Insurance stocks gain on expectations of lower distributor commissions

Life and general insurance shares gained amid expectations that Irdai could lower commissions paid to distributors, particularly banks, potentially reducing distribution costs.

Shares of insurance companies rose on Thursday amid expectations that the Insurance Regulatory and Development Authority of India (Irdai) could lower commission payouts to insurance distributors, particularly banks, according to analysts.

 

Among life insurers, HDFC Life Insurance gained nearly 5 per cent to close at Rs 556.8 on the BSE. Max Financial Services rose 4.6 per cent to Rs 1,553.1, while ICICI Prudential Life Insurance gained 4.4 per cent to Rs 492.1. SBI Life Insurance rose 3.7 per cent to Rs 1,762.3. Canara HSBC Life Insurance gained 1 per cent to Rs 155.3, while Life Insurance Corporation of India (LIC) rose 0.9 per cent to Rs 398.6.

 

The gains came amid expectations that Irdai’s long-awaited consultation paper on insurance commissions and distribution could be released soon. The proposed changes are expected to entail a steeper reduction in commissions paid to banks, while commissions for individual insurance agents could see a smaller reduction, according to reports.

 

Analysts expect the changes, if implemented, to benefit life insurers by reducing their distribution costs and improving margins. The impact could be more significant for insurers with greater reliance on bancassurance, they said.

 

Among general insurers, New India Assurance rose 7.1 per cent to Rs 197.05, while ICICI Lombard General Insurance gained 2.6 per cent to close at Rs 1,482 on the BSE.