RBI hurdle for banks entering into insurance broking

Banks may not immediately get to sell products of multiple insurance companies as the Reserve Bank of India is not very keen on them being exposed to new risks.

 

Unlike a corporate agency where the life insurance company is responsible for missteps by the agent, in a broking model it is the intermediary who takes responsibility for mis-selling.

“Banks are corporate agents (Bancassurance) because they voluntarily applied for corporate agency license and got their licences. They cannot unilaterally be ‘notified’ as brokers now. They have to apply for a broker’s license and obtain it,” said K K Srinivasan, former member, IRDA, in response to a query on whether banks can start selling products of multiple companies.

http://timesofindia.indiatimes.com/business/india-business/RBI-hurdle-for-insurance-broking/articleshow/16648706.cms