Captive Insurance Cos Won’t Retain an Exclusive Edge

When it came to getting banks to sell their insurance products, ICICI Prudential Life Insurance, HDFC Ergo General Insurance, SBI Life & General Insurance for years had an edge over the other players, because of earlier regulations.

Now, with the new regulations, effective April 1, life and general insurance players that are promoted by banks including Canara HSBC OBC Life Insurance Co, ICICI Lombard General, HDFC Life Insurance will no longer retain their exclusive edge.

The Insurance Regulatory and Development Authority of India (IRDA) has now permitted banks to have tie-ups with as many as three insurance companies to promote their products opening up the field to insurers like Bajaj Allianz Life & General Insurance, and Max Life Insurance, who aren't backed by banks.

Life insurance companies, who traditionally rely on individual agents to sell their products, feel that this move would lead to higher insurance penetration."India has seen life insurance penetration fall to a 10-year low to 3.3% in FY15. Now with this new avenue opening up for us, there will be a greater drive to push our products across multiple channels," says Anuj Agarwal, CEO, Bajaj Allianz Life. The product category that's been sold via bancassurance and via agents could differ though. "In our experience, we've seen that banks prefer to sell shorter payment term products and ULIPs. When it comes to pure protection life insurance policies, our agents usually have more success. Banks are better equipped to talk about money and returns than death," says Ashish Vohra, Sr Director & chief distribution officer, Max Life Insurance Co, which sees 55 per cent of its business coming in from its bancassurance channels including Axis Bank, YES Bank, Lakshmi Vilas Bank and several urban cooperative banks.