Irda panel to review bancassurance model

Kolkata, Mar 29 | Updated: Mar 30 2007, 06:54am hrs
To revisit the existing bancassurance model in the Indian insurance sector, the Insurance Regulatory and Development Authority (Irda) has set up a high level committee headed by R Kannan, who has recently assumed charge as a member in the Irda.

According to sources familiar to the situation, the panel would look into the possibilities of allowing multiple bancassurance tieups between insurers and banks. The possibilities, which the panel would be exploring, will allow a insurer to tie up with two different banks, one in the urban and other in the rural areas, sources said.

The regulator is of the view that a progressive, step-by-step approach for the insurance sector to avoid unnecessary competition, sources added. The existing guidelines allow commercial banks to have only one bancassurance agreement with one insurer each, in the life and non-life insurance segment. This has made life insurance difficult for insurers as almost all the banks have tied up with one insurer or the other. It was a long standing demand of the insurance players to allow banks to have multiple tieups with insurance firms.

The plight of the insurers has further compounded with banks, mainly from the public sector, venturing into the insurance sector. Already a string of banks have announced their forays into the insurance sector, both in the life and non life insurance sector and they include banks like, Bank of India, Allahabad Bank, Canara Bank, Union Bank of India, IDBI Ltd, Oriental Bank of Commerce, and Bank of Maharshtra.

In addition, the Bank of Baroda and Andhra Bank are also planning to enter the insurance sector.