Shares of SBI Life and HDFC Life, the two largest private insurers, fell 6% intraday on Thursday after reports suggested the insurance regulator might impose a cap on bancassurance sales due to concerns over frequent mis-selling.
SBI Life closed at Rs 1,424 on the NSE, down 5.41% from its previous close, while HDFC Life ended 4% lower at Rs 655.10 after slipping 6% during the session.
Also ReadIEX and Exide Industries top picks of HDFC Securities this week
According to a private television news channel, the Insurance Regulatory and Development Authority of India (Irdai) may limit the share of the bancassurance business from parent banks to 50% of an insurer’s total distribution. This report follows recent comments by Finance Minister Nirmala Sitharaman and Irdai Chairman Debasish Panda on the issue of policy mis-selling through bank branches.
Bancassurance remains a key distribution channel for life insurers, contributing over 55% of the life insurance industry’s Rs 3.78 trillion new business premium in FY24. It is especially critical for insurers backed by banks. Currently, more than 60% of SBI Life and HDFC Life’s premiums come from their respective bank partners, State Bank of India and HDFC Bank. By comparison, ICICI Prudential Life derives 29% of its new business from bancassurance, while the channel accounts for just 4% of Life Insurance Corporation’s (LIC) distribution.
HDFC Life dismissed the report as “rumours and speculation,” stating that the information was inaccurate. “As an organisation, we believe that regulatory changes of such significance are typically preceded by detailed industry consultations,” the company said in a press release, adding that it has a well-diversified distribution network to ensure market reach.
Also ReadRupee continues to be under pressure, slips to levels near all-time lows of 84.50/$
In a regulatory filing, SBI Life stated that Irdai follows a consultative process, seeking feedback from stakeholders before issuing guidelines or addressing industry concerns. “We have not been informed of any regulatory discussions regarding limits on insurance business through bancassurance,” it added.
Meanwhile, ICICI Prudential Life and LIC shares rose 2% and 3%, closing at Rs 693 and Rs 940.90, respectively.
» Read More
