Insurers split over bank tie-up norms

The insurance industry is split over the regulators proposal to get banks to sign zone-wise distribution agreements with insurers.Companies are likely to put a middle-path proposal of allowing a bank tie-up with two insurers in the meeting called by the regulator on Wednesday when all life and non-life companies will be present, TOI reports.

 

Last month,the regulator Insurance Regulatory and Development Authority (IRDA ) came out with new draft guidelines whereby the country would be divided into several zones and banks would need to enter into distribution agreements with insurance companies for each zone.The guidelines also aimed at preventing insurers cornering the pan-India distribution capabilities of large banks.

 

The Life Insurance Corporation and bank-promoted insurance companies such as SBI Life,ICICI Prudential Life Insurance,HDFC Life Insurance do not want to lose their core strength.But the new insurance companies without any significant bank partners are happy.The flip side of this regulation is that a bank,which has promoted an insurance company,will not be able to offer policies by its subsidiaries in all its branches.The general feeling is that it is better to have a situation where banks can distribute for multiple companies rather than break up the distribution system, said an industry person. Read more