Bancassurance players claim to have lower miss-selling rate

Even as RBI is reviewing the bancassurance model to see how it is leading to mis-selling of insurance policies, players with high bancassurance sales claim to have lower miss-selling percentage.
According to IRDA data, life insurers with high bancasurance channels have the lowest average of mis-selling at 0.4 per cent. They include Choice (0.08), Star Union (0.44), IndiaFirst (0.02) and IDBI Federal (0.70), according to IRDA data for FY14.
It may be noted that recent media reports had mentioned complaints against banks forcing customers to buy insurance policies while availing other services prompts government to seek a review of the bancassurance model.

While players with composite structure (bancassurance plus agency) have an average miss-selling percentage at 2.3, it is as high as six per cent in case of players with high agency forces.
Talking in terms of persistency, players with high bancassurance share have high persistency (65.4 per cent) compared to players with high agency share (60.2 per cent), the data showed.
Canara HSBC Oriental Bank of Commerce Life Insurance, which is the sole life insurer in the country which is fully dependent on bancassurance channel, felt that mis-selling is minimum with the banassurance model.
"Banks are physically present and accountable for services to their customers. Mis-selling of an insurance product may lead to losing the customer for other banking products," Canara HSBC Oriental Bank of Commerce Life Insurance chief executive John Holden told PTI here.