New rules on the cards to reduce heavy reliance on parent banks in bancassurance?

The Insurance Regulatory and Development Authority (IRDAI) may consider introducing rules aimed at reducing the heavy reliance on parent banks in bancassurance, according to sources.

Under the new rules, life insurance companies may need to collaborate with multiple banks to lower dependency on their parent banks, according to sources.

Such regulations, if they materialise, will be introduced after consulting stakeholders and preparing exposure drafts, they said.

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The news comes at a time when concerns have been raised about some parent banks reportedly contributing more than 90 per cent of sales for their subsidiary insurers.

Insurance regulator IRDAI, which closely tracks how business is concentrated in specific channels, plans to promote diversification by encouraging companies to use multiple distribution channels for balanced growth, according to they sources.

The authority is of the view that relying heavily on a single channel is not sustainable in the long run.