How much of India's life insurance moves through banks

Banks carry close to half of private life insurers' new business in India. According to the IRDAI Annual Report 2024-25, corporate agents brought 52.97% of private life insurers' individual new business premium in FY2025, and banks alone contributed more than 49%. Individual agents brought 22.80% and direct sales 17.09%.

Across the industry, including the public sector insurer, individual agents brought 49.44% and corporate agents 34.69% of life new business premium.

Source: IRDAI Annual Report 2024-25, individual new business premium by channel, FY2025, as reported by Outlook Money and Insurance Business Asia

Under the IRDAI (Registration of Corporate Agents) Regulations 2015, as amended in 2022, a bank acting as a corporate agent can tie up with up to three insurers each in life, general and health insurance. Many branches therefore sell policies from several insurers, through staff who also sell deposits, loans and cards.

For a private life insurer, the bank branch is the main point of sale, and the people at that branch are paid by the bank.

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What IRDAI has proposed for bank staff incentives

On 23 September 2026, IRDAI released a consultation paper on recalibrating the economics of insurance distribution. Comments are open until 25 October 2026. Reported implementation is from FY2028. The proposals relevant to bancassurance include:

1. A prohibition on volume-linked or reward-linked incentives for bank and NBFC staff who sell insurance.
2. A central identity mechanism that onboards each salesperson and tags every policy to the person who sold it.
3. Commission clawback where mis-selling is established, with the salesperson's record published through the registry.
4. Lower commission caps for large distribution entities, including a reported first-year cap of 20% on life policies with premium terms of ten years or more.
5. A prohibition on compulsory bundling of insurance with loans and other financial products.

These are proposals, and the final rules may change after consultation. The direction is clear enough to plan for.

IRDAI's proposals move bank staff incentives away from volume and tie every policy to a named seller.

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Who gets credit for a bancassurance policy

One policy sold at a branch can involve three or more people.

1. Branch staff who hold the customer relationship and open the conversation.
2. The bank's insurance specialist or desk, who completes the needs analysis and the paperwork.
3. The insurer's bancassurance or relationship manager, who trains branch staff, supports the sale and services the policy.
4. The branch or cluster manager, who may carry an insurance target for the branch.

Each of them is paid by a different employer on a different plan. The bank pays its staff. The insurer pays its relationship manager. The commission flows from insurer to bank as the corporate agent.

When the policy-level seller tag arrives, each of these credits will need to agree with one record. The principles that govern split sales compensation apply here: decide the shares before the sale, and write them down.

One bancassurance policy carries credit for staff on two payrolls, and the policy tag will expect those credits to agree.

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What a bank staff incentive can read instead of volume

If the final rules prohibit volume-linked incentives for bank staff, an incentive still has to recognize good selling. The measures below read the quality of a sale. Each one depends on how the final rules define what is permitted, so treat this as a planning list.

None of these measures can be read without the policy tagged to the person who sold it, and without data from the insurer flowing back to the bank.

A quality-based incentive reads what happened after the sale, which means the bank needs the insurer's policy data tied to each seller.

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Where bancassurance incentives leak today

Three gaps are visible in many bancassurance programs.

The seller is not recorded on the policy

Branch staff, specialists and relationship managers all touch the sale, and the policy carries one code, often the branch. Incentives are then allocated by branch target or by manager judgment. When a dispute or complaint arrives, nobody can show who sold the policy.

Commission is paid on policies that later cancel

A policy that cancels in the free-look period or lapses early has already earned a payout for someone. Without a clawback rule that reaches each person who was paid, the recovery falls on the bank's commission alone.

Liability is shared and records are not

In August 2026, a district consumer commission in Hyderabad held a bank and an insurer jointly and severally liable for mis-selling a policy to an elderly customer. When the bank and the insurer share liability, each needs a record of who sold the policy and what was explained.

Missing seller records, one-sided clawbacks and shared liability all point to the same gap: a credit record per policy.

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How to prepare before the final rules

Five steps can begin now, before the consultation closes.

1. List every person who receives incentive credit on a bancassurance policy, at the bank and at the insurer.
2. Write the credit rule for each role, and record it on the policy at the time of sale.
3. Agree with each insurer partner how persistency, cancellation and complaint data will flow back to the bank, tagged to the seller.
4. Draft a clawback rule that reaches every person paid on a policy that cancels or is found mis-sold.
5. Model the cost and effect of moving bank staff from volume measures to quality measures, before the final rules set a deadline.

The governance questions are the same ones that sit behind who owns a change to sales incentives in any sales team.

A credit record per policy, with data flowing back from the insurer, is the groundwork for whatever the final rules require.

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How Kennect supports bancassurance incentives

Across the BFSI deployments we run, incentive disputes trace back to the record behind each sale. So we build the incentive cycle around that record.

We hold the credit rule for each role, at the bank or the insurer, as part of the plan. We bring in policy, renewal and cancellation data from the systems that already hold it. We calculate each person's incentive on the measures the plan names, and reverse credit on a policy that cancels, with the reason shown.

Finance sees the incentive accrued against each policy. Distribution heads see credit by seller, by branch and by insurer partner. Each seller sees the policies credited to them and the measures that drove their payout.

One record per policy, carrying every credit and every reversal, is what a policy-level seller tag will ask of a bancassurance incentive.

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What this means for bancassurance heads

The consultation closes on 25 October 2026. Whatever the final rules say about permitted measures, they are likely to expect every policy to be tied to a seller and every mis-sold policy to carry a consequence. Banks and insurers that build that record now will adapt their schemes with less disruption when the rules are final.

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