Punjab National Bank (PNB) has decided to participate in the life insurance venture through a ‘corporate agency tie-up along with an equity participation with an existing Indian life insurance company.
In fact, the bank has given up its earlier plans to set up an insurnace venture along with a foreign partner. Accordingly, request for proposals (RFPs) have been issued to the existing ten life insurance companies which include Aegon Religare, Aviva, Bharti AXA, Bharti Sun Life, DLF Pramerica, Future Generali, HDFC Life, Max New York and Met Life Insurance.
The bank has taken this decision after it received advice from the consultant Boston Consulting Group (BCG), which was roped in by the bank for the job. As a brownfield model, the bank would first strike a tie-up for the distribution and then it will pick up equities from the life insurance company.
Talking to FE on the issue, KR Kamath, CMD, PNB, said that ?After weighing various options, we finally arrived at this model?.
The idea was to save time as going for a new life insurance arm would take three years from now, said Kamath. Currently, the bank is selling the products of Life Insurance Corporation which will have to be cancelled by it as the bank can sell only one life insurance company’s products in the life space as per the existing insurance regualtory framework.
?But, our bank was not looking at foraying into non-life insurance as of now, said Kamath. After finalising the life insurance company the banks will file a joint application before IRDA for the corporate agency tie-up, said Kamath.