PNB Principal junks agents, to use banking channel only

PNB Principal Insurance Company will sell its products only through banking channels. It will not have an agents' force.

The four-way joint venture is yet to receive final clearance from the Insurance Regulatory and Development Authority to start business.

Punjab National Bank will hold the largest stake in the venture, while the US-based Principal group, Vijaya Bank and Berger Paints will have smaller shareholdings.

The insurer plans to leverage the 6,000-odd branches of Punjab National Bank (PNB) and Vijaya Bank to push products.

"Ours will be a very different approach with a 100 per cent bancassurance model. We will be able to save a lot since we do not need to set up any physical network," said senior officials at the Principal group.

Bancassurance is the sale of insurance products through bank branches.

SBI Life had wanted to take a 100 per cent bancassurance model too but regulations did not permit it at the time when it started operations.

Only about 25-30 per cent of insurance policies sold today in India are done through the bancassurance model. Said the Principal official,

"Public sector bank branches are very under utilised. Little do people tap the potential that lie in them and we want to capitalise on their reach."

The new insurance company which is expected to get the regulator's nod in 2-3 months time. PNB will hold the maximum stake in the company at 30 per cent while the remaining 70 per cent will be held between the other three partners.

The exact shareholding pattern is yet to finalised, said sources. The four entities had entered into a memorandum of understanding back in April 2004 to roll out an insurance company.