IBanks can continue as agents of insurers: IRDA

Banks can continue to exclusively sell products of one insurance company as the Insurance Regulatory and Development Authority (IRDA) is renewing the corporate agency licences of banks having such tie-ups with insurers.

IRDA Chairman TS Vijayan said, “As of now, we are giving renewals. We have brought out regulations on banks to become brokers, and we expect the transition to happen in course of time. It cannot be abrupt and the transition will take some time.”

No deadline At present, banks have a corporate agency arrangement with insurance companies to sell insurance products. Under this arrangement, they are allowed to sell products exclusively of one life insurer, one non-life insurer and a standalone health insurer. Speaking on the sidelines of the Global Institute of Actuaries conference in Mumbai, Vijayan said the insurance regulator is working with the Reserve Bank of India for guidelines on what is best for all stakeholders and policyholders.

He also said that the regulator has not yet set a deadline on when banks should become insurance brokers. In December, the Finance Ministry issued a notification asking banks to become insurance brokers, whereby they will sell policies of multiple insurers.

This move is aimed at creating a level-playing field for non-bank promoted insurance companies vis-à-vis bank-promoted insurance companies.

Major public sector and private sector bankshave promoted insurance companies. Most of these banks are not keen to become insurance brokers as they have contractual obligations with joint venture partners of insurance companies.

deepa.nair@thehindu.co.in