Canara HSBC Life Sees Limited Hit From IRDAI Commission Cuts
Canara HSBC Life sees limited exposure to the proposed IRDAI commission reforms, offering a glimpse into how the insurer expects to navigate the changing regulatory landscape.
Canara HSBC Life, led by MD and CEO Anuj Mathur, expects a limited impact from IRDAI’s proposed commission cuts, as the regulatory changes could reshape insurance distribution economics.
NEW DELHI – Canara HSBC Life Insurance expects the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed commission reforms to have little effect on its credit life business. The company also expects its parent banks to continue distributing its products after the proposed cost reductions.
Anuj Mathur, Managing Director and CEO, spoke on the company’s second-quarter and first-half FY27 earnings call. He said he did not foresee a decline in the credit life business. If products become more affordable after the changes, he said, the insurer could scale up volumes.
Canara HSBC Life: What the Company Said About the Draft Rules
IRDAI released a consultation paper titled “Recalibrating Economics of Insurance Distribution” on September 23. Comments are open until October 25. The paper proposes lower expense-of-management limits for insurers, product- and channel-specific commission caps, and wider commission disclosure. It would also consolidate the existing distributor categories into three broad groups.
Analysis of the draft indicates the steepest proposed reduction is for single-premium credit-linked life policies. For a ₹1 lakh policy, commission could fall from as much as ₹57,000 to ₹2,000.
Also Read: IRDAI Chief Ajay Seth: Cut Costs, Correct Commissions, Tell Policyholders More
Mathur said a significant share of Canara HSBC Life’s credit life business comes from its two shareholder banks, Canara Bank and Punjab National Bank. Because these banks are also shareholders, he said, the company expects them to keep supporting the business. He added that IRDAI is gathering feedback from various stakeholders and that the final commission rates could end up slightly higher than the proposed ones.
Canara Bank holds 36.5% of the insurer and HSBC Insurance (Asia Pacific) Holdings holds 25.5%. Punjab National Bank holds 13%.
Canara HSBC Life: Where the Regulatory Process Stands
The proposals are still in draft form. The draft proposes company-level expense limits for life insurers of 15% and 12.5% over two and five years respectively. An IRDAI official has said January 1 and April 1, 2027 are both under consideration as implementation dates. The regulator has said commissions have grown faster than premiums since the 2023 changes. It has also pointed out that private life insurers’ expenses have risen to about 22% of premiums, from 16% in FY21.
Canara HSBC Life: First-Half FY27 Performance
Canara HSBC Life reported total premium income of ₹4,742 crore for the first half of FY27, up 17.3% year on year. The breakdown:
- New business premium: up 16% to ₹1,984 crore, covering individual and group business.
- Renewal premium: up 18% to ₹2,758 crore.
- Annualised premium equivalent (APE): up 14.4% to ₹1,250 crore.
- Value of new business (VNB): up 24% to ₹266 crore, at a margin of 21.3%.
- Protection APE: up 44% to ₹131 crore, about 10.5% of total APE.
- Profit after tax: ₹71.2 crore, up 10.8%.
- Assets under management: ₹50,200 crore, up 14%.
- Embedded value: ₹7,622 crore, with operating return on embedded value at 19.8%.
- Solvency ratio: 180%.
- 13th-month persistency: 85.6%.
The share of unit-linked insurance plans in the APE mix fell to 41% in the first half, from 50% a year earlier. The company said traditional products drove growth, with credit life and annuity segments also contributing.
