According to IRDA’s draft guidelines, banks will be able to tie-up with multiple insurance companies (life, non-life and health) across the country
IRDA’s new draft guidelines on bancassurance say that banks will be able to partner with multiple insurance companies in a controlled manner. Presently, a bank can sell products of only one insurer in the life and non-life segments.
According to the draft guidelines, a bank would be allowed to sell insurance products of one life, one general and one standalone health insurance company in a particular state. However, in another state, the same bank can sell the product of another set of insurance companies.
The draft guidelines have categorized the states in three Zones. Zone A includes metros like Delhi, Mumbai, Chennai and Bangalore. Zone B has states like Uttar Pradesh, Rajasthan, Bihar and Madhya Pradesh and Zone C includes north-eastern states along with Goa and Uttarakhand. An insurance company can’t tie up with any bancassurance agent in more than nine states and Union territories (UTs) in Zone A and six states and UTs in Zone B. The guidelines are quiet about Zone C.
Explaining further, the IRDA draft guidelines suggests that I Bank can be bancassurance agent for A Life Insurance co in the nine states of Zone A can partner with but for the rest of the states in the Zone, I Bank will have to tie-up with other insurer.
“This is clearly a step in the right direction as banks will be able to monitor insurance companies’ service levels and would be able to offer customers better service through optimal products,” said P Nandagopal, MD and CEO, India First Life insurance.
Partnering one state
Additionally banks can tie up with a specialized insurance company. Also, a specialized insurer can tie up with any bancassurance agent across the country. However, ‘the specialized insurance company’ has not been defined.
“A number of changes are expected from IRDA to take the insurance industry in a right direction. We are hoping these guidelines will help us to deliver satisfactory customer service,” said Krishnamoorthy Rao MD & CEO, Future Generali India Insurance.
Commission Cap
The draft guidelines have also suggested capping the commission to 85% of the commission payable under the Insurance Act, 1938 to the bancassurance partner.
The draft has several other guidelines, find the full copy of the guidelines at www.irda.gov.in which is open for public comment till December 12.