The Insurance regulatory and Development Authority (IRDA) on Friday said it was considering a proposal to allow banks to sell products of two insurance firms each in life and non-life categories, a move that will help increase penetration.
According to the current practice, a bank is allowed to sell products of one each in a life insurance company, a general and a health insurance firm.
“The committee (set up by the regulator) has recommended that banks should be allowed to tie up with two insurers. We are in the process of examining the recommendation,” said J Hari Narayan, chairman, IRDA.
The insurance regulator had set up a 10-member committee in 2007, headed by former LIC chairman NM Govardhan, to suggest ways to increase insurance penetration.
The IRDA is looking to open up the distribution channel to help increase penetration of insurance products amidst long pending demand of insurers for relaxing bank distribution channels.
Distribution channels include agency, bancassurance, referrals, direct sales etc.
The new business premium (first year premium) of life insurance industry grew by 14.5% to Rs1,25,800 crore in 2010-11. The total premium of the 23 player life insurance industry also increased by 8% compared to Rs2,86,500 crore in 2009-10.