IRDA seeks bank data on insurance deals

The insurance regulator has asked for information concerning payments made to banks by insurance companies to examine the impact of “bancassurance” – the term used to describe sale of policies to banks.

The insurance regulator has asked for information concerning payments made to banks by insurance companies to examine the impact of “bancassurance” – the term used to describe sale of policies to banks. The regulator intends to probe the sustainability of this sales channel and analyse its impact on insurers and policyholders.

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Insurance companies file the commission rates for bancassurance for every product they file with the Insurance Regulatory and Development Authority (IRDA). A bank earns 2 per cent commission for single premium policies and can earn maximum upto 35 per cent commission on regular premium policies.

“The data collected would throw light on the financial dimensions of the bancassurance channel and will be used to provide inputs to the Bancassurance Committee that has been constituted by us,” J. Hari Narayan, Chairman IRDA, told Hindustan Times.

Life and Non-life insurers have been asked to submit data from April 2008 to June 2009 on the commissions paid to a bank that sell their products, besides other details .

Rajesh Sud, CEO, Max New York Life Insurance said, “The IRDA wants to know whether the expenses incurred by insurance companies in distributing products through bank channels are appropriate.”