UPDATE 1 — India insurance reform plan tanks distribution — linked shares on threat to income

(Adds details paragraph 3 onwards) Sept 24 (Reuters) — Shares of insurance distributor PB Fintech, banks and non-bank lenders with sizeable insurance distribution income fell sharply on Thursday after India's insurance regulator proposed curbs on commissions and distribution payouts. PB Fintech, parent of insurance distribution platform Policybazaar and Max Financial led losses, plunging 10% each. Meanwhile, lenders including HDFC Bank, Axis Bank also fell 1.4% and 3.5%, respectively. The proposals, unveiled in a consultation paper on Wednesday, would sharply reduce commissions across life, health and motor insurance products, cap payouts on loan-linked insurance sales and gradually tighten insurers' expense limits. While the reforms are aimed at lowering policy costs and curbing mis-selling, analysts said they could disrupt existing distribution models, weighing on growth in an industry that relies heavily on agent and bancassurance channels for business. Macquarie described the proposed commission cuts as "steep" and likely to hurt near-term growth as insurers and distributors recalibrate business models. The brokerage said PB Fintech appears the most exposed given its sensitivit