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Bundled insurance to be banned partially: Reports

IRDA had introduced a discussion paper in which it said that a dealer shouldn’t be pushing products but a customer should be given more options

June 20, 2012 2:36 IST | India Infoline News Service
To ease its stance on bundling of insurance products, the regulator would now go for a partial ban on the practice instead of a blanket ban said earlier.

At present insurance is bundled with other products like online booking of air tickets, credit cards, vehicles, consumer durables, home loans or personal loans. According to IRDA, such insurance products are not always in the interest of the customers.

In early June, the regulator said that it is not against bundling of insurance with other products as it provides benefits like extended warranty against damages of consumer durables, personal accident cover or payment protection of credit cards. However, IRDA is concerned about the possibility of forced selling to uninformed customers. It has noted that there are chances of forced selling when the product is sold as a precondition to provide a particular service.

After several cases of mis-selling were reported last year, the regulator had decided to ban the practice. IRDA had introduced a discussion paper in which it said that a dealer shouldn’t be pushing products but a customer should instead be given more options.

The reports added, regulator’s stance was so firm on these covers that they were all set to be cancelled. Insurers, however, were against the complete ban and they seem to have convinced the regulator.

According to insurers, a bundled-in insurance cover helps in increasing penetration and a complete ban would hamper business. So instead IRDA has decided to impose a partial ban. In this case, the regulator can direct which products can be bundled and which can’t. The list of which products can be bundled and which cannot would be included in the final IRDA guidelines that would be released soon.

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