The Insurance Regulatory and Development Authority of India (IRDAI) has allowed banks to tie up with insurers.
This decision was taken as part of the IRDAI’s new Bancassurance model guidelines which will be notified soon. Prior to this decision, banks were not allowed to have insurance agency tie-ups with more than one insurer.
As per new decision banks can tie up with nine insurers from three segments viz. life, non–life and standalone health. It will not be binding on banks and they are free to take their call.
Earlier, IRDAI had constituted a 7 member committee to study the reviewing of the existing architecture of the Banacassurance model.
About Bancassurance model
- Bancassurance is a French term referred as selling of insurance through a bank’s. Thus it can be said that Bancassurance= Banks as Insurance Agents. In this case, selling insurance means distribution of insurance and other financial products of insurance companies through Banks.
- Under this model banks act as a major distribution channel for insurers which in turn helps them to generate profits from alternative source.
- This model originated in France and soon spread to other European countries.
- In case of India a number of insurers have already tied up with banks under bancassurance model and some banks already have flagged off selected insurance products.