India’s insurance sector, which has been stagnating, is likely to get a boost from the Insurance Regulatory and Development Authority’s (Irda) nod allowing banks to sell policies of more than one life insurance company.
The decision is also expected to benefit customers, who would get recommendations on appropriate products to suit individual needs, from among the variety offered by multiple insurers.
“The bank as a broker model, will ultimately benefit the customers as banks are expected to recommend the right product to the customer from the group of insurance products,” said Monish Shah, senior director, Deloitte India.
Early this month, the insurance regulator had allowed banks to act as brokers and to sell products of more than one insurer so as to increase the penetration of the sector across the country.
Bank branches play crucial role in selling policies. The contribution of bancassurance channel (banks selling insurance products) in new insurance business (the first premium) was around 11% in 2011-12.
The insurance sector is struggling with slow growth due to falling economic growth and regulatory changes. Total premium collection by life insurance companies has remained almost stagnant in the past two years, with Rs. 2.8 lakh crore collected in 2012-13, and Rs. 2.87 crore in 2011-12. In 2010-11, the total premium collected was Rs. 2.91 lakh crore.
“There are some banks which have strong presence in certain states. Insurance companies would like to join hands with them to increase their presence in those states,” said Tarun Chugh, chief- distribution, operations and marketing, ICICI Prudential Life Insurance.