Insurance stocks crash as Irdai proposes tighter rules
Mumbai: A host of insurance companies and insurance policy sellers slid as much as 36% on Thursday after the industry regulator Irdai suggested new policy distribution methods that, among others, ban dark patterns and several other changes to how insurance policies are sold that in turn could affect their revenue and bottom line.Tech-driven insurance policy seller PolicyBazar crashed 36%, lost Rs 680 and closed at Rs 1,210, a 52-week low level on Thursday. Another company in the same line of business, TurtleMint, lost the maximum possible 20% and closed at the lower circuit at Rs 109. Among the pure-play insurance companies, HDFC Life crashed 6.1%, ICICI Prudential Life Insurance closed 4.2% down, LIC closed 0.3% while SBI Life closed just a tad higher, up 0.1%.On Wednesday, Irdai proposed some changes to how insurance policies are sold and also how data relating to prospective insurance buyers are collected. It also proposed changes to expense of management limits and commission structures. Irdai also proposed some safeguards against mis-selling, a trait a large number of insurance buyers and people in general have complained about.Irdai has proposed lowering limits for expense of management limits and also to put caps on commissions on various insurance products and distribution channels.Some analysts and market players believe that such steps, on one hand, are pro-insurance buyers, but on the other, could severely dent revenues of some of the players. And hence the sell-off in their stocks on Thursday.On a call in the evening, the management of PolicyBazar acknowledged that if these proposals are made into rules, there could be some meaningful impact on its business. However, they said that the market’s reaction to its stock may have been on the higher side. It also said that the non-life business is expected to face a worse impact than the life business.
