The Insurance Regulatory and Development Authority (Irda) is working on new guidelines for selling insurance products through banks, or bancassurance.
“Once we develop a proper legal framework for bancassurance, we can have separate insurance products for banks. As the cost of selling insurance is less in banks, the customer must get the products cheaper. We are looking at products, which can even be sold in rural areas through post offices,” said R Kannan, member, actuary, Irda, at an industry body meet in Kolkata On Thursday.
The need for a separate insurance product for the banking sector was in view of Irda norms, which did not allow the sale of same products under different premium rates, Kannan said. This apart, Irda is also thinking of bringing certain state-sponsored insurance schemes such as the Employees State Insurance Corporation (ESIC) under its ambit.
NEW STRATEGIES
* Irda is thinking of bringing certain state-sponsored insurance schemes such as the Employees State Insurance Corporation (ESIC) under its ambit
* The regulator is also contemplating vesting more responsibilities with the Life Insurance Council and the General Insurance Council and ultimately developing a self-regulatory organisation (SRO)
* The insurance regulatory body would come up with detailed study on the portability of health insurance policies in the next three months
* The regulator will also push products combining pension and health insurance for the benefit of senior citizens
* In order to promote micro insurance, Irda might allow more than one life and non-life partners come together to serve in the rural areas, under the open architecture system
“At present, there are many government health schemes outside the ambit of Irda. We are in dialogue with the Union government in this regard, and examining if the pricing of such products are proper,” said Kannan.
Irda was also contemplating vesting more responsibilities with the Life Insurance Council and the General Insurance Council, the representative body of the insurance industry, and ultimately developing a self-regulatory organisation (SRO).
“We want to improve the way the councils are functioning so that they become SROs. We are looking how they can do data dissemination for companies,” he said.
Also, Irda would come up with detailed study on the portability of health insurance policies in the next three months, Kannan said.
The regulator also expressed concerns about the increasing cost of operations of insurance companies. The total expense as the percentage of the premium has increased from 22 per cent to 29 per cent in the last four years. Ideally, expenses should be less than 25 per cent of the total premium, said Kannan.
Irda was also looking at protecting policy-holders’ interest in cases of orphan policies, which are policies not being serviced by the agent who initially sold the policy. Also, in order to promote micro insurance, Irda might allow more than one life and non-life partners come together to serve in the rural areas, under the open architecture system.
The regulator will also push products combining pension and health insurance for the benefit of senior citizens. Kannan also pointed that there was a need for a proper pricing of health insurance policies by non-life insurance companies.
Insuarance is intangible product and it is sold and kept in force through personal insistance and cannot be sold at bank counters.It is presently miss sold by bank managers by linking it with loan and cash credit facilty.Eventually the renewals are seldom paid and policy lapses. IRDA should collect information on Bancasuarnce lapsation.(It is very high upto 50-60%).So policyholder looses money. Further there is Moral hazard involed in insurance forinsurance,In bancassuarance bank manager or designated persongive MHR just as a formality and this may adversely affect death cliams of insurers .It is also costly distribution channel, as the bank officials are given extra prizes apart from commission given to banks.The existing system of bancassuance is failure and only agency system is success
Posted by: prakki.rao
January 03 , 2010, 09:48 IST
of course, you may be right some extent that bankassurance is being done forcefully. but you are not thinking that the positive side that bank is providing an opportunity of protecting themselves by way of insurance. it is not costly, rather than facilitating the loanees to get finance for getting insured even though they are not able to save. banks are protecting not only the borrowers, and protecting their families in the uncertain eventualities of the life of borrowers. ok.
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