Insurance Firms Gain As Analysts See Benefits From IRDAI's Draft Rules
Shares of insurance firms New India Assurance, SBI Life, Start Health, ICICI Lombard, HDFC Life and LIC of India gained on Friday
Shares of India's insurance companies gained after analysts said the recent rules announced by the insurance regulator are potentially beneficial.
Shares of The New India Assurance Company Ltd., SBI Life Insurance Company Ltd., Star Health and Allied Insurance Company Ltd, ICICI Lombard General Insurance Company, HDFC Life Insurance Company Ltd., and Life Insurance Corporation of India gained in intraday trade. HDFC Life and ICICI Lombard reversed gains while the other stocks advanced in Friday's session.
The Insurance Regulatory and Development Authority of India earlier this week announced a draft regulation aimed at incentivising agencies and intermediates by linking commission to persistency rate instead of the current regime of policy tenure-based payout.
Motilal Oswal Financial Services Ltd. on Wednesday termed the draft guidelines a "step in the right direction" with the potential to enhance persistency, cost metrics, penetration of life insurance in the country. According to the brokerage, the new standard will bring greater discipline to the sale of insurance products while increasing margins and VNB.
Emkay Global Financial Service Ltd. said the new draft is a "refinement of existing regulations".