Insurance Regulatory and Development Authority (IRDAI) must make its forthcoming bancassurance norm, which allows one bank to tie up with nine insurers -- three each from life, non life and standalone health insurers -- mandatory, insurers have said.
"We have decided to allow a bank to tie up with nine insurers, three each from life, non-life and standalone health insurance company.
"However, it is not mandatory as the banks are free to take a decision on how many insurers they want to partner with," IRDAI member (Life) Nilesh Sathe had told reporters here on Thursday.
But as the regulation is not mandatory, analysts and industry players pointed out that the present situation where one bank is allowed to tie up with two insurers -- one life and one non-life -- is unlikely to change much.
"The regulation should be made mandatory in order to allow open architecture as intended. Left to themselves, most banks would prefer to exercise the option of continuing status-quo," Reliance Life Insurance chief executive Anup Rau told PTI.
Bharti AXA Life Insurance chief executive Sandip Ghosh said, "Since most of the leading banks in the country are already having their life insurance joint ventures, those banks are unlikely to distribute products of other insurers."
State Bank of India managing director Rajnish Kumar said, "It is a good move as we as a bank will now be able to sell the products of nine insurers, including our own bancassurance partners. It will help us grow our business in the form of commission fee."
"We already have got a tie-up with two foreign partners, one each in life and non-life, and they have brought their equity for the venture. But having partnership with more insurers will help increase revenue through commission fee."
He, however, added that he can not comment on whether SBI will be expanding its partnership with other insurers.
"As it has been made optional now, the banks which are ready to tie-up can tie-up as more than one insurer and those who are not ready, needn't tie-up with any other insurer," PNB Metlife Insurance chief executive Tarun Chugh said.
With its twin objectives of enlarging the reach of the insurance industry and achieving financial inclusion goals, IRDAI has been making efforts to launch open architecture bancassurance policy, but was unable to finalise the broad features as there was no consensus among stakeholders.
