Hyderabad: Insurance regulator IRDA on Wednesday indicated favouring banks to sell products of multiple insurance companies as the move would help deepen insurance penetration in the country.
T S Vijayan, chairman of Insurance Regulatory and Development Authority (IRDA), also said discussions with all the stakeholders are currently underway and final view will be taken after due consultations.
Vijayan's comments assume significance as the Reserve Bank is reportedly of the view that banks should restrict themselves to one single company and continue to be an 'agent'.
"Whether it is called a broker or an agent, it has representation of people. Banks are not going out to acquire customers. They are utilising the customer base of their own. Whatever the name you are going to call."
"They have a huge customer base, but that much utilisation is not happening. So a series of discussions, committee meetings and deliberations have been going on how best to utilise the bank branches to penetrate into the insurance market," Vijayan told reporters on the sidelines of the Eighth Meeting of the Asian Forum of Insurance Regulators.
Differentiating between 'agent' and 'broker', Vijayan said agent represents only one insurance company, whereas broker represents people.
"I would personally and ideally think that banks have got a huge customer base. They are utilising the customer base for buying insurance so they should represent a customer rather than an insurance company," he added.
Life Insurance Council (LIC), an industry association, has also suggested that a bank should be allowed to sell products of five different insurers.
At present a bank is allowed to sell products of only one life and one non-life insurance companies as an agent.
The council has recommended that a bank can tie up with at least five insurers with not more than 25 percent share per insurer.
Even Finance Minister P Chidambaram had favoured the idea of bank acting as broker for selling products for penetration of insurance in the country.
In its Financial Stability Report (FSR) for 2012, the RBI said the current regulations do not permit banks to become insurance brokers as it would lead to conflict of interest.
A panel was set up by the IRDA to look into the bancassurance model. The panel has already submitted its report, an IRDA official had earlier said.