ICICI Life defends credit cover as Irdai weighs steep commission cut

ICICI Life Insurance Co. Ltd, formerly ICICI Prudential Life Insurance, has put forward credit life insurance as an important protection product for Indian borrowers, even as the insurance regulator proposes to sharply cut the commissions lenders earn for selling it. Credit life cover pays off a borrower’s outstanding loan if they die during the loan term.

Speaking on the company’s earnings call on Tuesday, Amish Banker, life insurer’s chief distribution officer, said the product “provides a very important societal need in a country”, particularly for low-income borrowers whose loans may not be backed by an asset. For such borrowers, the need for credit life “becomes even more acute to avoid any severe social fallout and also any repayment pressure that may come about”, Banker said.

The remarks come three weeks after the Insurance Regulatory and Development Authority of India (Irdai) released a consultation paper proposing to cap commissions on single-premium life cover packaged with loans at 2%. According to the paper, commissions on single-premium credit life averaged 22% in FY25, while effective payouts on group credit life sold through non-banking financial companies (NBFCs) had risen to around 45%.

Management acknowledged that the paper “does propose a fairly significant cut” but stopped short of opposing it, saying it expects the regulator to take these points into account while drafting the final rules. Asked about the likely impact of a 2% cap, it said, “It’s a little too early to call.” Comments on the paper are due by 25 October.

Credit life makes up roughly a third of ICICI Life’s protection business. Its credit life annualised premium equivalent (APE) has stayed largely flat between ₹602 crore and ₹619 crore over the past three fiscal years, which the company attributed to stress in microfinance lending.

On Irdai’s concerns about insurance being forcibly bundled with loans, management said “all our products are sold with the consent of customers and customers are given a choice of how to fund the premium”.

The company’s investor presentation also states that credit life is voluntary, whereas the regulator’s paper describes such cover as “near mandatory in practice”.

For the first half of FY27, ICICI Life’s profit after tax rose 26.5% year-on-year to ₹760 crore. Total premium grew 15.3% to ₹24,505 crore, while new business premium rose 25% to ₹11,821 crore. The value of new business (VNB), which measures the profitability of new policies, grew 22.3% to ₹1,283 crore. The VNB margin improved to 26% from 24.7% in FY26, which management attributed largely to a shift in its product mix towards protection.

Retail protection APE jumped 47.2% to ₹455 crore, helped by the GST exemption on individual life insurance premiums from September 2025. Management expects this pace to ease, saying those growth numbers should taper down from the 40-50% that they’ve been seeing to more moderate levels in the second half of the year.

Bancassurance grew 4.6% during the half. Management said business from parent ICICI Bank, which accounts for about half of the channel, has stayed steady at around ₹120 crore a month, with growth coming from its other bank partners. The agency channel grew 3.3%, while annuities rose 50%.

Shares of ICICI Life closed at ₹446.20 on Tuesday, down ₹12.15 or 2.65%.

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