New Delhi, Sept. 25 -- The Insurance Regulatory and Development Authority of India's (IRDAI) consultation paper issued this week is a well-intended attempt at reforming the sector. Its proposals aim to lower distribution costs and commissions, ensure greater transparency in the pricing of policy premiums and reduce the management expenses of insurers, among other changes proposed to make products more customer-friendly.

Overall, such reforms should help invigorate the sector in a country where insurance penetration remains extremely low. A flurry of financial products rolled into insurance coverage, with sales agents accused of rampant misselling, has lent urgency to a fix-it mission.

By linking commissions to product complexity and eff...