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Insurance stocks plunge after IRDAI proposes changes to commissions
The IRDAI plan includes lower Expense of Management limits, product and channel specific commission caps, and tighter rules on selling insurance alongside credit.
Insurance stocks fell sharply on September 24 after India’s insurance regulator, IRDAI, proposed reforms to insurance distribution. LiveMint Markets said shares across the sector declined, with TurtleMint hitting its 20% lower circuit and PB Fintech reaching its 10% lower circuit.
TurtleMint was the top loser, down 20% to ₹109.10, while PB Fintech fell 10% to ₹1,701.00. ICICI Prudential Life Insurance dropped 7.6% to its day’s low of ₹448, and HDFC Life slid 5.6% to ₹530.15.
The proposed framework would change Expense of Management limits, commission structures, and safeguards aimed at reducing mis-selling. IRDAI also emphasized more transparent, digital insurance purchases, and suggested aligning commission levels with product complexity and distribution effort.
IRDAI’s proposals include lower commissions for policies sold through an “open architecture” model via brokers and banks, and little to no commission for mandatory covers such as third-party motor insurance. For banks and lenders selling alongside loans, commissions would be restricted to 2% to 5%, depending on the product, and the regulator proposed prohibiting mandatory bundling of insurance with credit.