The Insurance Regulatory and Development Authority of India (Irdai) is further strengthening the norms against forced selling of insurance policies by banks. In its 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 lines of commission/remuneration received by these banks and other corporate agents that are disclosed, usually on a quarterly basis.
The head of a private life insurer said 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 bancassurance. 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.
Irdai will release the final guidelines soon.