IRDAI
Mumbai: The insurance regulator is considering bringing in regulations to cap the share of a parent bank in the bancassurance business of its life insurance subsidiary. According to sources, the Insurance Regulatory and Development Authority of India (IRDAI) wants insurers to diversify their distribution channels and sell their products to customers of multiple banks instead of selling policies to just promoter bank customers, a highly placed source said on Thursday.
Currently, several insurance companies promoted by banks get 80-90 per cent of their new sales from parent banks.
The regulator may initially release a draft exposure or consultation paper to gather stakeholder feedback before implementing any final rules.
According to the source, the IRDAI wants to reduce concentration risk due to over reliance on a bank and encourage insurers to form partnerships with multiple banks to ensure a diversified bancassurance network.
The insurance regulator also wants brokers (who serve insurance to companies) to expand their footprint beyond the metro cities and would be acting tough when the brokers approach the regulator to renew their licenses. An insurance broker needs to renew their license every three years. “Why is there concentration of distributors in top metros only including Mumbai and Delhi. Who will serve the customers of Bhopal, Lucknow or Indore? When we issue licenses to distributors, they have to show a blueprint on how they plan to expand beyond the metros which we don’t find them doing. So why should we renew their license? The regulator will do hard talking,” said the source.
According to the source, the IRDAI wants to reduce concentration risk due to over reliance on a bank and encourage insurers to form partnerships with multiple banks to ensure a diversified bancassurance network.
The insurance regulator also wants brokers (who serve insurance to companies) to expand their footprint beyond the metro cities and would be acting tough when the brokers approach the regulator to renew their licenses. An insurance broker needs to renew their license every three years. “Why is there concentration of distributors in top metros only including Mumbai and Delhi. Who will serve the customers of Bhopal, Lucknow or Indore? When we issue licenses to distributors, they have to show a blueprint on how they plan to expand beyond the metros which we don’t find them doing. So why should we renew their license? The regulator will do hard talking,” said the source.
( Source : Deccan Chronicle )
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