Kathmandu. The Reserve Bank of India (RBI) has expressed concern over the rising rate of surrender of life insurance policies before maturity. <\/p>\n
The Indian central bank’s Financial Stability Report shows that surrender and withdrawal amounts are now higher than maturity payments. This indicates that the insured is dissatisfied with the policy and also exposes the risk of mis-selling. <\/p>\n
The report also points out that rising distribution costs increase the risk of mis-selling due to acquisition costs. In the report FY 2021. Life insurance companies have paid about Rs 5 lakh crore in total profits. June 2025. It is estimated that the rupee will increase to Rs 7.3 lakh crore in 2026. The structure of payments indicates systemic concerns. Surrender and withdrawal funds have increased rapidly. <\/p>\n
What’s the problem? <\/strong><\/span><\/p>\n According to the report, almost identical surrender and maturity payments will mean that insured will exit the policy prematurely. This change has a direct impact on asset-liability management. Premature issuance of the insured disrupts the underlying long-term assumptions in life insurance investment strategies and may lead to premature asset sales. <\/p>\n Persistently high surrender rates can also indicate dissatisfaction with the insured, product mis-sale or competitive pressure from other financial instruments. In terms of commission, the report points out differences in the cost structure of public and private life insurance companies. The commission ratio of private insurance companies has almost doubled since FY 2022. However, the operating expense ratio has remained stable. <\/p>\n How will the situation improve? <\/strong><\/span><\/p>\n Ajay Seth, chairman of insurance regulator IRDAI, recently said at a Life Insurance Council event that the regulator is working to improve distribution to address product suitability issues. “We may need better clarification of how the benefits of these measures are achieved,” he said. \u2014Agency<\/p>\n","protected":false},"excerpt":{"rendered":" Kathmandu. The Reserve Bank of India (RBI) has expressed concern over the rising rate of surrender of life insurance policies before maturity. The Indian central bank’s Financial Stability Report shows that surrender and withdrawal amounts are now higher than maturity payments. This indicates that the insured is dissatisfied with the policy and also exposes the […]<\/p>\n","protected":false},"author":16,"featured_media":202301,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45044,45159],"tags":[],"class_list":["post-305794","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-international-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305794","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=305794"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305794\/revisions"}],"predecessor-version":[{"id":305795,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305794\/revisions\/305795"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/202301"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=305794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=305794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=305794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}