Mumbai: The Insurance Regulatory and Development Authority of India (Irdai) is concerned over insurers' heavy dependence on parent banks for bancassurance sales and may come up with regulations to address it, according to sources. The regulator may ask life insurers to diversify their bank partnerships, curbing the dominance of parent banks, which in some cases contribute over 90% of total sales for their insurance subsidiaries. Insurers like Max Life, HDFC Life and SBI Life depend largely on their parent bank to sell products. The regulatory nudge is coming at a time when both the finance minister and Irdai chairman has expressed concerns over misselling of insurance products by banks. If a company relies on just one channel to sell insurance products, they may believe their business is doing well. However, regulators will monitor how things are going. It's important for the company to gradually reduce reliance on that one channel and start focusing on other ways to distribute their products, the source said. If implemented, the rules would follow stakeholder consultations and the issuance of an exposure draft, ensuring industry-wide feedback.The regulator has been closely monitoring bancassurance trends to address concerns of over-reliance and ensure a level playing field for those not promoted by banks. Some insurers have diversified by investing in agency and digital channels. To bring down the reliance, the regulator has allowed open architecture where distributors can sell products of multiple life, general and health insurance.
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