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13-06-2024 02:34 PM | Source: Kotak Securities Ltd

Views on the new master circular of Life Insurance from Shrikant Chouhan, Head Equity Research, Kotak Securities

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Below the Views on the new master circular of Life Insurance from Shrikant Chouhan, Head Equity Research, Kotak Securities

The IRDA has issued the final master circular on life insurance products, significantly reducing surrender charges on traditional savings plans. We note that the final guidelines are somewhat more favorable than the earlier draft. Based on our preliminary calculations, surrender income could decrease by approximately 55-70%. It's too early to quantify the impact on the Value of New Business (VNB) margin, as insurance companies might offset this by adjusting distributor terms or making changes to internal rate of return (IRR) calculations. While the valuation of the insurance sector remains supportive, investors are looking for stability and clearer visibility.

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Views on the new master circular of Life Insurance from Shrikant Chouhan, Head Equity Research, Kotak Securities

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