Sector regulator Irda today said it is considering a proposal to allow banks to sell products of two insurance companies each in life and non-life categories, a move that will help increase penetration.
As per the current practice, a bank is allowed to sell products of one each in a life insurance company, a general and a health insurance firm.
"The committee (set up by the regulator) has recommended that banks should be allowed to tie up with two insurers. We are in the process of examining the recommendation," Irda Chairman J Harinarayanan told reporters on the sidelines of a seminar here.
He was here at the launch of the IGMS (Integrated Grievance Management System), which is an online grievance portal for customers.
The Insurance regulatory and development authority (Irda) had in 2007 set up a committee to suggest ways to increase insurance penetration.
The regulator is looking to open up the distribution channel to help increase penetration of insurance products amidst long pending demand of insurers for relaxing bank distribution channel.
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To study distribution channels– agency, bancassurance, referrals, direct sales etc-- the regulator had set up a 10-member committee headed by former LIC chairman N M Govardhan in 2007.
The committee which submitted a 60-page report in 2009, suggested various measures for increasing distribution.
During the 2010-11 fiscal, the new business premium (first year premium) of life insurance industry grew by 14.5% to Rs 1,25,800 crore.
Besides, the total premium of the 23 player life insurance industry increased by 8% as compared to Rs 2,86,500 crore in the 2010-11.