The Insurance Regulatory & Development Authority (Irda) is expected to allow banks to sell insurance products of more than one company, allowing banks to retail insurance products and not just be distributors for one insurer.
A panel, set up by the insurance sector watchdog to look into bancassurance, is giving final touches to its report, an Irda official told ET.
Irda had allowed bancassurance from 2002. Under the norms, a bank was allowed to act as an agent for only one life and one general insurer. Bancassurance is a delivery channel in which an insurance company uses a bank's sales channel to sell its products.
Currently, bancassurance accounts for more than a quarter of the entire premium collected by the insurance industry.
Of the 23 life insurance companies in the country, nine are promoted by banks, while three out of 21 general insurance companies have banks as promoters.
Source: Economic Times Banks may sell covers of multiple insurers
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By ugesh sarkar, Section Insurance & IRDA
Posted on Thu Dec 17, 2009 at 03:01:33 AM EST
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While in the last financial year private insurers had paid just over Rs 200 crore as commission for bancassurance, the non-life insurers had forked out more.
Rating agencies said the new norms will help banks to withstand fall in income from lending operations. "A more diversified earnings profile will act as a positive driver for public sector banks' financial strength ratings," wrote Nondas Nicolaides , vice-president of ratings agency Moody's, in a recent note.
The enthusiasm is, however, not shared by some others. "If a bank acts as an agent for more than one insurer, confusion is likely to arise on account of complexity of products and more money will have to be spent on training," said Harpal Karlcut, CEO & MD of Canara HSBC Oriental Bank of Commerce Insurance Company.
Irda has been concerned about tie-ups between banks and insurance companies and is considering a regulatory framework for an open architecture for such arrangements. An Irda functionary said there have been instances where banks have discontinued tieups with insurance companies when competing insurers offered attractive benefits.
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