The Insurance Regulatory and Development Authority of India (IRDAI) has formed a taskforce to look into various aspects of the bancassurance channel, including mis-selling.
“Despite the large network of the banks through their branches across the length and breadth of the country, their contribution of banks as corporate agents is only 5.93 per cent of non-life premium and 17.44 per cent of the new business premium for life insurance for the year 2023-24,” the regulator said in a circular.
“One of the ways of reaching the last mile and making available insurance products to the nook and corner of the country is leveraging the vast bank branch network,’‘ it said.
To achieve this objective, the regulator felt it was `necessary’ to review the existing bancassurance intermediation model and carry out modifications, if any, to the regulatory framework governing the same, with focus on the protection of policyholders’ interest.
J. Meena Kumari, Executive Director (Life), IRDAI, will be chairperson of the taskforce which will have Yegna Priya Bharat, Chief General Manager (Health); Surya Kumar, Chief General Manager (Supervision), and J. Anita, Chief General Manager (Intermediaries), of IRDAI as members. It will also have industry representatives.
Terms of reference
The terms of the reference of the taskforce include suggesting the regulatory stipulations on the market conduct requirements of bancassurance partners especially in view of mis-selling and forced selling complaints, to study the effectiveness of the existing model of the channel and recommend ways and means of improving the efficiency and to examine the international best practices in this model and suggest suitable modifications.
Stating that banks play an important role in distribution of insurance products, the insurance regulator observed that while banks had the option to set up a separate legal entity for distribution of insurance products as Insurance brokers, till date, such option has not been exercised by banks.