According to corporate agency rules, banks can tie up with up to three life, three non-life and three standalone health insurers to sell their insurance products
Around 40 banks have evinced interest to open up their branch network to more than one insurance company in the life, non-life and health segments. From April 1, new norms for corporate agency channels will come into place. Nilesh Sathe, member (life) at the Insurance Regulatory and Development Authority of India (Irdai), said even those banks that are promoters of insurance companies have expressed interest to follow an open architecture.
This means those without bank partners or promoters can tie up with these banks. This would help them reach customers throughout the country through these bank branches.
According to corporate agency rules, banks can tie up with up to three life, three non-life and three standalone health insurers to sell their insurance products. However, with banks being given the ultimate liability on any product they sell, experts say the opening up might not yield any results in the near term. Corporate agency network by banks was earlier called ‘bancassurance’, which used to follow a model wherein one bank could tie up with only one life, one non-life and one health insurance company.
After the insurance sector was thrown open to the private sector in 2000, the early entrants rushed in and established tie ups with banks.
Some were also promoted by banks – ICICI Prudential Life Insurance, SBI Life, IDBI Federal Life etc. IRDAI has said that from FY17 onwards, bank boards will be required to give a clear plan as to how and by when would they open up their branch network to more than one insurer in each category — life, non-life and health insurance.
This is because even after IRDAI opened up the bancassurance network to more insurers, no bank approached the regulator for additional tie-ups.
Source: Business Standard