Regulations”), EoM includes: (i) all operating expenses of the insurer; (ii) commission paid to insurance agents and intermediaries; and (iii) commission and expenses on reinsurance inward which are charged to the insurers’ revenue account. Any charges against the profits of an insurer, such as income tax, goods and services tax etc., are excluded from the purview of EoM.

The 2023 Life EoM Regulations has retained the form and essence of the Erstwhile Life EoM Regulations and as such, the ambit of EoM remains the same. Further and more importantly, the segment wise (linked, non-linked (participating), non-linked (non-participating)) compliance with EoM limits has been retained. However, the percentage of premium permitted for determining EoM limits has been increased for a select few segments of life business leading to an overall increase in EoM limits for life insurers.