Categorized | General Insurance

IRDA may asks banks to sell policies of multiple insurers

Posted on 18 Feb 2015 by Easypolicy

Mumbai: The Insurance Regulatory and Development Authority (IRDA) is planning to make it mandatory for banks to adopt open architecture under which they will have to sell products of multiple insurance companies.

A private sector life insurance company's CEO said, “The regulator has clearly said that they are going to make open architecture mandatory in order to give choice to customers and boost insurance penetration.”

If the plan is executed, customers will get more choice. However, many companies that have paid hefty amounts for the bank partnership are unlikely to cheer the move. Recently, the Reserve Bank of India allowed banks to become brokers if they so chose.

Tarun Chugh, Managing director and CEO of PNB MetLife India Insurance said, “I believe that the choice for becoming a broker should rest with the Bank depending on their infrastructure and resourcing as broking involves a lot of training and education of the bank staff.”

As per the rules, business done with a promoter bank is capped at 25% while the bank can do 50% with another insurance company and 25% with the third company. Large foreign banks have entered into long-term agreements as part of regional deals which are not available to insurance companies for a longer duration.