Insurance Regulatory and Development Authority (IRDA) had set up a panel to look into the insurance penetration done through the bancassurance model following a few instances of miss-selling of insurance policies by banks.
According to Radhakrishnan Nair, Member (F&I), IRDA, the panel has submitted its report. He said that some banks resorted to forced selling of insurance policies at the time of advancing loans to customers. IRDA had earlier expressed concern for the same and had thus formed the panel to investigate the matter.
The bancassurance model also known as the Bank Insurance Model is a partnership between a bank and an insurance company. Through this partnership, the bank acts as a sales channel to sell insurance policies to its customers. The bank staff is trained on the insurance products, features, benefits, etc and they become the point of contact for the customer.
Speaking at the Indian Chamber of Commerce, Nair said that selling should be need-based and not forced.
If a policy is mis-sold to a customer, chances are high that at the time of renewal, the customer may not want to continue with the policy. In such cases, the policy lapses and this leads to forfeiture of the premium paid. He also said that there is a need for better regulatory practices to be put in place to deal with lapse cases.