IRDAI proposes digital motor insurance option for new-car buyers

IRDAI has proposed a QR-linked digital route for buying motor insurance when a new car or two-wheeler is purchased, along with a rule that participating dealer workshops should not deny cashless repair solely because the policy was bought elsewhere. The proposals are part of a public consultation released on 23 Sep 2026; they are not final rules and do not change the current buying process immediately.

For Indian buyers, the practical question is whether the dealership will remain the only visible route to a policy at delivery. If the proposals are adopted, a buyer would have to be shown a digital alternative through a Market Infrastructure Institution such as Bima Sugam. The paper also seeks to separate the choice of insurer from access to eligible cashless repair, while proposing lower commissions for some easy-to-sell motor covers.

Key takeaways

New-vehicle buyers could be shown a digital motor-insurance option and a QR code at the dealership.
A dealer acting as an Insurance Distribution Entity or Point of Sales Person would not be allowed to deny cashless repair only because the policy was bought elsewhere, if the proposal is adopted.
IRDAI has proposed zero commission for distribution entities on new-vehicle third-party cover and 5% on specified own-damage, personal-accident and legal-liability covers.
The consultation is not a final rule. Reporting on the paper says comments are invited until 25 Oct 2026, and no effective date has been set.

Indian new-car buyer scanning a generic QR code at a dealership desk with a car in the background

Illustrative image generated for FuelPrice; it is not an official IRDAI document or platform.

What the digital option would mean

IRDAI’s two-part consultation paper, titled Recalibrating Economics of Insurance Distribution, proposes that motor-insurance products for new and existing vehicles be available through MII platforms. For a new-vehicle sale, a dealer operating as an IDE or PoSP would have to prominently tell the customer about the digital route and display a QR code that leads to the platform.

This would not remove the need for motor insurance. IRDAI’s current motor-insurance guidance says third-party liability cover is mandatory for vehicles on public roads. The proposed change is about how the policy is offered and compared at the point of sale, not about removing the underlying legal requirement.

The proposal also gives the digital channel a defined place in the buying journey. For a not-for-profit platform created by insurers, IRDAI has proposed that the platform fee should not exceed 5% of the premium. That is a proposed platform-cost limit, not a promise that a customer’s total premium will fall by the same amount.

Cashless repair and dealer conduct

The proposal says a motor dealer acting as an IDE or PoSP should not deny a cashless repair facility merely because the customer purchased the policy from another channel. This is a proposed conduct safeguard for the source of the policy; it is not a guarantee that every repair, insurer or workshop will be cashless.

In practice, the policy comparison still turns on the cover selected, the insurer’s eligible workshop network, deductibles, exclusions, add-ons and claim process. A cashless facility also operates within the policy and network terms. The important distinction is that the proposed rule would stop the purchase channel alone from being used as the reason to refuse the facility.

Why commissions are in the proposal

IRDAI’s data, as reported by Mint and the Economic Times, shows that motor-insurance premium grew by about 34% between FY23 and FY25 while commissions rose by about 259%. In FY25, the average motor-insurance commission was around 24%; the reported averages were about 27% for OEM brokers and 38% for Motor Insurance Service Providers on new vehicles. The consultation also says the average commission on new-vehicle third-party cover rose from 4.3% in FY23 to 22% in FY25.

The regulator classifies new-vehicle third-party cover as a “nil-effort” product because registration requires proof of insurance. The proposed limits below are therefore about distributor remuneration. They are not a fixed retail-premium schedule and do not automatically translate into a lower quote.

New-vehicle cover	Proposed distribution-entity commission	Proposed agent or associate commission
Third-party	0%	Up to 2.5%
Own damage, personal accident and legal liability	5%	10%

FuelPrice has already covered the narrower IRDAI commission-cap proposal for motor policy buyers. The new development in this consultation is the consumer-facing digital option, the QR-code disclosure at dealerships and the proposed cashless-repair safeguard.

What buyers can compare now

There is no immediate change to the current process while the consultation is open. The useful comparison points remain the separate third-party and own-damage components, the insured declared value, deductibles, add-ons, exclusions, claims support and the list of cashless workshops. A lower proposed commission cap by itself does not guarantee a lower premium because pricing also reflects the cover, vehicle, risk factors, taxes and insurer terms.

For a new vehicle, keeping the insurance quote separate from the wider ownership budget can make the cost easier to read. Fuel is a different running expense; the fuel cost calculator can help estimate that part of a trip or monthly commute without treating it as an insurance saving.

What happens next

The paper is a consultation, not a notification. Stakeholder comments are due by 25 Oct 2026 according to the consultation coverage, after which IRDAI may revise the framework before issuing final regulations. The paper does not set a start date for the proposed commission caps, QR display or cashless-repair obligation.

Until a final framework is notified, a dealer is not being asked by this proposal to display a QR code, and a customer should not assume that a digital route or a change in dealer conduct is already in force. The immediate reader takeaway is to distinguish confirmed current requirements from proposed future protections when comparing a new-vehicle insurance quote.