A panel constituted by the Insurance Regulatory and Development Authority (IRDA) on bancassurance has recommended permission to banks to tie up with any two sets of insurers.
In its report, released by the IRDA on Tuesday, the panel states that instead of the existing one set of tie-ups with insurers, banks may be allowed to have tie-ups with any two sets of insurers in life, non-life (excluding health insurance), health insurance and Export Credit Guarantee Corporation (ECGC) and AIC.
Observing that there were ‘enviable' standards in customer service in banks, the panel said: “It is necessary to provide similar set of standards in bancassurance also.”
While noting that growth in bancassurance was ‘phenomenal' in the initial years of opening up of the insurance sector about a decade ago, the panel said the premium growth now seemed to have reached a plateau due to inability of both banks and insurance companies in exploiting the potential of bank customers.
On the compensation to banks, the committee said they should not be eligible for any compensation other than that payable for distribution of insurance products.
In 2009-10, the total commission received by banks was Rs 2,744 crore on Rs 21,947 crore total premiums collected.
The tenure of agreement between a bank and an insurer should not be less than five years.
For better customer service, the insurers and bancassurers should enter into a detailed service-level agreement, it adds.
Bancassurance is the insurance distribution model where insurance products are sold through bank branch network.