Look beyond surrender value rules as growth healthy for life insurers

There is some post-Q1FY25 guidance on growth and margins as follows: HDFC Life targets doubling VNB in four years and hopes to outpace the industry in retail APE (annual premium equivalent) growth

Private life insurers have performed well in the April-June quarter (Q1) of 2024-25 (FY25). But new surrender value regulations will trigger changes in the way the industry functions. Given higher payouts, insurers are likely to focus on persistency and they must cope with likely adverse impact on VNB margins (VNB is value of new business).

Apart from focusing on customer acquisition with high persistency levels, they will have to review the higher-upfront commission structure to encourage persistency, by increasing trail commission. They will also have to review non-par product IRRs (internal rate of return) and consider new