IRDA eases norms for bank tie-ups with insurers

23 May 2009

Norms for interaction between banks and insurance companies may finally be liberalised, as the Insurance Regulatory & Development Authority has formed a seven-member committee to bring about a new set of regulations in the 'bancassurance' segment, which relates to distribution of insurance products by banks.

While the existing committee on bancassurance formed by NM Govardhan is not being scrapped, its recommendations are being examined separately, said IRDA chairman J Hari Narayan in a statement issued in Mumbai on Friday.

The current rules allow a bank to have a tie-up only with one insurance company, while life and general insurance companies have been clamouring for a change.

Narayan said the new committee would examine the desirability for a differential treatment of insurance intermediation by banks under the bancassurance model, consistent with international best practices. "It will examine the scope, content and objective of a separate set of regulations for the bancassurance segment," he said.

The new committee comprises Deepak Satwalekar, former chief executive of HDFC Standard Life, G V Rao, former chairman and managing director of Oriental Insurance, S V Mony, non-executive chairman, Cholamandalam General Insurance, Sandeep Bakshi, chief exevutive, ICICI Lombard, R Krishnamurthy, managing director, Watson Wyatt, N M Govardhan, ex-chairman of the Life Insurance Corporation, and A Giridhar, executive director, IRDA.

The Indian Banks' Association, in a recent representation to the IRDA, said that banks have a wide network throughout the country and are well suited to market insurance products in areas of low penetration.