Banks as brokers: Life Insurance Council has no firm view yet

Our Bureau Hyderabad | Updated on February 20, 2014 Published on February 20, 2014

No consensus Rajesh Sud (right), Chairman, Life Insurance Council, andV Manickam, Secretary-General, at a press conference. PV SIVAKUMAR

Compulsory insurance brokerage not the only way to expand reach: Chairman

The Life Insurance Council could not arrive at a consensus on the issue of allowing banks to sell policies of multiple insurers as brokers.

“We are still in the discussion stage and I am unable to tell our view,” V Manikam, Secretary-General of the Council, told reporters here on Thursday.

The Life Insurance Council is an apex industry/consultative body representing 24 life insurers in the country.

FinMin move

It may be noted that the Ministry of Finance has asked public sector banks to take up compulsory insurance brokerage from January 15, 2014, which has however, been kept in abeyance.

Rajesh Sud, Chairman of the Insurance Awareness Committee of Life Insurance Council, and Chief of Max Life Insurance Co, said there were issues and all members of the council did not believe that compulsory brokerage was the only way forward for expanding insurance penetration in the country.

Foreign partners of private life insurers had different agreements which were entered into on the basis of the market/regulatory scenario, when banks were acting only as corporate agents, not as brokers, he added.

Selling policies

As a corporate agent, a bank is allowed to sell products of a single life insurance company. But as a broker, it can sell multiple policies of different insurers.

The Government had recently formed a committee, which is presently talking to various shareholders. The Council’s view will become vital in this context.

On the industry growth, Sud said it could grow in single digit in the current financial year. The industry is hoping to cash in on the demand for more tax-saving products as the financial year draws to a close.

“There are 367 products in the market, which were launched in accordance with the new norms for product design that came into effect from January 1, 2014. We are positive on sales growth,” he said.

According to the Council’s projection, the life insurance industry is expected to grow between 12 and 15 per cent in the next three to five years. “By 2020, the present 36 crore policyholders will increase to 60 crore, while assets under management by life insurers would reach ₹60-lakh crore from ₹20-lakh crore at present,” Manikam said.

Published on February 20, 2014
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