SBI Life Best Placed as IRDAI Tightens EOM Caps

is among the insurers best placed to handle IRDAI’s proposed tighter Expense of Management (EOM) caps, according to Nomura, as the regulator plans a five-year transition to lower expense limits and reintroduce commission caps across insurance products and distribution channels. Under the proposal, EOM caps for general and standalone health insurers would be reduced from the current 30% and 35% levels to 20% over five years. For life insurers, EOM limits are being redefined, with insurers required to reach 10–12.5% over the same period. Nomura said only SBI Life and LIC are currently close to the proposed limits. The consultation paper also proposes a simplified distribution structure covering Insurance Distribution Entities (IDEs) such as banks, NBFCs and brokers, and Insurance Distribution Persons (IDPs), including agents. For general insurance, third-party motor commissions to garages and IDEs are proposed at nil, compared with 2.5% earlier, while health insurance commission caps would also become stricter. Nomura said the changes could affect distributors, particularly those heavily dependent on health and protection products.