New Delhi, Sept. 23 -- The Insurance Regulatory and Development Authority of India (Irdai), through a consultation paper released on Wednesday, has proposed a sweeping overhaul of insurance distribution that could put pressure on insurers and distributors to reduce distribution costs and commissions, while giving policyholders greater choice in buying insurance.

The proposals include tighter Expenses of Management (EoM) limits, a return to product-level commission caps, a ban on compulsory bundling of insurance with loans by banks and non-banking financial companies (NBFCs), and changes to motor insurance distribution.

Expenses of management are the costs an insurance company incurs to run the business.

The draft reforms focus on areas...