Insurance premiums may increase or the commission of agents could see a reduction as the revised surrender value proposed by the Insurance Regulatory Development Authority of India (IRDAI) comes into force from Tuesday.

Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) introduced revised surrender value guidelines to offer better returns to policyholders exiting early from their life insurance policies.

A surrender value in insurance refers to the amount paid by the insurers to the policyholder upon terminating the policy before its maturity date. If the policyholder surrenders during the policy tenure, the earnings and savings portion will be paid to him or her.

The regulator has emphasised the need for insurers to ensure 'reasonableness and value for money' for both exiting and continuing policyholders when determining surrender values.

According to a senior official of the private sector insurance company, to meet the revised surrender charges, life insurers would either raise premium or cut the commission of their agents.

The product and commission structure could likely witness significant changes, leading to volatile premium movement in the second half of the current fiscal," Gaurav Dixit, Director at CareEdge Ratings, said.

Most of the insurance players have readied changes in their policies to meet deadlines. Most of these players have a limited number of policies compared to life insurance behemoth LIC.

LIC has a huge task ahead to bring changes in their policies to meet the regulator's dictate.

Gen Z and Millennials Drive Insurance Sales

In a separate report, PTI reported that Turtlemint, an insurtech company, revealed insights into the demographics of its expansive network of over 3.5 lakh certified insurance advisors, highlighting the increasing influence of younger generations in the insurance advisory space.

With Gen Z (born after 1997) and Millennials (born after 1981) driving around 85 per cent of total sales, Turtlemint facilitated over 2,000 crore in premiums over the past year alone.

According to Turtlemint’s data, 78 per cent of their total Gen Z advisors and 74 per cent of the Millennial advisors conduct most of their business online. In a closer look at state-wise trends, it is found that in most states some 80 per cent of certified advisors are GenZ and Millennials.