Insurance Stocks Ka Accident! — Aakhir Kya Hua?
Insurance stocks are witnessing a sharp sell-off today, with PB Fintech (Policybazaar) among the biggest casualties.
The trigger is not weak earnings.
It is a major proposed overhaul of insurance distribution economics by IRDAI.
The regulator's new consultation paper could change how insurers, brokers, banks, NBFCs and digital insurance platforms earn commissions
----->WHAT HAPPENED?
IRDAI has proposed sweeping changes under its consultation paper:
"Recalibrating Economics of Insurance Distribution"
The proposal focuses on:
• Lower Expense of Management limits
• New commission caps
• Changes in distributor payouts
• Greater commission transparency
• Restrictions on loan-linked insurance bundling
• Stronger rules against mis-selling
• Restrictions on "dark patterns" in digital insurance platforms
---->THE BIGGEST FEAR: COMMISSION CAPS
IRDAI has proposed product- and channel-specific commission limits.
For example, the proposal includes:
• Individual health insurance: distribution-entity first-year commission around 15%
• Health renewals: distribution-entity commission capped at 5%
• Motor insurance: lower commission limits
--->STOCKS UNDER PRESSURE
Insurance & Distribution
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