On bancassurance, IRDAI is reportedly considering regulations to cap the share of a parent bank in the bancassurance business of its life insurance subsidiary. According to sources, the regulator may initially release a draft exposure or consultation paper to gather stakeholder feedback before implementing any formal rules.
IRDAI’s stance stems from the belief that life insurance companies should not rely exclusively on their parent bank as a distribution channel indefinitely. The regulator encourages insurers to form partnerships with multiple banks to ensure a diversified bancassurance network, fostering greater competition and reducing dependency on a single institution.
The second area of concern for IRDAI revolves around the over-reliance on a single distribution channel for life insurance sales. The regulator advocates for a more balanced approach, urging life insurance companies to diversify their distribution channels. This move aims to reduce concentration risk and ensure a robust and sustainable distribution framework across the industry.
