Banks to act as brokers by selling insurance products of more than one insurer.
Banks will be allowed to sell insurance policies of more than one insurer, said P Chidambaram on Monday. Following this, banks will act as brokers and the fiduciary responsibility of the bank will be to the policyholders.
“We have been waiting for this measure for a long time. We welcome the regulation as this move will help insurers expand the distribution channel as well as help banks to offer a wider choice of products to their clients,” said a senior official from Reliance Life insurance.
According to current regulation, insurers can sell the products of only one insurer under the bancassurance model.
“As distributors, banks have to accept the responsibility for the sale of such products. They have to carefully suggest products to policyholders,” said Atanu Sen, MD and CEO, SBI Life Insurance.
The finance minister reportedly said, “It was desirable for banks to act as brokers and that the fiduciary responsibility of the bank will be to the policyholders. This will provide the intended policyholder a bouquet of products from which he/she may chose the appropriate product based on his/her needs and will also prevent mis-selling.”
The industry is eagerly awaiting for the detailed guideline and regulations on bancassurance model from IRDA.