IRDAI Urges Insurers to Diversify Distribution Channels Beyond Parent Banks
The Insurance Regulatory and Development Authority of India (IRDAI) has called on insurance companies to diversify their distribution channels, urging them not to rely too heavily on a single entity, such as a parent bank, to sell policies. An official, who requested anonymity, revealed that in some cases, parent banks of insurers are responsible for selling over 75% of the policies, leading to concerns over excessive dependence on one channel.
While the regulator acknowledges that insurers may benefit from the bancassurance model, it emphasized that such reliance can foster complacency. However, the official noted that a drastic reduction in reliance on parent banks or the bancassurance model would be too destabilizing for the industry and should not be implemented overnight.
The official further stated that the focus should be on fostering “overall digital growth, orderly growth, and the removal of concentration in specific areas” to ensure a more sustainable and diversified distribution approach.
On the issue of forced selling or mis-selling of policies, the official emphasized that concerns raised by top officials, including Finance Minister Nirmala Sitharaman, should be taken seriously by the industry, encouraging insurers to address and internalize the message of responsible sales practices.
