IRDA MAY TIGHTEN NORMS FOR INSURANCE SALE THROUGH BANKS

The committee set up by the Insurance Regulatory and Development Authority (IRDA) has recommended the regulator to ask banks to renew at least half the life insurance policies they sell, failing which they may lose the licence to distribute insurance products.

In year 2011, the regulator had ushered in a minimum policy renewal criteria for individual insurance agents. The regulator directed insurance companies to terminate the contracts of agents who fail to get at least half the policies sold by them renewed in the subsequent year.

“We have noticed some instances of forced selling of insurance products by banks while advancing loans to customers. Hence, we are looking at calculating loss ratio (the ratios of premiums paid to the claims settled) in respect of business procured by banks so as to assess the quality of the business,” a senior official from IRDA said.

Further, the official said, “One of the factors that affect persistency is the after-sale service provided to the policyholder. Currently, large numbers of policies are left without being serviced after the policy is sold, resulting in the policies getting lapsed.”

The insurance regulator is in process of finalising bancassurance guidelines and is expected to come out with the final report by August this year.

(Source: www.insuringindia.com)