In a few months you may expect your bank to start offering you insurance products of various insurance companies rather than pushing for just one company’s product with which they have a joint venture partnership. The Insurance Regulatory and Development Authority (Irda) is set to make it mandatory for banks to adopt the broking model rather than following the corporate agent structure.
“It will definitely lead to higher choice for the consumer at a particular bank branch and therefore it is good from that perspective,” said Subrat Mohanty, executive VP, HDFC Life who added that Irda may also look to allow the 22 lakh odd agents to start selling products of multiple insurers as that will further benefit the customer who will get more choice from his her agent.
Even though several months have gone by, not one bank has gone ahead to apply for the broking license. Insurers, however, feel that not only will it increase choice for the consumer it will also reduce mis-selling and lead to more real comparisons for the consumer when he visits a branch to buy a product.
“In a broking model, if products of five insurers are available then the consumer will be shown real comparison of products of five companies in the same category from where he can pick the best one. He will not be shown a comparison of one category of product with another category of product from the same insurer,” said Anup Rau, CEO, Reliance Life Insurance adding that need based approach will take a lead as obligation based selling will reduce.
The move that was brought in with a view to benefit the customers who will then have the option to choose from a variety of products offered by various insurers, would also provide level playing field to all insurers as they will have an equal opportunity to offer their products through all banks.
It may be good for the consumers but no bank has yet taken a license to operate as a broker and the latest move from the Irda may now force them to take that route.
What IRDA wants?
Irda chairman, TS Vijayan, had in a meeting with the insurers on Thursday made it clear that if the banks continue to sell insurance as agents then it will look to make it mandatory for them to adopt the broking route and advised companies to fall in line before it was made compulsory.