IRDAI instruct insurers not to depend on banks for selling policies

The insurance regulator has warned life companies against overdependence on banks for selling policies. Banks are now the dominant mode for distributing policies of private insurers, and the share of individual agents which is the core agency force of the insurance industry has declined.

IRDAI had called a meeting of CEOs of life companies and bancassurance was one of the issues raised where the fear was that if there was any eventuality which compelled the RBI to prevent banks from selling insurance, companies dependent on banks would see their sales being hit.

Insurance officials, however, say the bancassurance model is line with the developed markets, and banks are the dominant channel for distribution of life products in Europe and they are growing their share in Asia.

IRDAI also made it clear to the industry that they would not have the freedom to increase commission. Earlier, the regulator had said that it would focus on overall costs to the policyholder, leading many to believe that commission rates would be freed as long as they remain within the overall cost ceiling. The regulator told life companies that the trend was towards lower commission across industry and the insurance sector could not be an exception.

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