The draft guidelines on bancassurance put out by the Insurance Regulatory Development Authority recently, if implemented in word and spirit, will turn out to be cumbersome for the industry and will make the process of providing customer service more difficult for companies.
The industry is therefore divided on the draft guidelines, under which the regulator has segregated the country into geographical zones and has allowed insurance companies to partner with different banks and NBFCs in different states for selling their products.
Currently, a bank can tie up with only one life insurer and a general insurer for selling insurance products to its customers.
There will be different set of challenges for bank promoted companies and those which do not have banking relationship; said Mr Pawan Verma, chief operating officer, Star Union Dai-ichi Life Insurance Company Ltd. Most companies have already invested in training the manpower for distribution of their products. The new guideline, if implemented, might require companies to undertake fresh training programmes, he pointed out.
Mr Verma was in town to announce the launch of the company’s tax saving endowment plan – Dhan Suraksha Platinum on Tuesday.
“A bank promoted company can leverage on the branch network of the promoter bank. We have been particularly successful in activating the branch network,” Mr Verma said.
Almost 99 per cent of Star Union’s (jointly promoted by Bank of India, Union Bank of India and Dai-ichi Life Insurance) business comes from the bancassurance channel. “We are now adding strength to our agency network. We have close to 440 agents across 8 centres, we want to increase it to 2,000 by March 2013,” Mr Verma said.
For the purpose of appointing bank partners, the draft norms divide the country into three zones -- A (comprising 13 states), B (comprising nine states) and C (comprising 17 states).
According to Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance, “There have been lots of debate and dialogue on this but if IRDA has said this is the way to go, it will happen.”
The tie up with banks in a zone specific manner may lead to some difficulties, especially for customers who are on the move (like for example transferable jobs). “Customer service will be a big issue particularly for mobile customers. One needs to be figure out how to service such customers,” he told newspersons on the sidelines of the launch of its Educare Plan here on Tuesday.
There would be more debates and discussions on this issue for the next 8-12 weeks before any clarity emerges. “Our major distribution channel is the agency model, which accounts for almost 40 per cent of our total business. We are also pretty strong on the direct channel through our sales team and online platform which together accounts for about 18 per cent of the total sales,” Mr Srivastava said. EOM.