IRDAI Proposes Rules for How It Makes Rules: 21-Day Consultation, Three-Year Reviews and Cost-Benefit Assessment

India's insurance regulator has proposed a rulebook for its own rule-making. On June 17, 2026, the Insurance Regulatory and Development Authority of India (IRDAI) put out a draft regulation setting out the procedure for making regulations and issuing subsidiary instructions, with comments invited until July 8, 2026. The draft rests on the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which changed the Insurance Act, 1938 and related laws and, according to Indian reports, took effect for most provisions in February 2026. This article summarises the draft as reported by Business Standard and by tax and legal commentary. The draft's full text was not reviewed for this update, so readers should consult IRDAI's website for the exact wording and any final version. An earlier version of this article is superseded by this one.

What problem is the draft trying to solve? Regulators across the world make rules, and the quality of those rules depends on how they are made. A regulator that consults early, explains its reasoning and reviews old rules tends to produce regulations that industry can implement and that consumers can trust. IRDAI already consulted stakeholders on many drafts, but the process was not set out in one regulation. The draft would codify those practices and add duties, which is what the reports mean by greater structure, transparency and accountability. The Tax Corp lists the guiding principles as policyholder protection, orderly industry growth, service quality and trust, transparency, proportionality and accountability, ease of doing business, use of technology and adoption of best practices.

What would be published, and for how long? Under the draft, IRDAI would put draft regulations on its website with a statement of particulars. Business Standard reports that this statement would cover the statutory provisions invoked, the regulatory intent and, where applicable, relevant global best practices. The minimum period for public comment from insurers, intermediaries and other stakeholders would be 21 days. In this case the window from June 17 to July 8 is exactly 21 days.

How must IRDAI respond to comments? The draft requires IRDAI to publish a general statement explaining how it responded to comments by the date a regulation is notified. That does not oblige the regulator to accept any particular suggestion, but it requires an explanation of the overall treatment. If the final regulation differs substantially from the draft for reasons other than stakeholder feedback, IRDAI would have to consult again. This protects the public from a change late in the process that nobody had the chance to examine.

What is the cost-benefit assessment? Before finalising a regulation, IRDAI would assess the expected costs and benefits for policyholders, the insurance industry and the broader economy. The reports do not describe the method or whether the assessment would be published. A cost-benefit exercise can be simple or detailed, and the value of the requirement will depend on the standard IRDAI sets for itself.

How often would regulations be reviewed? All regulations would be reviewed every three years from publication, unless an earlier review, amendment or repeal is needed. Periodic review matters in insurance because markets change quickly. Rules written for paper-based distribution may fit poorly with digital sales, and rules written when foreign ownership was capped may need updating now that India has opened insurance to 100% foreign investment, as reported in separate coverage on this site.

What are subsidiary instructions and committees? Beyond formal regulations, IRDAI issues circulars, guidelines and other instructions. The Tax Corp says the Act creates a formal regime for them and that consultative committees advise the regulator. According to Business Standard, the committees would include external experts in insurance, finance, law and information technology, plus industry representatives and regulator officials. Their recommendations would be advisory and would not be binding on IRDAI.

Is there an exception for urgent matters? Yes. IRDAI could skip the consultation or committee steps in urgent public-interest cases, provided it records its reasons in writing. Such exceptions are common in regulatory frameworks, because delay can itself harm consumers, for example when a firm's solvency is at risk. They also create a point of scrutiny: the more often the exception is used, the weaker the consultation commitment becomes. The requirement to record reasons gives courts, industry and the public a document to examine.

Who is affected? Insurers, reinsurers, brokers, third-party administrators, surveyors and other intermediaries all fall under IRDAI's regulations. Consumer groups and policyholders can also comment. Larger firms generally have the resources to respond to drafts; smaller firms and individual policyholders do not, so how IRDAI publicises drafts and presents them in plain language will affect who is heard.

What should readers watch for? Four things stand out: whether IRDAI finalises the regulation in the form proposed; whether the 21-day minimum is treated as a floor or a norm; how detailed the published cost-benefit assessments are; and how often the urgency exception is used. Another point is timing. The Act's wider rule-making programme requires IRDAI to prepare new regulations, so the quality of the consultation procedure will be tested quickly.

This article is a summary of press and legal commentary and is not legal advice. Refer to IRDAI's official publications for the draft and any final regulation.