Budget Box: Banks can sell insurance products of multiple insurance firms

As per Budget 2013-14, banks will also act as brokers for selling insurance products of multiple companies.

More highlights on Insurance sector:

• Insurance companies will be allowed to open branches in non-metropolitan cities without approval from the insurance regulator.
• All towns with population above 10,000 will have one Life Insurance Corporation office and one public sector general insurance company’s office by 2014.
• To expedite the settlement of 10 lakh motor third party claims before Tribunals/Courts, insurance companies will organise adalats to settle the claims.
• Group insurance products will now be offered to groups such as self-help groups, domestic workers’ associations, among others.
• There is a proposal to relax the eligibility conditions for life insurance policies issued on or after April 1, 2013 for persons suffering from disability or certain ailments by raising the permissible premium rate from 10% to 15% of the sum assured.
• Insurance companies will be directly allowed to trade in debt market. It will mean some reduction in costs and may help deepen debt markets.
• The decision to permit insurance companies to become trading members of debt stock exchanges will curtail the cost for insurers.

What is current situation?

Currently, banks can sell products of one life, one non-life and a standalone health insurer. The bancassurance guidelines are still under consideration of the Insurance Regulatory and Development Authority (IRDA). Reserve Bank of India (RBI) had recently shown concerns about banks becoming brokers.

Month: Current Affairs - March, 2013