Private banks may get to sell policies of more than one insurer

The new bancassurance policy is likely to allow private sector banks to sell policies of more than one insurance company, bringing them on par with their public sector counterparts.

Under the existing policy, private banks are only allowed to sell insurance policies of only one company. IRDA is planning to widen the scope of the bancassurance channel by roping in private banks.

Finance ministry officials are reported to be in discussions with banking and insurance regulators, Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority (IRDA), before finalising the guidelines.

''The final guidelines to be framed are likely to have a mandate for private banks too as far as insurance penetration is concerned,'' he said, adding that the final guidelines are expected from RBI before 15 January.

IRDA plans to fully leveraging the existing strengths of banks in terms penetration and customer reach for expanding insurance and offering a better choice for customers.

The new guidelines being finalised, will allow banks as brokers to cap business from their own group companies at 25 per cent for life insurance and a similar cap for non-life insurance business. At the same time, the cap on selling policies of one company will be 50 per cent of the total insurance sales of a bank.

Finance minister P Chidambaram had, in his 2013-14 budget speech, said that banks would be permitted to act as insurance brokers so as to increase insurance penetration.