The Insurance Regulatory and Development Authority (Irda) has rolled out a revised set of draft regulations on bancassurance tie-ups that are expected to give more flexibility to banks as well as insurers.
Bancassurance is a model that allows banks to sell insurance products.
The move comes just a week after the finance ministry permitted banks to sell insurance products offered by more than one insurer, giving the much-needed flexibility to insurers and banks. The new guidelines are expected to improve insurance penetration across the country.
Currently, one bank can deal with only one insurer (one life and one non-life). But as per the proposed norms, a bank can tie up with a particular life, non-life and health insurance company in maximum 20 and minimum 10 locations. For the remaining areas, it will have to seek different partners.
?The distribution for bancassurance may either be through the agency channel or the broking channel. The conduct of bancassurance through a broking channel will be governed by the Irda Regulations, 2002, and applicant desirous of conducting such business may apply as per the procedure laid down in the said regulations. The conduct of business through the agency channel will be as per the regulations herein contained,? Irda said in the draft circular.
The insurance regulator has also divided 40 locations across the country into three zones, namely A, B and C. While Zone A includes metros and other tier-I cities, Zone B and C include tier-II cities, North-eastern states and Union Territories.
The bancassurance agent will fall within the ambit of Banking Ombudsman Scheme 1995 for the purposes of grievance redressal against deficiency of services and not answerable to Insurance Ombudsmen.
According to Irda, every licence granted by the regulator will be in force for three years and can be renewed for a further period of three years.
