India: Regulator warns of over-reliance on bancassurance

26 Apr 2016

The insurance regulator has warned life companies against over-dependence on banks in distributing their products.

Banks are now the dominant mode for distribution for private-sector insurers, and the share of individual agents - the core agency force of the insurance industry - has declined.

IRDAI had called a meeting of CEOs of life companies recently where bancassurance was one of the issues raised, reported the Times of India.

Insurance executives, however, say that the bancassurance model is line with the practice in developed markets. Banks are the dominant channel for the distribution of life products in Europe and they are growing their share in Asia.

The share of bancassurance in insurance distribution for privately-held insurers has been rising. In 2010-11, banks accounted for 33.2% of individual new business and by 2013-14, the proportion stood at 43.6%. Overall, the bancassurance market grew from INR95 billion (US$1.4 billion) in FY2013-14 (individual segment) to over INR110 billion in FY2014-15 driven by large unit-linked insurance policy sales.

 

Subscribe here to get Agents WIN in your inbox weekly.