Insurance Shares Slip After RBI Proposes Tighter Rules on Financial Product Sales

• Insurance shares fell after RBI proposed stricter rules for financial product sales, impacting major listed life and general insurance companies.
• Investors are cautious about the potential impact of tighter distribution norms, especially for bank-led insurance sales (bancassurance).
• RBI's draft guidelines aim to curb mis-selling and aggressive cross-selling, requiring explicit consent and suitability checks for each product.
• The proposed framework prohibits bundled consent, conditional product sales, and mandates separate application forms for each financial product.
• Rules also target dark patterns, require clear disclosure of distributor roles, and bring Direct Selling Agents under stricter scrutiny.