IRDAI assembles taskforce for bancassurance
The share of banks as corporate agents was 5.93% of non-life insurance and 17.44% of new business premiums in 2022-23.
The Insurance Regulatory and Development Authority of India (IRDAI) formed the Taskforce on Bancassurance Channel. Whilst banks have the option to establish separate legal entities for insurance distribution as insurance brokers, they haven't exercised this option so far.
The task force's terms of reference include:
- Suggesting regulatory stipulations concerning market conduct requirements for bancassurance partners, particularly in response to complaints related to mis-selling or forced selling in this distribution model.
- Assessing the effectiveness of the existing bancassurance model and proposing ways to enhance its efficiency.
- Studying international best practices in this model and recommending any necessary adjustments to domestic regulatory requirements.
- Addressing any other pertinent matters referred to the task force.
Despite the extensive branch network of banks across the country, the contribution of banks as corporate agents accounted for 5.93% of non-life insurance premiums and 17.44% of new business premiums for life insurance in the year 2022-23.
To extend insurance products to every corner of the country and reach the "last mile," leveraging the vast bank branch network is essential.
This requires a review of the existing Bancassurance intermediation model and potential modifications to the regulatory framework with a strong focus on safeguarding policyholders' interests.
Consequently, the task force named J. Meena Kumari, Executive Director (Life), IRDAI, as its chair.
The task force is expected to submit its recommendations within two months from the date of this order.