Irdai Forms Taskforce To Review Bancassurance Norms

The Insurance Regulatory and Development Authority of India (Irdai) has established a taskforce to investigate various aspects of the bancassurance channel, including concerns about mis-selling.

"Despite the extensive network of banks with branches spanning the entire country, their contribution as corporate agents stands at only 5.93 per cent of non-life premium and 17.44 per cent of the new business premium for life insurance in the year 2023-24," stated the regulator in a circular. "One approach to reach every corner of the country is by utilising the extensive bank branch network," the circular said. 

To accomplish this goal, the regulator deemed it "necessary" to review the current bancassurance intermediation model and make any necessary adjustments to the regulatory framework governing it, with a focus on safeguarding the interests of policyholders.

J. Meena Kumari, Executive Director (Life) at IRDAI, will serve as the chairperson of the taskforce, with Yegna Priya Bharat, Chief General Manager (Health); Surya Kumar, Chief General Manager (Supervision); and J. Anita, Chief General Manager (Intermediaries), of IRDAI as members. Industry representatives will also be included.

The taskforce's scope includes proposing regulatory requirements for the market conduct of bancassurance partners, particularly in light of concerns about mis-selling and forced selling. It will also examine the effectiveness of the existing channel model and suggest ways to enhance its efficiency, as well as analyse international best practices and recommend suitable modifications.

The insurance regulator emphasised the significant role that banks play in the distribution of insurance products, noting that although banks have the option to establish a separate legal entity for insurance product distribution as insurance brokers, they have not yet exercised this option.