Insurers propose tiered expense limits to IRDAI based on premium scale
The insurance industry is considering asking the regulator IRDAI for a tiered expense structure, and smaller insurers want a higher expense‑on‑margin (EoM) limit on their initial premium base. The proposal would tie the permitted expense ratio to the insurer’s growth, with the ratio declining as the insurer expands. Insurers would use total premium as the measure of scale instead of assets under management.1
Under the suggested framework, all insurers would need to reduce their EoM to 15% of gross direct premium within two years and to 12.5% within five years. General insurers would have a separate target, bringing their EoM down to 25% in two years and 20% in five years. The tiered limits aim to align expense caps with the size and growth trajectory of each insurer.1