May 6, 2016
Twenty-five to 30 banks will soon start distributing the products of more than one insurer, according to Mr Nilesh Sathe, Member-Life of IRDAI.
Since last month, the insurance regulator has allowed banks to tie up with three life insurers, three general insurers and three standalone health insurers to distribute insurance products. Earlier, banks were allowed to have bancassurance arrangements with one insurer each in the life, non-life and standalone health insurance categories. Insurers, particularly those not owned by banks, are likely to see a major boost in insurance distribution, as a result, reported the Hindu Business Line. On Tuesday, Future Generali Life, which prevously did not have a bancassurance partner, announced a partnership with Saraswat Bank, which has a tie-up with HDFC Life for distribution of life insurance products. Last month, Future Generali Life announced tie-ups with 10 medium and small size banks, aimed towards increasing rural insurance penetration. Through these, the company will focus on its rural insurance and micro insurance portfolios.
Industry experts say that other non-bank-promoted insurers, such as Birla Sun Life, Reliance Life, Bajaj Allianz, Aegon Life and Shriram Life, are also likely to get into similar arrangements with leading banks. Mr Anup Rau, CEO of Reliance Life, said that insurers not promoted by banks are likely to be looked at favourably because there will be no conflict of interest. However, the process will take some time as it is not mandatory for banks to tie up with more than one insurer, he added. At present, most major public and private sector banks, such as State Bank of India (SBI), Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have stakes in insurance companies. Mr Arijit Basu, Managing Director and CEO of SBI Life, said that SBI has opted not to go for three insurance tie-ups. However, he said that in the next three years, the bank may look at multiple insurance partners as it gains more expertise cross-selling insurance products.
Insurers have also begun talks to tie up with recently licensed payments and small finance banks. Mr Tarun Chugh, Managing Director nd CEO of PNB MetLife, said the industry is likely to see the launch of simple over-the-counter products, which can also be bought online with the new payment banks. For example, private-sector life insurer Shriram Life Insurance is looking to expand its base in smaller towns. The company’s Managing Director, Mr Manoj Jain, told Business Standard: “We do not have a bancassurance partner. We realised that we since we missed the bus in tying up with banks earlier, we should look at small finance banks. We have identified two of them. “Shriram Life has taken stakes of around 3% in Ujjivan Financial Services and 5% in Utkarsh Micro Finance. Since they will be getting into multiple corporate agency model to sell insurance products, they will also sell our products. This will give us a level playing field.” he said.