IRDAI new rule: Insurers hit, shares of ICICI Prudential and HDFC Life fall.

IRDAI New Rule: Thursday turned out to be a very bad day for insurance companies. As soon as the stock market opened, the shares of these companies started selling heavily. Shares of HDFC Life fell 7.2 percent in early trade to Rs. 521 was done. At the same time, shares of ICICI Prudential Life registered a massive decline of 7.5 percent. Markets are bearish today, but insurance stocks have been hit the hardest. Behind this disaster is a new proposal from the insurance regulator IRDAI.

The real reason behind the stock crash

In fact IRDAI has released a consultation paper on insurance sector. The paper was in stark contrast to market expectations. In this, major changes have been proposed in the Expense-of-Management (EOM) as well as the commission structure of insurance companies. Brokerage firms believe that these changes will have a profound impact on the entire economics of selling insurance. Due to this fear, investors hastily started selling their shares. Life insurance stocks are already in bad shape. HDFC Life is down nearly 30 percent so far in 2026, while ICICI Prudential is down 33.3 percent. In such a situation, this new draft is increasing their difficulties.

Big trouble for distributors

According to global brokerage firms such as Bernstein, the suggested cut in commissions is much higher than expected. The most severe impact will be on companies like PolicyBazaar (PB Fintech). Jefferies also believes that a reduction in commissions on new business could reduce Turtlemint’s earnings by 10 to 12 percent, including PB Fintech. The first-year commission on pure-term policies will now be limited to 25-30 percent. While for life insurance companies, the EOM limit will be fixed at 12.5 percent.

These companies including LIC will get relief

While on one hand there is uproar in private companies, on the other hand there is news of relief for some government companies. According to Macquarie, apart from LIC, these proposed changes will have little impact on SBI Life. The main reason for this is their large agency network. The new rules give more importance to directly engaged agents rather than broker channels. Apart from this, Star Health along with ICICI Lombard General Insurance will also be protected from this shock to a large extent. If we talk about the banking sector, Macquarie believes Axis Bank and HDFC Bank could have a more negative impact than SBI and ICICI Bank.

Customers will benefit from cheaper premiums

The stock market may have been spooked by this news but it could prove to be good news for the common man. The HSBC report shows that the main goal of this major move by IRDAI is to make insurance more affordable in the country. Insurance premiums may become cheaper due to reduction in distribution costs. It will directly benefit the customers who want to buy a new policy. This will increase access to insurance in the future. However, Bernstein expects strong opposition from the insurance industry to these drastic changes.