IRDA may allow banks to sell multiple insurance

India Infoline News Service | Mumbai |

The current bancassurance model allows a bank to become corporate agent of only one insurer

The Insurance Regulatory and Development Authority is likely to allow insurers to use their bank branches to sell policies, if banks decide to act as insurance brokers, according to a media report.

At present, a broker has to set up a separate subsidiary with a separate share capital for distribution of insurance products. However, IRDA is considering to amend this regulation to allow banks to distribute insurance through their existing branches without forming a separate subsidiary, the report added.

According to IRDA broking norms, banks will represent the customer rather than an insurer. So, it is expected to curb chances of mis-selling.

The current bancassurance model allows a bank to become corporate agent of only one insurer — it can sell insurance products of one life, one general insurer and a standalone health insurer.

Bancassurance refers to distribution of insurance products through banks.

However, after becoming a broker, banks can sell insurance products of multiple insurers.

The life insurance industry has made a representation to IRDA, mentioning that a bank should be allowed to sell policies of five insurers, with not more than 25% share per insurer, the report added.
 

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