Insurance Board mulling to bring regulations to guide growing bancassurance trend in industry; bank employees required to know both banking and insurance business

It has become a routine practice for the banks and insurance companies (both commercial and development banks as well as life insurance and non-life insurance companies) to sign an agreement of bancassurance in the recent days. in fact, it shouldn’t be an exaggeration to claim that there are few banking institutions left in the country that hasn’t signed any agreement of bancassurance with insurance companies in order to facilitate the sales of those companies and to provide general insurance facilities through the wide-scale banking channel.

However, the unfortunate part of the story is that there is no any legal guidance or policy framework to guide such a joint practices of banking and insurance institutions. Better late than never, the Insurance Board seems to be convinced that a legal binding to direct such transactions has to be set into motion and the board is therefore working to bring necessary amendments in the Insurance Act addressing the same.

As per the insurance expert privy to the matter, banks haven’t been able to discharge their functions completely under the bancassurance agreement owing to lack of thematic knowledge of insurance amongst their employees. Recently, the banks have been entering in bancassurance agreement with different insurance companies and their wide range of insurance policies have become a grave source of confusions for the bank employees.

In some cases, the respective Insurance companies have also been found providing necessary orientations to the employees of the selected banking institutions. While in most other cases, the agreements between banks and insurance companies have been limited only to formal paper work as there’s no such policy-wise and functional clarity regarding the same.

It has also been observed that the banks have been treating the bancassurance deals as the source of extra income which they can receive without making an investment. After entering into an agreement with insurance companies, the bank will work exactly as the insurance agents who have been currently receiving certain agent charge for every insurance policy they are able to sell. Following the same suit, the banks are also receiving extra income in forms of agent commission which they are generating mobilizing their existing branch network. In this regard, there are several of them that haven’t paid any heath to orient their employees in order to make them well-versed with both banking and insurance business.