IRDAI constitutes taskforce to review existing Bancassurance framework

The Insurance Regulatory and Development Authority of India (Irdai) formed a taskforce that will review the existing bancassurance framework and improve the efficiency of the same amid complaints of mis-selling/forced selling of policies.

"Despite the large network of banks through their branches across the length and breadth of the country, the contribution of banks as corporate agents was 5.93 per cent of non-life premium and 17.44 per cent of new business premium for life insurance in the financial year 2022-23," Irdai said in its circular. Further, despite having the option to set up a separate legal entity which will ensure the distribution of insurance products as insurance brokers, banks have not exercised this option.

As a measure that will boost insurance penetration in the country in line with the regulator's aim to ensure insurance for all by 2047, it is important to leverage the vast branch network of the banks in ensuring the availability of insurance products in every nook and corner of the country.

In order to achieve this objective and considering the interest of the policyholder, Irdai has set up a taskforce to examine the bancassurance framework. The committee will be headed by J Meena Kumari, Executive Director (Life) Irdai, who will serve as the Chairperson of the taskforce.

Other members will include senior officials from Irdai, representatives from the insurance companies and banks as well as R K Sharma, CGM (PP & GR), Irdai, serving as the Member-Convener.

As per the terms of reference for the taskforce, it has to suggest regulatory stipulations on the market conduct requirements of bancassurance partners amid rising complaints of mis-selling or forced selling of policies from customers.

Further, the committee will study the effectiveness of existing bancassurance models and suggest ways to improve its efficiency. Also, it will examine the practices followed internationally and suggest suitable modifications that can be implemented on domestic regulations.

The taskforce is asked to submit these recommendations within a period of two months from the order.