IRDAI’s New Annual Fee Model for Insurance Intermediaries: What Has Changed and Why It Matters

Introduction

India’s insurance intermediary regime has gone through an important structural change.[1] The old model broadly worked on the basis that the certificate of registration had a three-year validity period and renewal fee had to be paid for continuation.[2] The amended law now shifts the system towards a continuing registration model, under which registration remains in force subject to payment of annual fee, unless it is suspended or cancelled by the Authority.[3]

This may sound like a small compliance change, but it is not. It changes how insurance intermediaries should think about regulatory continuity. Under the older approach, renewal was often treated as a major event that came up after a fixed period. Under the new approach, the emphasis is on maintaining registration on a continuing basis through annual fee discipline and ongoing compliance.

The New Section 42D: A Governance Layer Around Your Insurance Relationships

The 2025 amendment made a direct change to the Insurance Act, 1938.[4] It now states that a person cannot begin to carry on or act as an insurance intermediary unless it obtains a certificate of registration from the Authority.[5] Further a significant shift appears, which provides that the registration shall remain in force subject to payment of annual fee specified by regulations, until it is suspended or cancelled by the Authority in accordance with the prescribed procedure.[6]

The amendment also tightens the consequences of non-payment.[7] The Authority may suspend or cancel registration if the insurance intermediary fails to pay the annual fee required.[8] It may also suspend or cancel registration for contravention of the Insurance Act, the IRDAI Act, rules, regulations, directions or orders, as well as certain other legal defaults set out.[9]

The amendment also updates the regulation-making power so that regulations can prescribe the annual fee in relation to the registration and the procedure for suspension or cancellation of registration.[10] This matters because the statute gives the framework, but the detailed working of timelines, processes and consequences will depend on the regulations.[11]

One Date, Big Shift: The Cut‑Off Between Old And New Intermediary Regimes

The amendment Act itself said that it would come into force on a date to be notified by the Central Government.[12] The Central Government, through a Notification appointed February 5, 2026, as the date on which the provisions of the Act, except section 25, would come into force.[13] This date is critical because the IRDAI circular treats February 5, 2026 as the point from which the earlier three-year renewal framework stands discontinued.[14]

What the IRDAI Circular Does

After the amendment took effect, IRDAI issued a circular dated March 16, 2026, dealing with transitional arrangements for payment of annual fee and issuance of certificate of registration for insurance intermediaries. The circular applies across a wide set of intermediary categories, including insurance brokers, corporate agents, insurance marketing firms, web aggregators, common service centres, insurance surveyors and loss assessors, insurance repositories, third party administrators, and other entities registered as insurance intermediaries under the applicable regulations.[15]

The circular records the legal background in simple terms.[16] It notes that the Insurance Act, 1938 has been amended so that registration granted to an insurance intermediary remains in force subject to payment of annual fee, until the certificate of registration is suspended or cancelled by the Authority.[17] It then expressly states that, with effect from February 5, 2026, the earlier framework providing for three-year validity of the certificate of registration and payment of renewal fee stands discontinued.[18] It further states that registration of insurance intermediaries shall henceforth be subject to payment of annual fee in accordance with the amendment and the regulations framed thereunder.[19]

The Interim Arrangement

Because the final regulations are still to come, IRDAI has put an interim arrangement in place.[20] As a transitional measure, insurance intermediaries granted fresh registration or renewal of certificate of registration during the period from February 5, 2026, to June 30, 2026 are required to pay the interim annual fee at the time of issuance of the certificate of registration.[21] The circular also states that the interim annual fee applicable for this period is specified in Annexure I.[22]

This is a practical stop-gap mechanism. IRDAI could not leave the market in a vacuum between the date when the amended law became effective and the date when the fuller regulatory framework is notified. So, the circular effectively creates a bridge. It tells intermediaries that the old renewal structure is no longer the governing model, but it also gives them a workable payment mechanism for the transition window.

Adjustment of Earlier Renewal Fees

The circular also deals with a fairness issue that would otherwise have arisen in the transition period.[23] It says that where renewal of a certificate of registration has been granted on or after February 5, 2026, and the renewal fee had already been remitted before such renewal, the fee already collected shall be adjusted against the interim annual fee payable, and any balance shall be refunded.[24]

Why This Change Matters in Practice

The most immediate impact is operational. Insurance intermediaries will now need to treat annual fee compliance as a live annual governance obligation rather than as a once-in-three-years renewal event. Finance teams, compliance teams and management will need tighter calendars and sharper internal controls. A missed annual payment is not just an accounting delay. It can become a regulatory problem because the amended law specifically links non-payment of annual fee with the Authority’s power to suspend or cancel registration.[25] 

The change also reflects a deeper policy shift. A continuing registration model gives the regulator a more current supervisory framework. Instead of waiting for a formal renewal cycle to re-engage with the intermediary’s status, the law now allows registration to continue only so long as the annual fee structure and compliance conditions are met. This makes the regime more dynamic. It also means that intermediaries cannot think of registration as something safely parked away for years at a time.

Issues Still Under Watch

Even though the legal direction is clear, some practical issues will depend on the detailed regulations that are yet to come.[26] For example, the market will need clarity on the exact annual payment cycle going forward, the treatment of delayed payments, whether there will be grace periods, and how proof of continued registration will be evidenced in day-to-day business.[27]

There is also the issue of alignment. Many category-specific intermediary regulations were drafted in the earlier licensing and renewal context. Those regulations will need to be read carefully alongside the amended statute and the transitional circular until the new framework is fully harmonised.

Conclusion

The central point is simple. From February 5, 2026, the law moved away from the old three-year certificate renewal structure for insurance intermediaries.[28] In its place, the new regime now supports a continuing registration model tied to annual fee payment and subject to suspension or cancellation where the law so permits.[29] IRDAI’s March 2026 circular does not create that shift by itself; the statute does.[30] What the circular does is manage the transition, provide interim payment rules, and prevent disruption until detailed regulations are issued.[31]

For insurance intermediaries, the takeaway is practical and immediate. Registration is no longer something to think about only when a fixed renewal date approaches. It is now a continuing compliance status that must be actively maintained every year.

[1] Insurance Act, 1938, s. 42D, as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[2] IRDAI Circular dated March 16, 2026, para 3.1.

[3] Insurance Act, 1938, s. 42D(4A), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[4] Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, s. 40.

[5] Insurance Act, 1938, s. 42D(2A), as inserted by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[6] Insurance Act, 1938, s. 42D(4A), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[7] Insurance Act, 1938, s. 42D(6), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[8] Insurance Act, 1938, s. 42D(6)(v), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[9] Insurance Act, 1938, s. 42D(6)(i), (ii), (iii), (vii) and (viii), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[10] Insurance Act, 1938, s. 114A(2)(r), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[11] Insurance Act, 1938, s. 114A(2)(q), (qa) and (r), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[12] Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, s. 1(2).

[13] Notification S.O. 490(E) dated February 3, 2026.

[14] IRDAI Circular dated March 16, 2026, para 3.1.

[15] IRDAI Circular dated March 16, 2026, para 1.1.

[16] IRDAI Circular dated March 16, 2026, para 2.1.

[17] IRDAI Circular dated March 16, 2026, para 2.1.

[18] IRDAI Circular dated March 16, 2026, para 3.1.

[19] IRDAI Circular dated March 16, 2026, para 3.2.

[20] IRDAI Circular dated March 16, 2026, para 4.4.

[21] IRDAI Circular dated March 16, 2026, paras 4.1 and 4.3.

[22] IRDAI Circular dated March 16, 2026, para 4.2.

[23] IRDAI Circular dated March 16, 2026, para 5.1.

[24] IRDAI Circular dated March 16, 2026, para 5.1.

[25] Insurance Act, 1938, s. 42D(6)(v), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[26] Insurance Act, 1938, s. 114A(2)(r), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025; IRDAI Circular dated March 16, 2026, para 4.4.

[27] Insurance Act, 1938, s. 42D(4A), s. 42D(7) and s. 114A(2)(r), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[28] Notification S.O. 490(E) dated February 3, 2026; IRDAI Circular dated March 16, 2026, para 3.1.

[29] Insurance Act, 1938, s. 42D(4A) and s. 42D(6), as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.

[30] Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, s. 40.

[31] IRDAI Circular dated March 16, 2026, paras 4.1 to 4.4 and 5.1.

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The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.

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