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A case for increasing coverage? The leaders of life insurance companies discussed this topic at the Business Standard BFSI Insight Summit, 2024, with Business Standard's consulting editor Tamal Bandyopadhyay. Panellists included VIBHA PADALKAR, managing director and chief executive officer (MD & CEO) of HDFC Life Insurance, ANUP BAGCHI, MD & CEO of ICICI Prudential Life Insurance, and MAHESH BALASUBRAMANIAN, MD of Kotak Life Insurance. Edited excerpts:

- Vibha Padalkar, managing director and chief executive officer (MD & CEO) of HDFC Life Insurance, Anup Bagchi, MD & CEO of ICICI Prudential Life Insurance, and Mahesh Balasubramanian, MD of Kotak Life Insurance

What is the impact on life insurance companies due to the revised surrender value norms which came into effect from October 1?

Padalkar: The pain is there and a little bit of disconnect in terms of what it is that as insurers we were trying to do. Because we are giving very long-term guaranteed products. So, having an exit early on could potentially lead to an asset and liability management mismatch. Especially, if interest rates move very sharply. When we look at the bigger picture, it is pro-customer wherein at the end of the first year a customer gets a much larger amount than zero and so on. At the same time, we don't want customers to exit because these are long-term products. So, we will see how it evolves. I think I am very proud of our sector that time and again when we have had these large-scale regulatory changes or even Covid, we have come out only stronger. So, these are all growth pangs in my view.

Balasubramanian: It does cause some short-term pain, but we are all beyond that now. First and foremost, we had to rework some of our commission structures with our partners in terms of deferring the commission or looking at a clawback in commission, etc. All of us have done that for various parts of our distribution. We are also looking at absorbing some of it as margins in the business and thereafter, I think one will also have to look at the interest rates that are being offered. Right now, none of us have changed interest rates based on that. But at some point of time, I think we might have to look at the interest rates as well as an industry. Thereafter, we can make sure that the customers feel more reassured with insurance as a sector and they feel far more confident about purchasing policies. In the long term, we believe that it will only increase demand.