The Insurance Regulatory and Development Authority of India (IRDAI) has decided to allow banks to tie up with a maximum of nine insurers-with three each from the life, non-life and standalone health sectors- as part of new bancassurance rules.

Banks will be given leeway to decide how many insurers they wish to work with, the local media reported, citing Mr Nilesh Sathe, IRDAI Member (Life) who is in charge of the broking channel. “We didn’t make it mandatory, going by the larger consensus of the industry,’’ Mr Sathe said. The new regulation is expected to be issued shortly.

But as the new regulation is not mandatory, analysts and industry players point out that the present situation where one bank is allowed to tie up with two insurers —one life and one non-life— is unlikely to change much, reported the Press Trust of India. IRDAI has been attempting to have an open-architecture bancassurance system in order to increase insurance penetration, but has run into objections from a number of stake holders of the insurance industry. However, several insurers are lobbying IRDAI to make it mandatory for banks to tie up with three insurers each from the three insurance sectors. “The regulation should be made mandatory in order to allow open architecture as intended. Left to themselves, most banks would prefer to exercise the option of continuing with the status quo,” Reliance Life Insurance CEO, Mr Anup Rau, told Press Trust of India. .