Insurers are awaiting the final bancassurance norms, which have been in the making for the past four years, and expect Irda to include suggestions in the recently-released second draft that has called for removing the 50 per cent cap on sales and exclusivity.
The draft regulations on open bancassurance architecture had drawn sharp reactions from both insurers as well as banks as they fall short of their expectations.
Currently, banks are allowed to tie up as corporate agents with one life, one non-life and one standalone health insurer.
While insurers without any tie-up with banks want the regulator to allow banks to have multiple partnerships, the lenders, including those from the public sector - which have floated their own insurance ventures - are opposed to the move as it would neutralise their exclusive tie-up and undermine investment in their insurance ventures.
The second Irda draft proposed doing away with the cap on banks' business from a single insurer. The regulator's previous draft mandated banks to cap business from one insurer at 50 per cent.
Reliance Life Insurance's head Anup Rau told PTI that "the open bancassurance architecture will be in the interest of the consumers and help the industry grow in size."
"The current architecture of one-bank-one-insurer helps bank push the product of their own insurer and earn a commission on it, which is a clear case of conflict of interest. We fully support an open architecture where banks sell product of multiple insurers," he said.
HDFC Standard Life Managing Director and Chief Executive Amitav Choudhury also supported the open model, saying "the new bancassurance draft is balanced and allows banks to decide the level of open architecture.
"We believe we are very well-positioned if the regulations were to be enforced in current form. We have been a leader on the bancassurance space and are confident proposed changes will help us associate with new partners," he said.
SBI Life's Arijit Basu said, "Irda has given revised draft on which we are broadly in agreement, we have requested for some minor changes/modifications."
New India Assurance Chairman G Srinivasan supported the view, saying his "company would like an open architecture on bancassurance and agrees with the latest proposals as "this will help all insurers to have tie-ups with banks and lead to the larger customer reach."