Insurers, particularly those promoted by non-banking companies, are likely to see a major boost in insurance distribution, as banks can now start selling products of multiple insurers.

On Tuesday, Future Generali Life, which did not have a bancassurance partner, announced a partnership with Saraswat Bank, which has a tie-up with HDFC Life for distribution of life insurance products.

Industry experts say that other non-bank-promoted insurers, such as Birla Sun Life, Reliance Life, Bajaj Allianz, Aegon Life and Shriram Life, are also likely to get into similar tie-ups with leading banks.

From April, the insurance regulator has allowed banks to tie up with three life insurers, three general insurers and three standalone health insurers to distribute insurance products. Earlier, banks were allowed to have tie-ups with one insurer in each category of life, non-life and standalone health.

Nilesh Sathe, Member-Life at the Insurance Regulatory and Development Authority of India (IRDAI), said 25-30 banks will start distributing products of more than one insurer.

Incidentally, while the regulator has been pushing for an open architecture for distribution of insurance products, most major banks, which have promoted insurance companies, were hesitant to tie up with other insurers as it was a part of the agreement with their foreign joint venture partners.

More favourable Anup Rau, CEO, Reliance Life, said that insurers not promoted by banks are likely to be looked at favourably as there will be no conflict of interest. However, the process will take some time as it is not mandatory for banks to tie up with more than one insurer, he added.

At present, most major public and private sector banks, such as State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have promoted insurance companies.

Arijit Basu, MD and CEO of SBI Life, said that SBI has opted not to go for three insurance tie-ups. However, he said that in the next three years the bank may look at multiple insurance partners as it gains more expertise cross-selling insurance products.

Insurers have also begun talks to tie up with the recently licensed payments and small finance banks.

Tarun Chugh, MD and CEO, PNB MetLife, said the industry is likely to see the launch of simple OTC products, which can also be bought online with the new payment banks. However, Jyoti Punja, Chief Distribution Officer at standalone health insurer Cigna TTK, said that open architecture may also lead to complexities because the bank will now have to deal with more than two to three insurers.

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