IRDAI puts a check on bancassurance to curb mis-sale

The Insurance Regulatory and Development Authority of India has put norms against forced selling of insurance policies by banks. In a recent meeting, IRDAI decided to seek an undertaking from the CEO and the Chief Financial Officer (CFO) of the corporate agent (including banks) that there is no forced selling of an insurance product to customers at periodic intervals.

This would be on the line of commission/remuneration received by these banks and other corporate agents that are disclosed usually on a quarterly basis. Often, banks and financial institutions that act as corporate agents force the customer to buy insurance from a particular insurer.

It was suggested that the head of the banks (and other corporate agents) should be extra cautious to ensure that no product is forcefully sold. This would be part of the regulations on registration of corporate agents. The head of a private life insurer said that there have been instances of banks trying to persuade customers to buy an insurance product. “It could be a life cover or a personal accident cover with low premiums that are pushed with a loan or account opening.

Unless a customer wants the product, they should not be made to buy it”, he said. This would mean those insurers without a bank partner or promoter would still have to wait longer to get business from banc assurance. The regulator has said an insurer can have tie-ups with up to three insurers in any line of business-life, non-life or health.