Major life insurance companies saw significant declines in their shares, with some dropping as much as 4%. This was in response to reports that the insurance regulator IRDAI is considering limiting the share of bancassurance business that parent banks can hold to 50%. The concern is that insurers rely heavily on bancassurance partnerships, which allow banks to sell insurance products to their customers.

Currently, parent banks account for 85-95% of the bancassurance business for companies like HDFC Life, Max Life, and SBI Life, while ICICI Bank represents 50% of the business for ICICI Prudential. The IRDAI's proposed regulation aims to address the concentration of business generated through these partnerships, indicating a potential shift in the regulatory landscape for the insurance sector.