Stories
SBI Life, LIC Best Positioned Amid New IRDAI Commission Caps, Says Harshal Mehta
- •Harshal Mehta of AMSEC states SBI Life and LIC are best-placed among insurers due to new IRDAI commission and expense-of-management (EOM) caps.
- •SBI Life's existing low cost base and LIC's large agency network provide flexibility and reduce impact from the new regulations.
- •The new caps led to a market-wide selloff in insurance and lending stocks, with PB Fintech losing ‘25,000 crore in market capitalization.
- •Credit life insurance faces the sharpest commission cuts, while ULIP products see smaller reductions; ICICI Prudential expects moderate impact.
- •HDFC Life and Max Financial face the sharpest near-term cuts due to reliance on bancassurance and broker channels, but could gain market share if banks favor closed-architecture partners.
Key Questions Answered
SBI Life and LIC are considered the best-placed life insurers to face the least impact from the proposed IRDAI commission caps. SBI Life benefits from a lower cost base and operating expenses, while LIC leverages its large agency network for greater payout flexibility under a closed distribution structure.
Credit life insurance faces the sharpest commission cuts, with caps dropping down to near 2-2.5%. Additionally, insurers heavily reliant on bancassurance and broker channels, such as HDFC Life and Max Financial, face the steepest near-term commission reductions.
According to an IIFL Capital analysis of listed insurers, LIC, SBI Life Insurance, and New India Assurance are the only covered companies already operating below the proposed FY29 Expense of Management ceiling.
