MUMBAI: In a meeting with the regulator this week, chief executives of life insurance companies made representation on the cap on proposed surrender charges. The regulator is understood to have reassured them that their views would be considered while framing the final guidelines.
Shares of life insurance companies have seen significant activity in the last two days.Industry sources attribute this to the prospect of proposed rules on surrender charges being diluted. Analysts believe that capping surrender charges would have an impact on the bottom line of these companies.
HDFC Life gained 7.5% in the last two days, ICICI Pru Life and LIC were up over 5%, and SBI Life gained 4%. While surrender charges are aimed at defraying the upfront costs of insurers and discouraging policyholders from exiting early, the flip side is that customers who have been mis-sold lose out if they decide to exit policies early. Share prices also rose in anticipation of improved growth in Jan 2024.
Among the listed life insurers, LIC recorded a premium of Rs 18,920 crore on Jan 24 – marking a 23.6% increase over Jan 2023. SBI Life’s Jan premium of Rs 5,218 crore more than doubled compared to Rs 2,572 crore in the year-ago period. HDFC Life’s total premium grew by 2% to Rs 2,400 crore in Jan, while ICICI Prudential witnessed an 8% year-on-year growth to Rs 1,564 crore on January 24.