IRDA issues norms for licensing banks as insurance brokers

Banks can now become licensed insurance brokers. The Insurance Regulatory and Development Authority has come up with regulations for licensing banks as insurance brokers.

This move is expected to open up distribution possibilities for non-bank promoted insurance companies that hitherto had no tie-ups with banks under the banassurance model.

Till date, banks were able to distribute insurance products only as a corporate agent (under a bancassurance model).

The existing regulations stipulated that each bank can distribute only one life insurance, one general insurance and health insurance company products.

With the latest move to allow banks to become insurance brokers, the scope for banks to sell multiple company products has become a reality.

But banks are not going to readily jump into the broker bandwagon as many already have floated their own insurance joint ventures. They would not like to go in for selling others’ products when they can sell their own joint venture company’s products.

However, some banks especially those in the private sector are likely to opt for becoming brokers in a big way, according to sources in the banking industry.

srivats.kr@thehindu.co.in

Source: thehindubusinessline