IRDAI probes illegal practices in bancassurance segment

IRDAI is probing illegal practices by some private insurers and their partner banks in bancassurance channels, according to a senior Official.

It has come to the IRDAI’s notice that some of the insurers are offering commission or remuneration to the bankers that is more than the maximum stipulated levels under the norms, a senior regulatory official said.

Several large insurance companies and their parent companies are maintaining current account balances with various banks which also act as corporate agents.

“The interest forgone on such large balance is counted towards the compensation banks are to receive for the sale of insurance products. Due to this practice, the interest of policy holders is at stake as these funds earn zero returns,” the official said.

Such practices are in gross violation of the IRDAI’s norms for bancassurance industry and standard corporate governance norms.