Insurance companies do not favor bancassurance model for selling their policies by scrapping the agency model
Mumbai: Insurance companies favor agency model for selling insurance rather than bancassurance model. The insurance industry feels that a major short coming of banks is that they are not able to match products to client needs.
Recently, the IRDA Chairman was quoted as having said that the agency model was on the wane in India as a part of a global trend.
“We would prefer to sell our policies through individual agents as insurance policies need individual attention,” said K G Krishnamoorthy Rao, Managing Director and CEO, Future Generali India.
Over 70% of the life insurance business comes from individual agents, with agents accounting for a whopping 90% for the industry leader, Life Insurance Corporation of India.
Even for the non-life industry, almost 41% of all premiums come from the agency channel, according to a report by the Boston Consulting Group (BCG) and FICCI on the non-life insurance industry.
A top official from the industry revealed that it would be difficult for banks to sell different policies as bank officials lack adequate product knowledge and are not able to understand the nuances of the different product categories.