Private insurer Reliance Life is exploring a distribution tie-up with several banks, including from the public, private and cooperative sectors, and may offer a stake of up to 5 per cent for the same.
The move comes close on the heels of the Insurance Regulatory and Development Authority (IRDA) allowing banks to act as distributor for multiple insurance companies.
Reliance Life, which is part of Anil Ambani-led Reliance Group's financial services arm Reliance Capital, is one of the few insurers in the country which does not have a bancassurance tie-up or a distribution pact with a bank.
"Allowing banks to act as brokers and sell products of more than one insurer has opened up a distribution opportunity for the company.
"We are in talk with multiple banks, including commercial and co-operative, for a long-term strategic partnership and might offer a small equity stake up to five per cent to a bank of critical size and reach," Reliance Life Insurance CEO Anup Rau told PTI.
IRDA recently has allowed banks to act as brokers and sell products of more than one insurer in order to increase the penetration of insurance in the country.
Many major banks in the country, including SBI, ICICI Bank and HDFC Bank, have insurance ventures within their groups and they act as their insurance brokers.
The banks who don't have insurance units had tied up with insurance firms long before Reliance Group entered insurance business, thus leaving a major gap in Reliance Life's distribution network.
According to industry experts, the banking distribution channel account for almost 60 per cent of the business at leading private sector life insurance companies.
"Our current distribution gap can be served by one bank of a significant size and reach. If we do not get the bank of that critical size, we can have more than one bank on board for selling our insurance products," Rau said.
At the same time, Reliance Life would continue to capitalise on its strong agency distribution model and efforts would be made to improve the agency productivity, he added.
When asked about the focus areas, the Reliance life CEO said: "We continue to focus on traditional products and agent productivity. Our product portfolio has undergone a significant and profitable change, with 80 per cent of business now coming from traditional products, and only 20 per cent from unit-linked products."
Reliance Life registered 48 per cent growth in new business (individual) premium at Rs 267 crore in the first