India, Sept. 30 -- In a pushback to the IRDAI's proposed overhaul of the insurance distribution industry, Accel-backed insurtech startup Coverfox's founder Sanjib Jha has written to the agency questioning whether sharply lower commissions could undermine insurance penetration.

In a letter to the IRDAI, Jha argued that the proposed 2% remuneration cap for loan-linked protection products could make it difficult for lenders to continue distributing insurance to rural and low-income borrowers.

He said that lenders have spent decades building the infrastructure needed to reach underserved borrowers and that the proposed payout may not be enough to sustain that distribution model.

As per him, group credit-life commissions have historically a...