First life, non-life tie-up in insurance sector to be unveiled today

The New India Assurance Company will tie up with AMP Sanmar Life Insurance Company tomorrow. This will be the first tie up of its kind between a life insurance company and a non-life insurance company for the sale of insurance products in the country.

The Insurance Regulatory and Development Authority (IRDA) does not allow for any composite licence wherein a single insurance entity can sell both life and non-life products.

Through this tie up however, the respective insurance outfits will use each other's infrastructure and sales force to sell their products.

"We are keen to capitalise on the synergies between the two companies. These are new ideas we are trying to explore as our agents and that of AMP Sanmar will be encouraged to sell each other's products," said a senior New India official.

It might however, be recalled that S V Mony, currently advisor to AMP Sanmar, was formerly chairman of New India and General Insurance Corporation of India (GIC).

This is a unique tie up, wherein AMP Sanmar would be able to offer an add-on accidental cover with its life insurance policies.

Today life insurance companies are allowed to offer double accident risk cover as an add-on to the life cover, either on their own like in the case of the Life Insurance Corporation of India (LIC) or through tie ups with other non-life players.

This means an individual who chooses to buy a life insurance policy from AMP Sanmar would get a double accident benefit that is insured by New India.

The latter will be sold as an add-on to the base policy, and the premium earned would go to New India. So a Rs 1-lakh life cover would in effect give the beneficiary of the policyholder Rs 2 lakh should the policyholder die in an accident.

New India however, will not be allowed to hawk AMP Sanmar's risk products as per IRDA. This is because non-life companies cannot add-on any life cover to their products. Moreover, since non-life products are of one-year gestation, and life covers exceed one year, theoretically it is not a possible.

There is no exclusivity clause in the tie up, which means New India will be free to tie up with other life insurance companies as well. Likewise, AMP Sanmar is open to tying up with other non-life players.