HDFC Bank will no longer exclusively sell its parent firm’s insurance products but will soon start selling its rivals’ products as well. It has shortlisted four life and four general insurance companies for this.
“HDFC Bank has shortlisted four life and general insurance companies, including Bharti Axa, Birla Sun Life, Tata AIA and Bajaj Allainz,“ said two people familiar with the development.“They may start selling products of two life (insurance) and two general insurance companies.“
An official of HDFC Bank said they would not like to comment on market speculation.
HDFC Bank will be joining the likes of Axis Bank, Saraswat Bank and Indian Overseas Bank that have adopted an open architecture model to sell products of more than one insurance company. The Insurance Regulatory and Development Authority (Irda) had recently allowed banks to tie up with up to three companies to sell their insurance products.The industry was however divided on this issue.
Those who had floated their own insurance ventures were opposed to opening up as it would affect their exclusive tie-ups, whereas others were lobbying for an open architecture model. The regulator is in the process of prescribing differential commission for banks, which may be lower than what an agency earns while selling policies.
Banks’ income from insurance companies is likely to be affected as the insurance regulator will come out with a differential commission structure for agency and banks, which could shave off incentives for bankers selling insurance.
Source: The Economic Times
Date: 21st Dec, 2016