IRDAI Rules for Insurance Agents in India: Complete Guide (Updated 2026)

Key Highlights:

• Dos and don'ts of the IRDAI code of conduct for insurance agents
• How commission rules changed from April 2024 onwards
• Licence renewal rules and what changed in 2026
• Reasons for suspension or cancellation of an agent's licence
• Penalties IRDAI imposes on agents and insurers for violations

If you are an insurance agent working in India, or are thinking of becoming one, there is something that you must know well in advance - the IRDAI rules for insurance agents in India.

IRDAI has a detailed set of rules that govern everything, including who can become an agent, how you must sell, what you must disclose to customers, how your commission works, and rules for the license renewal.

Understanding the rules is also one of the important aspects of building a successful and compliant career in insurance. Therefore, in this blog, we will guide you on the important IRDAI rules for insurance agents, the code of conduct you are legally required to follow, and everything that has changed recently.
 

Who Can Become an Insurance Agent? - A Quick Overview 

To become an insurance agent in India, you must comply with some basic conditions as laid down by the Insurance Regulatory Development Authority of India, IRDAI. The requirements are as follows:

• You must be at least 18 years old.
• You must have passed at least Class 10 or 12th education, or as specified by the insurer.
• You must have a valid PAN card to be submitted along with your agency application.
• You must not be guilty of criminal misappropriation, breach of trust, cheating, forgery, or fraud by any court.

Once you meet these eligibility conditions, the next step you will have to do is complete the mandatory training and clear the IRDA IC-38 exam, the mandatory pre-licensing examination for all insurance agents in India. 
 

IRDAI Code of Conduct for Insurance Agents 

As per IRDAI regulations, every insurance agent in India is required to follow a prescribed code of conduct. This code of conduct covers two things: what an agent is expected to do while selling and servicing insurance, and what an agent is strictly prohibited from doing. Both are equally important for an agent. 

Code of Conduct you have to follow as an Insurance Agent

• Introduce yourself clearly: Every agent must introduce themselves and state which insurer they represent. The customer has the right to know who they are dealing with.
• Show your identity card and appointment letter: As an insurance agent, you must carry your agency identity card at all times and show it to the prospect or customer. If the customer asks to see your appointment letter, you are required to present it to them.
• Explain the product based on customer needs: Pitching a product is not just enough. You must share all relevant information about the insurance products your insurer offers and recommend a plan that genuinely fits the customer's needs.
• Give impartial advice if you represent multiple insurers: As a composite agent (who works for multiple insurers), you must give unbiased advice on all the products available across those insurers and shall not just push the one that pays you more.
• Disclose your commission if asked: Your customer may ask about your commission payout for the product you are selling; in such cases, you are required to tell them about your commission. Refusing or avoiding the question is not permissible as per IRDAI. 
• Inform the customer about the premium: You must clearly tell the customer what premium the insurer will charge for the product being recommended. 
• Explain the proposal form and importance of disclosure: Explain to the customer in simpler and clearer terms as to what information is needed in the proposal form and why honest and complete disclosure matters on their part. 
• Submit a confidential report on the customer: In case you find any fact about the customer that has a potential effect on the insurer's underwriting decision, such as a health condition, adverse habit, or income inconsistency, you must report it to the insurer through an Insurance Agent's Confidential Report along with the proposal.
• Collect all required documents: You need to collect and maintain a proper record of all necessary documents from the customer at the time of submitting the proposal form, and also in case of any additional documents required later.
• Advise customers to make a nomination: This is a basic but important step that is often overlooked by customers. An agent needs to encourage every customer to nominate a beneficiary under their policy. 
• Keep the customer informed about their proposal: Once a proposal is submitted, keep the customer informed whether it has been accepted or rejected by the insurer.
• Help with policy servicing: An agent’s job does not end at the sale. You must assist the customer with all policy-related matters like address changes, assignments, exercising policy options, and any other needs that come up during the policy term.
• Assist in claim settlement: When a policyholder or nominee needs to file a claim, you must help them understand the process and complete the required documentation to ensure a smooth settlement.
   

What an Insurance Agent Shall Not Do 

• Selling without a valid appointment: You cannot sell an insurance policy without being formally appointed by a licensed insurer. Doing so is illegal and can result in immediate cancellation of your agency and impose financial penalties.
• Encouraging the customer to misrepresent or hide any information. Never encourage or pressure a customer to hide any important information in the proposal form. Any such conduct affects the insurer's underwriting decision and is a serious violation of IRDAI’s code of conduct.
• Submitting wrong information on behalf of the customer: An agent should not submit any incorrect information or false documents to the insurer for acceptance of the proposal. This is considered fraud and can lead to cancellation of both the policy and the agent’s licence.
• Using multilevel marketing to sell insurance. Insurance cannot be sold through multilevel marketing networks. This is a business model where a person earns not just from their own sales but also by recruiting others into the network and earning a margin from their sales as well. Entering into such practices is a serious offence in the insurance industry and can result in the cancellation of your licence. 
• Misbehaving with the customer: Every customer deserves to be treated with respect. Any rude behaviour, disrespect or any other kind of misconduct with a customer is a violation of the IRDAI code of conduct, regardless of whether a sale is made or not.
• Interfering with another agent's client or proposal: An agent should not interfere in any other agent’s proposal or client that has been introduced by another insurance agent. Winning over some other agent’s clients or disrupting another agent's business is not permitted.
• Offering unofficial rates or terms: An agent cannot offer the customer any rates, benefits, terms, or conditions that are different from what your insurer officially offers. Every offer made to a customer must be strictly as per the insurer's approved product terms.
• Demanding a share of the policy payout: Insurance agents are not allowed to demand or accept any portion of the claim payout or policy proceeds from a beneficiary under any circumstances. Your earnings are limited to the commission paid by the insurer.
• Forcing a customer to cancel and rebuy a policy. Do not pressure a policyholder to cancel their existing policy and buy a new one from you within three years of that cancellation. This practice is a direct violation of IRDAI rules and one of the most common forms of mis-selling.
• Reapplying too soon after a cancellation: If your agency appointment was previously cancelled by IRDAI or the designated official, you cannot apply for a fresh appointment till 5 years from the date of that cancellation.
• Becoming a director of an insurance company: As an insurance agent, you cannot become or continue to remain a director of any insurance company. This is a strict conflict of interest restriction under IRDAI regulations.
   

Insurance Agent Commission Rules Under IRDAI

The old system of fixed, product-wise commission caps is no longer in place. Before April 2024, IRDAI used to directly regulate how much commission an insurance agent could earn on each product. There were fixed commission slabs published by IRDAI specifying the exact percentage an agent could earn as first-year commission, renewal commission, and single premium commission separately for life, health, and general insurance products.  

This changed from April 1, 2024, when the IRDAI (Expenses of Management including Commission) Regulations, 2024 came into effect. Under this framework, IRDAI no longer publishes fixed first-year or renewal commission slabs by product. Instead, each insurer determines its own commission structure while complying with the following conditions:

• Linking payouts to quality measures like persistency and mis-selling controls
• Staying within the overall Expenses of Management (EOM) limits set by IRDAI 
• Having a Board-approved commission policy that is in the policyholders' interest

IRDAI Insurance Agent Licence Renewal Rules 

As per the earlier system, every insurance agent (such as individual agents, brokers, corporate agents, and web aggregators) was required to renew the licence after every three years from the date of the new license issued or renewed. In simple words, the IRDA license had a validity of 3 years, before which the agent had to:

• apply for renewal
• pay the prescribed renewal fee
• fulfil all compliance requirements to continue operating legally. 

But, this changed in 2024 with the introduction of a perpetual license scheme under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which came into force on February 5, 2026. With the new update in place, insurance Agents such as brokers, corporate agents, insurance marketing firms, web aggregators: 

• No longer need to apply for renewal every three years.
• Must pay an annual fee to keep the licence active.

But here is something important to note: this change applies only to insurance inetrmediaries including brokers, corporate agents, insurance marketing firms, web aggregators, but not the individual insurance agents. The existing renewal rules under IRDAI's appointment regulations continue to apply to individual agents for now. 
 

When Can IRDAI Suspend or Cancel an Agent's Licence?

IRDAI may cancel an agent's licence after giving a formal notice and a reasonable opportunity to present their side. An agent’s license is cancelled or suspended if he or she:

• Violates any insurance regulation: If any agent violates the provisions of the Insurance Act, 1938 or any other regulations for insurance agents laid down by the IRDAI, action can be initiated against them.
• Fails to follow the code of conduct. Any breach of the code of conduct prescribed by IRDAI. This included mis-selling any insurance policy, non-disclosure of any crucial facts, or any other prohibited practice will lead to suspension or cancellation of the agent’s license. 
• Provides false information in the agency application: Any incorrect details or hiding any important facts by the agent at the time of applying for an agency appointment will lead to cancellation of the agent’s license. 
• Does not submit required information or returns: Failing to submit information, documents, or returns that the insurer or IRDAI has asked for is treated as non-compliance and can lead to action against the agent.
• Does not cooperate with an IRDAI inspection or enquiry: If the agent fails to cooperate or respond in case of any inspection or enquiry by the insurer, it can result in suspension or cancellation of the licence.
• Fails to resolve policyholder complaints: If an agent repeatedly fails to address policyholder grievances or does not respond satisfactorily when IRDAI takes up a complaint, it can be treated as a conduct violation.
• Misuses money collected from policyholders: Any direct or indirect misuse, theft of any premium or cash collected from policyholders on behalf of the insurer, the licence can be suspended or cancelled. However, an agent is not legally authorised to collect cash or premiums from customers unless specified by the insurer. 

For any misconduct or violation of any regulations by an agent, IRDAI has secured some strict penalties for the insurance agent. 
 

IRDAI Penalties for Insurance Agents and the Insurer

If any insurance agent or the insurer violates the regulations, he/she or the entity is imposed with the following penalties. 

• Penalty on the agent: If an insurance agent acts in violation of the Insurance Act, 1938 or any IRDAI regulations made under it, they can be penalised up to ₹10,000.
• Penalty on the insurer for appointing an ineligible agent: In case any insurer appoints an ineligible agent and conducts insurance business through such a person, the insurer can be penalised up to ₹1 crore.
• Penalty on the insurer for agent misconduct: If an agent commits misconduct, including any violation of the code of conduct or participates in misselling, or violates IRDAI rules, the insurer can be held liable for such actions by the agent and can be penalised up to ₹1 crore for such violations.

Summary 

The insurance industry in India is a dynamic space which keps evolving with new regulations and updates. Being a successful insurance agent in India requires not just a legal license and a strong client base, but also a valid code of conduct for insurance agents.

IRDAI has put a clear set of rules that govern every aspect of an agent's work, from eligibility and appointment to conduct, commission, compliance and license renewal. In case of any violation of such rules, the agent’s license may be cancelled or suspended. The key is to stay updated with the new updates and act accordingly.