Niva Bupa barred from opening new branches for six months by IRDAI

The Insurance Regulatory and Development Authority of India (IRDAI) has barred Niva Bupa Health Insurance Company from opening any new place of business for six months, effective August 19, 2026, after flagging non-compliance with applicable Expense of Management (EoM) limits for financial year 2024-25.

The regulator has also issued a warning to the insurer over the EoM compliance issue and directed it not to add any new branches during the six-month period.

The action follows an explanation sought by IRDAI from Niva Bupa regarding its expenses for FY 2024-25. The insurer subsequently made submissions to the regulator in response to the queries.

In a disclosure to the BSE, Niva Bupa said it was evaluating the order and would take appropriate steps to safeguard the interests of its stakeholders.

The insurer, however, said its compliance position had improved subsequently. Niva Bupa said it was compliant with the IRDAI (Expenses of Management, including Commission of Insurers) Regulations, 2024 for the full financial year ended March 31, 2026.

It also said it remained compliant with the EoM regulations for the quarter ended June 30, 2026, and was on track to remain compliant for the full financial year ending March 31, 2027.

What are EoM limits?

Expense of Management limits determine how much insurers can spend on expenses, including commissions and other operating costs, relative to their gross written premium. For health insurers, expenses should not exceed 35% of gross written premiums in a financial year.

The regulatory limits are intended to ensure that insurers maintain control over distribution and operating costs while protecting policyholders from excessive expenses being passed through the insurance ecosystem.

The issue comes amid intensifying competition in India's insurance industry, where distribution costs and commissions have emerged as a key concern. Rising commissions have prompted IRDAI to examine how insurance distributors are compensated, with the broader objective of reducing mis-selling and controlling high distribution costs.

Shares of Niva Bupa closed at Rs 82.61, down 1.70% over the previous close on the BSE.