The new bancassurance exposure draft released by the IRDA should bring about a positive impact on the three standalone health insurance companies in India – Apollo Munich Health Insurance, Star Health Insurance, and Max Bupa Health Insurance.
According to the draft, one bancassurance agent can tie up with one life insurance, one non-life (general) insurance, and one standalone health insurance company in any of the states.
Bancassurance is a term that refers to banks selling insurance products to their customers. It is the sale of insurance products through the banks’ distribution channels.
Considering the fact that there are 24 life insurance companies and almost an equivalent number of non-life insurance companies in the country, each of them will try to widen its distribution network. However, Apollo, Max, and Star Health being the only 3 exclusive health insurers in India, will most certainly get an edge over the others.
There is a greater need for increasing the penetration of insurance products in India. Banks have a huge customer base and have built a relationship with their customers over time. A tie-up with insurance companies will help them increase their product offerings, at the same time boost the sales of the respective insurance company.
Highlights of IRDA bancassurance draft:
. No Bancassurance Agent shall be paid a commission exceeding 85% of the limit specified in Section 40A of the Insurance Act, 1938.
. Bancassurance Agent must ensure that every sale of the insurance product is supported by the need analysis format duly signed by the insured person.
. Bancassurance Agent must extend all possible help and cooperation to the insured person in the completion of all documents etc in the event of a claim.
. Must disclose the scales of commission in respect of the insurance product offered for sale.
“In case the general insurer does not have any health product to distribute, the Bancassurance Agent may tie up with one more general insurance company carrying on exclusively business of health insurance,” IRDA said in its bancassurance draft.