IRDAI's Satyajit Tripathy cautions on practices of insurance brokers to increase valuation

IRDAI

Insurance Regulatory and Development Authority of India's (IRDAI) member distribution Satyajit Tripathy, on July 25, cautioned against the practices adopted by insurance brokers to increase valuation.

He added that, in the long run, increased valuation proves detrimental to the entire ecosystem.

"I must add a word of caution that with increased growth being seen, we need not be adopting what we call as sharp practices to increase valuation, get listed, and to do business in a way, which may in the long run prove detrimental to the whole ecosystem," Tripathy said addressing the Insurance Brokers Association of India's foundation day in Mumbai.

Last year, Aditya Birla Capital Ltd (ABCL) concluded the sale of its 50.002 percent stake in Aditya Birla Insurance Brokers Ltd (ABIBL) to Edme Services Private Ltd, which is part of the Samara Capital Group and an affiliate of Samara Alternate Investment Fund.

Additionally, in 2023, Global Insurance Brokers (Global), a provider of risk management, insurance, and reinsurance broking services in the Indian subcontinent has announced its acquisition by professional services firm Aon plc.

Further, he said that in the insurance broking space, there is a record level of activity in terms of mergers, acquisitions, and demergers in the distribution segment. “The regulator is witnessing increased activity in this area on a day-to-day basis.”

Brokers' contribution to the industry, particularly in normal life policies, has been higher because of the value addition in the last 4-5 years, particularly post-COVID.

Long-term value

He advised intermediaries to pull up their socks and focus on creating long-term value in their own setups, given the increasing interest from foreign direct investors.

Tripathy also urged insurance intermediaries to nurture and mentor talent, and to focus on areas where governance standards are high but business ethics may be low.