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IRDAI Proposes Commission Clawback for Insurance Mis-Selling: What It Means for Policyholders

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IRDAI Proposes Commission Clawback for Insurance Mis-Selling: What It Means for Policyholders

Buying insurance is often presented as a simple financial decision: understand the policy, pay the premium and get protection. But what happens when the person selling the policy has a bigger incentive to close the sale than to check whether the product actually suits the customer? The Insurance Regulatory and Development Authority of India (IRDAI) is proposing changes that could make sellers more accountable for such practices. Under the proposed framework, commissions could be clawed back if a policy is found to have been mis-sold. IRDAI has also proposed linking the identity of the salesperson to every policy and putting information about mis-selling incidents in the public domain.

Why is IRDAI looking at commissions?

IRDAI has flagged rising distribution costs in the insurance industry as a concern, saying high costs could contribute to poor policy persistency, higher policy costs and commission-driven sales.

The numbers show why this has become an issue.

For private life insurers, the total expense ratio stood at 20.2% of gross premium in FY26, up from 16.5% in FY21. It was 21.3% in FY15.

In general insurance, the ratio rose to 32.1% in FY26, from around 25% in FY19. It was 30.3% in FY15.

IRDAI’s wider consultation paper also says distributor remuneration rose 125% between FY23 and FY25, compared with a 28% increase in new business premium in a representative sample covering around 92% of premium procured through corporate agents. Distributor remuneration was nearly 27% of first-year premium, with rewards and incentives adding another 30%-60% over base commission.

What does commission clawback mean for a customer?

In simple terms, a salesperson or distributor could receive a commission when a policy is sold. If that sale is later established to be a case of mis-selling, the commission could be recovered.

IRDAI has proposed that insurers put proper clawback arrangements in place to recover excess payments in cases where policies are cancelled. The regulator has also proposed that delays in recovering such amounts should attract interest.

For customers, the idea is to change the incentive behind selling insurance.

Instead of rewarding only the number of policies sold, the proposed framework seeks to place greater emphasis on whether the policy was suitable, whether it remains in force and how the customer is serviced.

Your salesperson could be identifiable

Another major proposal is to tag the functional identity of the salesperson, agent, Point of Sales Person or other relevant seller to the policy.

If mis-selling occurs, that record could become part of the individual’s performance history and be made available through the proposed Public Insurance Registry. This could help customers and future employers identify a history of mis-selling.

For a policyholder, this could mean greater traceability: there would be a clearer record of who sold the policy rather than accountability resting only at the insurer or distributor level.

Bank and NBFC employees could face tighter incentive rules

IRDAI has also proposed restrictions on incentives given to bank and NBFC employees for selling insurance.

Volume-linked or reward-linked incentives could be prohibited. The consultation paper refers to incentives such as trips, luxury gifts, milestone bonuses and contest rewards as examples of remuneration that could create conflicts between sales targets and customer suitability.

This matters because many customers buy insurance through their existing bank or lender.

The proposals would also restrict compulsory bundling of insurance with loans and other financial products. In certain permitted package offers, customers would have to be shown the interest rate with and without insurance, while the insurance premium would have to be paid separately.

What should policyholders take away?

The proposals do not mean that every insurance commission is a problem or that the rules are already in force. They are part of a consultation process, with stakeholders invited to submit comments by October 25, 2026.

But if implemented, the framework could change how insurance is sold.

For customers, the important shift would be towards greater accountability for the person recommending and selling a policy. The proposed rules also seek to make suitability, servicing and policy persistency more important parts of the economics of insurance distribution.

For anyone buying a policy, the basic lesson remains straightforward: don’t buy insurance simply because a bank employee, agent or salesperson recommends it. Understand what the policy covers, what it costs, how long you have to pay and whether it actually matches your financial needs.

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FMCG Companies Brace for Higher Input Costs

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FMCG Companies Brace for Higher Input Costs

India’s consumer sector is heading into the festive season with demand holding up, but rising input costs are putting pressure on company margins.

Consumer companies are seeing steady demand across categories, with rural consumption also showing signs of resilience. However, higher costs of key raw materials could make it harder for companies to protect their profits.

What’s pushing costs up?

Several FMCG companies have flagged rising input costs during the September quarter.

Higher prices of commodities and raw materials, along with elevated crude oil prices, are adding to the cost of making and transporting everyday products. Packaging costs can also rise when crude-linked inputs become more expensive.

Companies are trying to manage the pressure through cost efficiencies, supply-chain measures and selective price increases.

Will consumers pay more?

That’s the key question.

When input costs rise, companies have three broad choices: absorb the additional cost and take a hit to margins, cut costs elsewhere, or pass some of the increase on to consumers.

If cost pressures persist, price hikes across everyday products could eventually follow.

For consumers, that could mean paying a little more for everything from packaged food and personal-care products to household essentials.

Festive demand could offer some relief

The good news for FMCG companies is that festive spending could provide a boost.

With Diwali falling later this year, some festive demand is expected to shift into the December quarter rather than showing up fully in the September quarter. Categories such as snacks, sweets, gifting and other consumer products could see stronger demand as the festive season progresses.

Rural demand remains important

Rural consumption will also be closely watched. Smaller towns and rural markets are an important growth driver for FMCG companies, and a recovery in rural spending could support volumes.

But uneven weather conditions and pressure on agricultural incomes remain concerns.

What Happens If Costs Stay High?

For now, demand remains relatively strong. But if input costs continue to stay elevated, companies may eventually pass some of that pressure on to consumers.

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Can Your Handbag Get You a Loan?

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Can Your Handbag Get You a Loan Now?

There was a time when buying a designer bag was fairly straightforward: you liked it, you could afford it, and you bought it.

Now, things are a little different.

People are booking appointments, joining waitlists and hunting down specific colours, materials and limited-edition pieces. There are collectors with entire rooms dedicated to their handbags. And increasingly, buyers aren’t looking at these bags only as fashion purchases; they are looking at what the bag could be worth years down the line.

That got me thinking: when did a handbag start looking like an investment?

The Numbers Are Making The Case

According to the Knight Frank Luxury Investment Index, handbags were the best-performing luxury collectible category in 2024, gaining 2.8%. 

Economic Times also highlighted how certain luxury handbags can sell for significantly more in the resale market than their original retail price. One example cited was an Hermès Birkin 25, which retailed at around ₹10.2 lakh but was selling for roughly ₹18 lakh in the resale market.

That’s a pretty interesting premium for something that is technically still a handbag.

Forbes has been making a similar argument for years. Its research has looked at designer handbags particularly sought-after Hermès pieces as an alternative investment, comparing their appreciation with traditional luxury assets such as art.

Of course, that doesn’t mean your wardrobe is suddenly a stock portfolio. But it does show that something interesting is happening in the luxury market.

Scarcity Is Doing A Lot Of The work

The most valuable handbags aren’t necessarily the most expensive ones. They’re often the ones people can’t easily get.

Limited production, discontinued designs, rare colours and materials, celebrity associations and strong brand demand can all contribute to resale value.

And that explains the waitlists.

The scarcity itself becomes part of the product. If everyone could walk into a store tomorrow and buy the same bag, some of that exclusivity and potentially some of its resale appeal would disappear.

It’s the same basic idea we see with many collectibles: when supply is limited and demand stays strong, people are willing to pay more.

This Is Also Creating A New Kind Of Collector

There are serious collectors building entire portfolios of handbags. Some buy specific models because they believe they will hold their value. Others look for pieces that are rare or difficult to find.

And yes, there are people whose collections are large enough to require dedicated storage.

At that point, we’re moving beyond fashion. We’re talking about an asset that someone is deliberately acquiring, preserving and potentially reselling.

And Then There’s The Collateral Angle

Here’s where things get even more interesting.

In some markets, specialist lenders allow owners to borrow against valuable luxury handbags, using them as collateral. In simple terms, the bag is valued and the owner can potentially access a loan against that value.

But this is where one should draw the line between “valuable asset” and “investment.”

Not every designer bag will qualify. And not every bag will be appreciated. Brand, model, condition, authenticity, rarity and resale demand can all influence its value.

So, are designer bags actually investments?

Sometimes. But not every expensive handbag is an investment. A stock can generate dividends. A bond can generate interest. A property can generate rent. A handbag doesn’t do any of that.

Its investment potential comes from what someone else may be willing to pay for it later. And that makes the market much more dependent on trends, scarcity and consumer demand.

So yes, a ten lakh handbag could potentially become more valuable over time.

But that doesn’t mean spending ten lakh on a handbag is automatically a smart financial decision. The smarter way to look at it may be this: a designer bag can be a luxury purchase that happens to have investment potential, not an investment that happens to be a bag.

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Diwali Gold Rush: Prices Fall 23%, Should You Buy?

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Diwali Gold Rush: Prices Fall 23%, Should You Buy?

Gold has had a pretty dramatic year.

After hitting record highs earlier in 2026, gold prices have now corrected by more than 23%. International prices fell from around $5,419 an ounce in January to just above $4,155 by October 5. In India, MCX gold also slipped from its yearly high of ₹2.48 lakh per 10 grams to around ₹1.49 lakh.

With Diwali and the wedding season around the corner, the big question for buyers is simple: Is this dip a good opportunity to buy gold?

Why has gold fallen?

The recent correction has been driven by a mix of global factors.

Higher US Treasury yields and a stronger US dollar have put pressure on gold prices. Changing expectations around global interest rates and geopolitical developments have also contributed to the decline.

But a fall in price doesn’t automatically mean gold is now “cheap”.

Kaveri More, Commodity Technical Analyst at Choice Broking, says the correction looks more like a period of consolidation and repricing rather than a signal to rush in and buy everything at once.

So, should you buy before Diwali?

If you are buying gold for Diwali, Dhanteras or an upcoming wedding, your approach can be different from someone buying purely as an investment.

For jewellery, buying according to your actual requirement may make sense rather than trying to predict where prices will bottom.

For investment purposes, experts suggest avoiding a lump-sum purchase right now. Instead, investors could consider staggering their purchases across 3–4 tranches over the coming weeks.

The idea is simple: you don’t have to perfectly time the lowest gold price.

For investors who don’t specifically need physical gold, Gold ETFs can also be considered. They provide exposure to gold without the making charges associated with jewellery.

What about jewellery buyers?

The festive season could still bring some demand, but consumers are becoming more careful about how much they spend.

Colin Shah, Managing Director of Kama Jewellery, expects festive and wedding demand to see occasional spikes of around 15–20% during the peak season. However, buyers are increasingly looking at lightweight and contemporary jewellery that fits within their budgets.

The average ticket size is expected to be around ₹1.5 lakh–₹3 lakh.

A 23% correction may make gold look more attractive, but a lower price doesn’t mean the bottom is here.

If you need jewellery for a genuine occasion, buy according to your requirement and budget.

If you’re buying gold as an investment, don’t put all your money in at once. Staggering purchases can help reduce the risk of getting your timing wrong.

And most importantly, don’t use money meant for short-term expenses just because gold prices have fallen.

Source: MoneyControl

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