IRDA might prohibit banks from selling multi Insurance products
IRDA is planning to permit banks to sell only five products – two Life Insurance, two- non-Life Insurance and one Health Insurance of different insurers under bancassurance. Banks will be given the liberty to allow preference to any one player, an industry official informed Cafemutual.
By the middle of the current financial year, IRDA would introduce new regulations on bancassurance. “We see a lot of tie-ups happening in the industry. We hope that IRDA will soon announce new rules for multi ties to avoid chaotic situation,” said Vibha Padalkar, CFO, HDFC Standard Life Insurance.
The banks would be paid higher commission than retail. All expenditure incurred by banks for selling insurance policies would be in their books & thus they would be paid a higher commission. Currently, commissions in the retail segment varies from 6% - 8%.
The insurance industry still favours the agency model for selling insurance rather than bancassurance. 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 (LIC). Even for the non-Life Insurance industry, almost 41% of all premiums come from the agency channel.
“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.