Insurance Act Amendments Will Not Have Any 'Immediate' Impact Barring This One Stock: Brokerages

Brokerages see limited near-term impact of the Sabka Bima Sabki Raksha, 2025 insurance bill, which was passed in Lok Sabha on Tuesday night, with shares of PB Fintech in focus.

The bill, which proposes to raise foreign direct investment (FDI) in the insurance sector from 74% to 100%, in addition to introducing a series of other amendments to insurance laws, may also lead to foreign and niche players entering the space, according to brokerages.

Kotak Securities on Insurance

• Kotak sees the Insurance Act amendments as limited in scope with no immediate sector-wide impact.

• The amendment raises the FDI limit in the insurance sector to 100%.

• This could allow new foreign majors and niche players to enter the market.

• The brokerage expects limited impact on life insurers due to long gestation periods and distribution challenges for new entrants.

• Proposals around commission caps could put pressure on PB Fintech's stock.

• IRDAI already has the flexibility to set commission caps, with the amendment reinforcing this authority.

• The regulator may periodically reassess expense structures and payout norms.

Morgan Stanley on Insurance

• Morgan Stanley welcomes IRDAI's enhanced powers over investments, commissions and expenses.

• The changes are expected to improve governance, transparency and long-term sustainability.

• The enabling provision allowing mergers between insurers and non-insurers is also viewed positively.

• Industry views on commissions remain mixed, ranging from comfort with current levels to support for deferred commissions.

• The sector could benefit from the removal of certain investment-related regulations.

• The Bill also empowers IRDAI to frame regulations around composite licenses.

Investec on PB Fintech

• Investec maintains a Buy rating with a target price of Rs 2,300.

• The Insurance Amendment Bill, 2025 empowers IRDAI to set caps on insurance commissions.

• The regulator is considering a shift to a deferred commission structure from the current upfront model.

• IRDAI is also exploring an overall cap on insurance commissions.

• The brokerage believes commission caps may not necessarily be detrimental for PB Fintech.

• Introducing caps may not materially impact take rates.

• The actual impact will depend on where the commission caps are eventually set.

• While commission deferment could cause near-term pain, it is seen as positive over the long term.