IRDA mulling to follow 'lead insurance model' to enhance reach
Mumbai: The insurance regulator IRDA Monday said it is mulling to follow the lead insurance model based on geography, which is presently followed by the banking industry known as 'lead banking model'.
"IRDA has proposed the lead insurance model on the basis of geography, just like the banking industry," IRDA Chairman J Hari Narayan said here at an Assocham summit.
He also said the regulator is waiting for feedback from the life insurance and non-life insurance council on this issue.
In the banking sector, lead bank model is followed in specific geographies in order to give emphasis on availability of various banking services in one particular zone, which the regulator is considering to replicate.
When asked about increase in cap of FDI in the insurance sector, the IRDA Chairman said, the industry needs a lot investment for future growth.
"So, we will welcome the steps to increase the FDI in insurance sector," he added.
Talking about approval of pension products, Hari Narayan said those filed by companies are not pension products.
"They may call it pension product. Its much like a mutual fund products. That is you make a periodic investment and you can pull back at any point of time. So, these products will not be approved. What we have said is that a pension product should have an annuity. So product without any element of pension will not be approved," he explained.
Hari Narayan further said the finance minister had met with select insurers earlier in September, in which the insurers had suggested some measures for the growth of life insurance industry.
"So, there is a list of issues, which will be further discussed in another meeting with the Finance Minister on Wednesday, like income tax, service tax. We believe that certain tax measures will be helpful for the growth of the industry," he said.
Referring to draft guideline on product design, he said, it will be sent to the Life Council in 2-3 weeks.
The regulator also pointed out its concerns relating to next growth areas in general insurance industry in the wake of slowing motor insurance segment coupled with reducing margins in health insurance.
He, however, said motor pool, which is one of the highest loss making segment of general insurance industry, will stop bleeding by next year.
Talking about bancassurance, he said, one is to one agency system (one bank selling products of one insurance company) is as per the law, however, banks can work as insurance brokers to sell products of multiple insurance companies.
Hari Narayan also stressed on rationalisation in commission structure, saying that management cost should be reduced.