Restrictions on bancassurance may not be a great step: HDFC Life's Padalkar

Restrictions on the bancassurance channel might not be a great step at a time when it has more touchpoints and the number of complaints is not higher than other channels, said Vibha Padalkar, managing director (MD) and chief executive officer (CEO) of HDFC Life Insurance on Thursday.

 

Speaking on the sidelines of MEDC’s Insurance & Reinsurance Conference 2025, Padalkar said that imposing restrictions on bancassurance may not be a wise move when data does not support it, particularly as bank touchpoints today are ten times more. “When there is a crying need for insurance penetration in India, I think it might not be a great step,” she said.

 

Bancassurance is a partnership between banks and insurance companies to sell insurance products through bank branches. In October 2023, the Insurance Regulatory and Development Authority of India (Irdai) formed a task force to review the existing bancassurance framework and improve its efficiency amid complaints of mis-selling or forced selling of policies.

 

Previously, during SBI’s Economic Conclave, both the Finance Minister Nirmala Sitharaman and Irdai Chairman Debasish Panda expressed concerns about mis-selling or forced selling of insurance products via banks and emphasised the need to restore customer confidence in the system while urging banks to focus on their core banking services.

 

Sitharaman had said, “I wish to say this for the due consideration of the bank boards: sale of insurance by banks has raised concerns of instances of mis-selling, and I would say this has contributed indirectly to the cost of borrowing for the customers. So banks will have to look at this, look at their core banking activities, and not burden customers with insurances they don’t require.”

 

In December, there were reports stating that the insurance regulator is likely to introduce norms to limit the over-dependence of life insurers on their parent bank for business sourced through bank channels. However, in the post-earnings analyst call for Q3FY25, listed life insurers HDFC Life Insurance and SBI Life Insurance said they had not heard anything regarding the same from the regulator.