IRDA, RBI discuss concerns over insurance broking

 

 

 

In an effort to address the concerns of banks taking the broking route for selling insurance policies, the top brass of the Insurance Regulatory and Development Authority  met their counterparts from the Reserve Bank of India and chiefs of public and private sector banks recently.

 

The three major concerns put forth by the banks were related to their contracts with joint venture partners, equity arrangement and non-compete clause with insurance companies. 

 

The other major concern is the IRDA provision that banks will have to cap business from their own group companies at 25 per cent for life insurance with a similar cap on non-life insurance business too. “To ensure that there would be no disruption in business, we explained that 25 per cent cap can be implemented in a phased manner in three-five years,” said a senior IRDA official.

 

A senior IRDA official said,  “On selling products of multiple insurers, we said that the customer will have more choice and will be able to choose the product best suited to his needs rather than the insurer’s product with whom the bank has an exclusive tie up. On training bank personnel, we explained that comparison is enabled by IT systems.”