HDFC Life and Max Financial shares fall due to higher surrender value suggested by IRDAI

14 Dec 2023 , 02:59 PM

The IRDAI’s proposal for a higher surrender value on non-PAR products caused HDFC Life and Max Financial to trade in the red, down as much as 4 percent, defying the current market trend.

A consultation paper that suggests a higher surrender value for non-PAR products has been produced by the IRDAI. This will certainly have a detrimental effect on the margins of non-PAR products by making policyholders get a larger amount after policy lapses.

HDFC Life shares dropped 1.9% to Rs 685 on the NSE as of 12:20 p.m., while shares of Max Financial were trading at Rs 1,027.8 a share.

The entire payment that an insurance company makes to a policyholder in the event that the policy is terminated before it matures is known as surrender value. This means that only policies with a surrender benefit will be covered by this.

Furthermore, this solely affects non-PAR plans, meaning that the policyholder does not get any of the life insurance company’s earnings or dividends. On this policy, there is no bonus awarded.

The IRDAI has been concentrating on reforms over the last few months in order to advance its goal of attaining ‘Insurance for All by 2047.’

In an effort to enhance communication and openness between insurers and consumers, the sector regulator published a circular on October 30th, instructing insurance companies on how to use Customer Information Sheets (CIS). The essential elements of the policy are presented in plain language in the CIS.

A high-level panel has been established by the IRDAI to recommend ways to encourage banks to participate in making insurance products easily accessible throughout the nation.

The contribution of the lenders as corporate agents was 5.93 percent of non-life premiums and 17.44 percent of new business premiums for life insurance in 2022–2023, notwithstanding the vast network of banks through their branches throughout the entire nation.

For feedback and suggestions, write to us at [e-mail]