- February 2, 2023
After resisting open architecture for a while, banks are now showing interest in selling the products of multiple insurance companies. Banks usually sponsor insurance companies.
Last year, the Reserve Bank of India (RBI) allowed banks to sell insurance products of multiple insurance companies, but did not make it mandatory. This norm, which will come into effect from April 1, will allow one bank to sell three separate products for life, general and health insurance.
“Over 40 banks, including the ones that have insurance products, have shown interest in selling products of multiple insurance companies,” said Nilesh Sathe, member, life, Insurance Regulatory Development Authority of India (IRDAI), on the sidelines of an event organised by the National Bank for Agriculture and Rural Development (NABARD).
Till date, banks could sell one insurance product from each insurance segment — life, general and health — under bancassurance agreements. Bancassurance follows a corporate agent structure, which means banks sell insurance as corporate agents.
Banks that have promoted insurance companies were initially hesitant to offer insurance products of other companies, as their original shareholders’ agreements with their respective foreign partners was not in favour of such a move.
All of the large lenders of the country, including State Bank of India, ICICI Bank, Bank of Baroda and Canara Bank, have entered the insurance space.
Mr Sathe also said the insurance regulator has allowed four global reinsurers to open branches in India, but declined to give details.
Last year, RBI allowed banks to sell products of multiple insurance companies
Source: The Hindu