Banks can tie up with 2 to 3 insurance cos

At present, banks cannot have agency tie-ups with more than one insurer. “Initially, we will be a little cautious... it (tie-ups of banks with insurance companies) can be two or three. We will then revisit the experience and come back,” Insurance Regulatory and Development Authority (IRDA) Member (Actuary) R Kannan told reporters here.

Various life and general insurance firms have been asking IRDA to relax this norm. The regulator is currently reviewing the existing Banacassurance model and has set-up a seven-member committee to study the subject. The agency distribution arrangements through banks is generally known as the ‘Bancassurance’ model. The regulator is definitely going to introduce an open architecture, Kannan said, adding, “the question is how many tie-ups the banks can have with insurance companies.” “It , that is, banks’ tie-up with two-to-three insurance companies, should be operationally feasible, administratively possible and at the  same time take care of policyholders’ interests,” he said.

The insurance regulator is also planning to come out with a circular for insurance companies to draft policy documents in regional languages in the next three months, Kannan said.
“The circular on vernacular language is going to come out in a maximum of three months,” he said. Besides Hindi, IRDA would give options to insurers to come out with policy documents in the language according to their requirement. “We will not ask insurers to come out with policy documents in all the vernacular languages as it will increase costs and the policyholders will have to pay for it,” he said.

There has to be some trade-off between cost and operational efficiency, Kannan said.
The regulator has set-up a committee to look into the new direct tax code implications for insurance firms, he said.