Saturday, December 2, 2023

Insurance: Irdai sets up panel to increase banks’ participation in selling insurance products

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New Delhi: Regulator Irdai has set up a high-level panel to suggest steps to increase the participation of banks for easy availability of insurance products across the country. Despite the large network of banks through their branches across the length and breadth of the country, the contribution of the lenders as corporate agents was 5.93 per cent of non-life premiums and 17.44 per cent of new business premiums for life insurance in 2022-23. Irdai said banks are engaged in the distribution of insurance products as corporate agents and/ or as master policyholders subject to the applicable regulatory framework.

While banks have the option to set up a separate legal entity for the distribution of insurance products as insurance brokers, till date, such an option has not been exercised by banks, it said.

“One of the ways of reaching the last mile and making available insurance products to the nook and corner of the country is leveraging the vast bank branch network,” the Insurance Regulatory and Development Authority of India (Irdai) said in a circular while setting up the taskforce on bancassurance. To achieve the objective, the regulator said it is felt necessary to review the existing bancassurance intermediation model and carry out modifications, if any, to the regulatory framework governing the same, with a focus on the protection of policyholders’ interest.

The task force is headed by J Meena Kumari, Executive Director (Life), IRDAI. The panel also has representations from banks and insurance companies. The panel has been asked to suggest regulatory stipulations on the market conduct requirements of bancassurance partners, especially in view of mis-selling/forced selling complaints in the distribution model. Besides, it will study the effectiveness of the existing bancassurance model of insurance intermediation and recommend ways and means of improving the efficiency of the same.

The panel will also examine the international best practices in this model and suggest suitable modifications to the domestic regulatory requirements.

The task force has been given two months to submit recommendations to the Irdai.

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