Buying insurance could become cheaper over time, but the people selling those policies may have to earn less. However, that is if the insurance regulator’s latest suggestions go through. The Insurance Regulatory and Development Authority of India (IRDAI) has proposed tighter limits on commissions paid to banks, brokers and agents, along with curbs on digital practices that can push customers towards buying a policy.
The proposals are aimed at reducing the cost of distributing insurance and curbing mis-selling, but whether customers actually see lower premiums will depend on how insurers respond.
The proposals have already unsettled the market. Shares of insurance distributors and companies with significant insurance income fell on Thursday as investors assessed the possible impact on distribution earnings. PB Fintech, the parent of Policybazaar, fell 33.27% to close at Rs 1,258.80, while Turtlemint dropped 19.99% to Rs 109.10. Max Financial Services declined 9.71% to Rs 1,411.20, HDFC Life fell 4.96% to Rs 533.65 and ICICI Prudential Life ended 3.44% lower at Rs 467.85. SBI Life was down 0.09% at Rs 1,758.50.
But the proposals are not final rules. The IRDAI has issued them as a consultation paper and is seeking comments until October 25. There are chances that the framework could change after feedback from insurers, distributors and other stakeholders.
