<div><em>Not just fixing accountability for forced selling, new corporate agency rules in insurance now allows corporate agents to offer insurance products of more than one insurer. Sunil Dhawan reports</em></div><div> </div><div>More choice for buying insurance! Insurance Regulatory and Development Authority of India (IRDAI) has allowed corporate agents such as banks to offer insurance policies of more than one insurance company. Presently, banks are only allowed to sell insurance products of a single insurer with whom they have tied-up. Going forward, they can tie-up with a maximum of three insurers. There are 7316 corporate agents in the country today including banks, NBFC and other registered and licensed private entities.</div><div> </div><div><strong>The new rule:</strong> A Corporate Agent dealing in Life or General line of business may have arrangements with a maximum of three life or general insurers respectively. Further, the business of Corporate Agent (General) has been capped at Rs 5 Crore per risk for all insurances combined. While for the Corporate Agent (Health), they have also been allowed to have arrangements with a maximum of three health insurers. In the case of Corporate Agent (Composite), there can be a maximum of three tie-ups as well. Such practise will come into effect from 1st April, 2016.</div><div> </div><div><strong>Open architecture:</strong> With this move, IRDAI seems to be moving towards the open architecture system. Today for example, State Bank of India and ICICI Bank are corporate agents of SBI Life insurance and ICICI Prudential life insurance. They therefore sell products of only these insurers. Going forward, the product portfolio will see a sea-change and the competition is sure to go up. </div><div> </div><div><strong>What it does:</strong> By bringing in these changes, customer gets more choice. Instead, of a single insurer’s products, customer will now have more options to consider. Banks or other corporate agents too can have different products to offer to clients. No matter how standardised the product structure could be, there are differentiations that makes one product better than other. </div><div> </div><div>The corporate agent having tie-ups with more than one insurer is expected to disclose to the prospective customer the list of insurers, with whom they have arrangements to distribute the products and provide them with the details such as scope of coverage, term of policy, premium payable, premium terms and any other information which the customer seeks on all products available with them. </div><div> </div><div><strong>Forced selling:</strong> At times, corporate agent such as bank may force customer to buy insurance product as an ancillary product for having bought any primary banking product. This is largely the case in home loans where insurance is told to be bought ‘mandatorily’ if a loan is seeked. There is no such compulsion. The top officer of the corporate agent has been asked to furnish a statement stating no forced selling is done. This step will inculcate discipline in the system as the accountability is being set. </div><div> </div><div><strong>End note: </strong>Ask for other insurer’s products if you are forced to buy only one. Further, as a buyer you may also ask commissions across those products which the agent will earn. Overall, this move gives more flexibility, transparency and choices to insurance buyers in the country.</div><div> </div><div> </div>
