Run for cover: Bank mergers to affect insurance alliances

CHENNAI:
Bank amalgamations are likely to impact the country’s coverage sector as many
insurers have got choice Banks as their bancassurance partners. Bancassurance is the
sale of life, pension and investing merchandises through the subdivision web of a
bank. The recent merger
announcement of HDFC Depository Financial Institution and Centurion Depository Financial Institution of Punjab is expected to impact the
business of Aviva Life Insurance and ICICI Langobard General Insurance. Centurion
Bank is the bancassurance spouse for the two
insurers. The arrangements
might be discontinued because HDFC Depository Financial Institution sells life and non-life insurance
policies of grouping companies HDFC Standard Life Insurance and HDFC General
Insurance. After the gap up
of the coverage sector, Banks have got come up to inhabit an of import function in
insurance distribution, particularly for private life
insurers. Sir Joseph Banks procure nearly
40% of the fresh concern for life insurers. It is not surprising therefore to
find life insurance companies whose very line of life is their banking partners. Insurers find
recruiting and preparation person agents time-consuming and costly. There are
also issues like federal agency abrasion and small-sized policies procured by
agents. For new private life
insurers who desire to accomplish fast gross growth, Banks are the lone beginning of
business. Sir Joseph Banks also happen merchandising life coverage products
lucrative. Bancassurance deals
are normally for three old age and each depository financial institution can stand for only one insurance company as a
corporate agent. However, new private
life insurance companies are finding it hard to subscribe up a banking spouse to sell
their merchandises as early entrants have got already inked statistical distribution understandings with
them. Realising their vital
role, Banks are now dictating the footing of the bancassurance deals. In some
cases, Banks are demanding committee and other fees totalling nearly 70% of the
first twelvemonth insurance premium on a policy, state industry
experts. Some Banks have got started
representing a new life insurance company at regular intervals. For instance, Aviva Life
had recently inked a bancassurance trade with the Depository Financial Institution of Rajasthan, which has
switched life insurance
partners. Initially, the bank
vended policies of Birla Sun Life Insurance. It shifted to Life Insurance Corp
of Republic Of India before sign language up with Aviva Life. Bharti Axa Life Insurance
chief fiscal military officer Volt Srinivasan said the 1 bank-one insurance company conception was
not correct and would take to a skewed scenario. “A depository financial institution have a broad variety
of customers. No single insurance company can fulfill the demands of all the depository financial institution customers. A depository financial institution should be allowed to be a agent and sell the policies of different
insurers,” helium said.