Urges Arms Length Between Insurers And Other Financial Entities

The Insurance Regulatory Authority (IRA) is likely to prescribe that an arms length be maintained between insurance companies on one hand and banks and other financial entities on the other.

Speaking at the insurance seminar, N Rangachary, chairman, IRA hinted he did not favour the idea of insurance produts being sold through banking channels. The IRA chief did recognise that there was a need for changing the delivery system of insurance services and dwelt on the the subject of "Bancassurance" ( a term signifying synergies between banking and insurance) and the virtues of telemarketing and direct marketing.

However, he said that an arms length distance will have to be maintained between the entities.

 

His view was not shared by a cross section of participants at the seminar, in particular by N Govardhan, former chairman of Life Insurance Corporation of India (LIC), who stressed upon the need for using the banking channel for selling of policies.

Govardhan also said IRA should specifically define the realm of health insurance, because this overlapped with some of the policies offered by LIC.

IRA is also developing a database on the Indian insurance industry. He said there was a dearth of good, realiable and comprehensive data on the industry and that IRA has started work in this regard.