Standalone health insurance companies are eagerly awaiting the final guidelines on bancassurance as they feel it will provide them with a level playing field with regard to tying up with banks for selling insurance. The current guidelines permit banks to tie up with only life and one non-life insurance company. But under the new guidelines, which are yet to be finalised, banks will have the option to offer products of more than one insurance company. The Insurance Regulatory and Development Authority (IRDA) is yet to finalise the guidelines.
Manasije Mishra, CEO (Designate), Max Bupa Health Insurance company says that currently it is very difficult for standalone health insurance companies to tie up with banks, since banks would prefer a general insurance company that offers all non-life products and not just health. And since most banks already have their tie-ups in place, both life and general, it leaves the standalone health insurers with very little choice.
"This is a practical reality faced by all standalone health insurance companies. So, for us the new guidelines on bancassurance would be a game changer since we can tie up with banks for distribution. It is a win-win situation for all consumers would have more choices; banks will have a wider portfolio with multiple options and standalone health insurers have an opportunity to expand their distribution network.'' he says.
The draft guidelines on bancassurance have been revised once already and the final guidelines are expected anytime now. As per the second draft guideline, the option to tie up with one or multiple insurance companies has been left to the banks. If a bank chooses to tie up with multiple insurance companies then it should tie up with the same insurer in a minimum of 10 states or union territories and a maximum of 20 states or union territories, the draft guidelines says. This makes it possible for a bank to tie-up with a maximum of four insurers from one sector, since the guidelines have divided the country into 40 regions or sectors.
Antony Jacob, Chief Executive Officer, Apollo Munich Health Insurance says that once the new bancassurance regulations are introduced, stand-alone health insurance companies can increase their reach and penetration. "The 600 crore bank account network that is widespread across the country can prove to be a very strong and effective channel. With their reach and accessibility, banks seem to be the most practical choice for making health insurance available far and wide,” he says.