HDFC Life Insurance Company denies speculations regarding changes in Bancassurance regulations

HDFC Life Insurance Company Ltd on Thursday (November 28) dismissed media reports about possible changes in bancassurance regulations by the Insurance Regulatory and Development Authority of India (IRDAI), terming it as “rumours and speculation”.

In a regulatory filing, the company stated: “This is in response to the breaking news published today on a leading news channel regarding possible changes to bancassurance regulations by the Insurance Regulatory and Development Authority of India. The breaking news is based on rumors and speculations and we would like to make it clear that the said information is erroneous .”

HDFC Life emphasized that major regulatory changes are usually 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 believes supports efforts to increase insurance penetration across the country.

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“As an organisation, we believe that legislative changes of such significance are usually preceded by detailed industry consultations. HDFC Life has a diverse distribution network in our country which allows us to increase insurance penetration and adapt to the evolving business environment.” in question.

This comes after reports said that IRDAI may impose a cap on bancassurance contributions from major banks. Sources say IRDAI is considering limiting the share of major banks in the bancassurance business to 50% of the insurer’s total distribution. This move aims to reduce systemic risks by reducing over-reliance on a single channel.

Currently, major banks provide a significant portion of the bancassurance revenues of major insurance companies. HDFC Life, Max Life and SBI Life rely on their parent banks for 85-95% of their bancassurance sales. ICICI Prudential Life sees around 50% of its bancassurance business coming from ICICI Bank.

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According to sources, IRDAI believes that any potential risk to banks could disrupt the insurance business and negatively impact policyholders as well as shareholders of listed insurance companies. The regulator plans to monitor this situation over the next few months. If insurers fail to meet the target, IRDAI may consider providing an easy path for compliance.

Shares of HDFC Life Insurance Company Ltd closed at ₹657.60, down ₹23.15, or 3.40%, on the BSE.