Insurers knock on Irdai door for clarity on director overlap ban

Insurers seek Irdai clarity on a new law barring common directorships, a move that could disrupt boards of bank-backed insurance companies

Insurance companies, through their industry bodies — the Life Insurance Council and the General Insurance Council — have sought clarification from the insurance regulator on a provision that bars a director or officer of an insurance firm from simultaneously holding a similar position at another insurer in the same line of business, a bank, or an investment company, according to sources familiar with the development.  

Industry representatives contend that the clause could mainly impact bank-backed insurers, where several directors currently sit on both the bank’s and the insurance company’s boards. 

“The Life and General Insurance Councils sent letters to the regulator seeking clarification from the Insurance Regulatory and Development Authority of India (Irdai) on the common directorship clause in the new Bill 10–15 days ago. Even though the norm has come from the government, we are seeking clarity from the regulator, which may, in turn, seek guidance from the government. We want to remain compliant with the norms,” sources said. 

Many of the country’s largest banks — including State Bank of India (SBI), ICICI Bank, HDFC Bank, and Axis Bank — either have insurance arms or hold significant stakes in insurers, resulting in senior bank executives sitting on the boards of these companies. The new provision could put these board positions in jeopardy, prompting industry concerns over its implications for upcoming board meetings and overall governance. 

According to legal experts, although the Insurance Amendment Bill has been passed by both Houses of Parliament and has received the President’s assent, it is not yet in force. The law will take effect only after the central government issues a formal notification, similar to the rollout of the labour codes and the Digital Personal Data Protection Act. As a result, insurers and board members are not required to take immediate action, and board meetings and appointments can proceed as usual. 

SBI Life Insurance and SBI General Insurance have C S Setty, chairman of SBI, and Ashwini Tewari, managing director (MD) of SBI, as nominee directors on their boards. Similarly, HDFC Life Insurance and HDFC Ergo General Insurance have Keki Mistry, non-executive director (ED) of HDFC Bank, on both boards, while Kaizad Bharucha, deputy MD of HDFC Bank, sits on the HDFC Life board, and Renu Sud Karnad serves on the HDFC Ergo board. ICICI Prudential Life Insurance and ICICI Lombard General Insurance have Sandeep Batra, ED of ICICI Bank, serving on both boards. 

Emails sent to Irdai and Life and General Insurance Councils remained unanswered until press time.

 

Under Section 32A(1) of the Insurance Amendment Bill, 2025, a director or officer of an insurer shall not be a director or officer of any other insurer carrying on the same class of insurance business, or of a banking company, or of an investment firm. While the provision is intended to strengthen governance, it has raised concerns within the industry.  

Restructuring boards could be time-consuming, and some experts warn that a loss of parent-level control over policy decisions could prove harmful to the sector.