The Insurance Regulatory and Development Authority of India (IRDAI) has directed banks not to sell insurance forcefully to its customers.
In its statement to The Business Standard, IRDAI said “Where the insurance is sold as an ancillary product along with a principal business product, the corporate agent or its shareholder or its associates shall not compel the buyer of the principal business product to necessarily buy the insurance product through it.” It also added that the chief executive officer and the chief financial officer of the entity have to submit a written declaration stating that they haven’t forced customers into buying insurance from them.
The regulator has allowed banks to tie up to three insurers each from life, non-life and standalone health insurance. In the general insurance segment, banks will not be able to service insurance products if the sum assured is more than Rs 5 crore. As per IRDAI’s norms, those with a tie-up with more than one insurer in a business segment have to inform their prospective customers about different insurance products in which they are dealing. Other details such as policy term, scope of coverage, premium payable, and premium terms will also be disclosed to the insurer. Also, corporate agents can’t solicit non-single unit-linked insurance products (ULIPs) over telephonic mode if the annualized premium exceeds Rs 50,000.
The move is likely to offer more choices to consumers. Mr. Anup Rau, Chief Executive, Reliance Life Insurance said, “While we hope opening of the bank channel to more insurers will be mandatory, this is a good start. We are optimistic that people would be provided more choice by banks.”