Hyderabad, March 13 Faced with economic slowdown and likely dip in business, some life insurers are seeking relaxation of norms pertaining to bancassurance.

A fresh representation in this regard has been submitted to the Insurance Regulatory and Development Authority (IRDA) by private insurance companies, according to sources.
If a bank is allowed to sell the products of more than one insurance company, it may compensate any possible dip in sales by broad basing the marketing of products, according to experts.

“It is true that we, along with other like-minded companies, have given a representation to IRDA to allow sale of insurance products of more than one company by banks as bancassurance of late has emerged as a viable distribution channel,” Mr Analjit Singh, Chairman, Max New York Life Insurance Company Ltd, told Business Line.

What has been allowed in the case of selling of mutual fund products could be extended to insurance products also, he contended, adding that the measure might result in creating a level playing field for life insurers. While the issue has been a much discussed and debated one, the resurfacing of the request assumes significance in the light of tough times for the industry due to recession. Even the regulator, in its recent outlook, cautioned that cost cutting would be vital for the industry, including marketing expenses.

Some banks too feel that the move may, in fact, augur well by reducing the direct selling expenses of insurers and augment fee-based income for banks.
Helpful for banks too

“I think it should be helpful to the banks if they are allowed to sell more than one company’s products,” Mr S.C. Kalia, Executive Director, Vijaya Bank, said. Interestingly, the main opposition to the proposal comes from the state insurer Life Insurance Corporation (LIC). “The idea will be very detrimental to the industry as well as customers as there is every scope for unhealthy competition and conflict of interest,” a senior official in the Bancassurance division of LIC said over phone from Mumbai.
IRDA examining proposal

When contacted Mr J. Hari Narayan, Chairman, IRDA, said, “The insurance regulator is still examining the issue of banks being able to sell insurance products of more than one company. While one group wants its implementation, another set of insurance companies are against it. We are looking at getting a broader consensus on the issue.