In a regulatory filing, the company clarified: “This is in response to today’s news flash on a leading news channel regarding potential changes to bancassurance regulations by the Insurance Regulatory and Development Authority of India. The news flash is based on rumours and speculation, and we would like to categorically state that the information mentioned is inaccurate.”
HDFC Life emphasised that significant regulatory changes are typically preceded by detailed consultations with industry stakeholders. The company also expressed confidence in its ability to adapt to a dynamic business environment through its well-diversified distribution network, which it credits with supporting efforts to boost insurance penetration across the country.
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“As an organisation, we believe that regulatory changes of such significance are typically preceded by detailed industry consultations. HDFC Life has a well‐diversified distribution network which enables us to increase insurance penetration in our country and adapt to the evolving business environment,” it said.
This comes after reports said that IRDAI may impose a cap on bancassurance contributions from parent banks. Sources indicate that the IRDAI is considering limiting the share of the bancassurance business contributed by parent banks to 50% of an insurer’s total distribution. This move aims to reduce over-reliance on a single channel, thereby mitigating systemic risks.
Currently, parent banks contribute a significant portion of the bancassurance revenue for major insurers. HDFC Life, Max Life, and SBI Life rely on their parent banks for 85%-95% of bancassurance sales. ICICI Prudential Life sees around 50% of its bancassurance business coming from ICICI Bank.
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According to sources, the IRDAI believes that any potential risk to banks could disrupt the insurance business and negatively impact policyholders as well as shareholders of publicly listed insurance companies. The regulator plans to monitor this situation over the next few months. If insurers fail to meet the target, the IRDAI might consider providing a glide path for compliance.
Shares of HDFC Life Insurance Company Ltd ended at ₹657.60, down by ₹23.15, or 3.40% on the BSE.
