IRDA examining bancassurance model of selling policies

"A panel was set up by the IRDA to look into the bancassurance model. The panel has already submitted its report," IRDA member (F&I) R K Nair said.

Nair said that some banks had resorted to forced selling of policies while advancing loans to customers.

Typically, the policies get lapsed due to non-continuance by the customer after the first premium is paid, leading to forfeiture of the money by the insurance company, Nair said at the Indian Chamber of Commerce here today.

He said that IRDA was concerned over the practice, for which a panel had been set up.
"Selling should be need based and not forced," he said.

Nair said better regulatory practices were needed to deal with lapse cases.

On the IPO guidelines for non-life insurance companies, he said the rules would be similar to those for life companies, but disclosures would be different.

"The nature of disclosures are under finalisation," he said.

Nair said the Insurance Act of 1938 was framed when the financial market scenario was totally different from what it is today.

He said a panel had been formed by IRDA to study changes in financial dynamics over the period and to give suggestions on what modifications were required to keep up with the times.

With respect to solvency II norms, he said it was a risk-based model used in the European countries.

He said that India was not prepared to go for solvency II, since there was a lack of statistical data.

Nair said the World Bank and IMF were doing a financial sector assessment of India's financial system, including regulators like IRDA.

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