Higher surrender value to badly hit life insurers margins: Report

The recent regulatory push to increase the surrender value of a life policy through the revised concept of threshold limit and adjusted guaranteed surrender value for all non-linked policies, if implemented, will hit the margins of the insurers, warns a report.
The Insurance Regulatory and Development Authority (Irdai) earlier this month put out a draft circular proposing an increase in the surrender value of a life policy by revising upwards threshold limits and the adjusted guaranteed surrender value for all non-linked policies, both par and non-par.
Surrender value is the amount that an insurer pays to a policyholder in case he or she terminates the policy before maturity.
The move if implemented as the current format will affect the overall margins of life insurance companies, India Ratings said in a note on Thursday without quantifying by how much given the complex calculations being proposed.
But the agency also believes that defining the thresholds for surrender value will b