IRDAI Forms Taskforce to Enhance Bancassurance Framework

• 07 Nov 2023

Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has established a taskforce aimed at reviewing the current bancassurance framework and enhancing its efficiency in response to complaints of policy mis-selling and forced selling.

Key Points

• Underutilization of Bancassurance: IRDAI noted that despite the extensive branch networks of banks across India, their role as corporate agents contributed to only 5.93% of non-life premium and 17.44% of new business premium for life insurance in the 2022-23 fiscal year.
• Additionally, banks have the option to establish a separate legal entity to distribute insurance products as insurance brokers but have not utilized this opportunity.
• Enhancing Insurance Penetration: IRDAI seeks to leverage the extensive bank branch network to make insurance products accessible throughout the country.
• This initiative aligns with the regulator's goal of ensuring insurance coverage for all by 2047.
• Regulatory Stipulations and Market Conduct: The taskforce's primary focus is to recommend regulatory stipulations related to the market conduct requirements of bancassurance partners, particularly in response to the increasing complaints of policy mis-selling and forced selling by customers.
• Efficiency and International Best Practices: In addition to addressing mis-selling, the committee will evaluate the effectiveness of existing bancassurance models and propose measures to enhance their efficiency.
• It will also examine international best practices and suggest suitable modifications that can be incorporated into domestic regulations.
• Recommendations Deadline: The taskforce is expected to submit its recommendations within two months of the directive.