IRDA asks insurers to agree to open architecture
In a significant move to expand the bank exposure to insurance products, the regulator IRDA is all set to issue new guidelines for life insurers for distribution tie-ups with banks.
The regulator is likely to issue new norms for insurers' bank tie-ups
Hyderabad: In a significant move to expand the bank exposure to insurance products, the regulator IRDA is all set to issue new guidelines for life insurers for distribution tie-ups with banks.
In a meeting with the CEOs of insurance firms here, the IRDA Chairman TS Vijayan is believed to have told that to accept "open architecture", or it may be made mandatory to allow banks to sell products of more than one insurance company.
He is meeting with the CEOs of insurance companies on Thursday here on "consultation for regulatory changes" in the wake of the Insurance Ordinance.
"The industry can expect some guidelines regarding the same shortly," the sources said.
Under the open architecture model, banks can act as insurance brokers for more than one insurer.
Thursday's meeting, attended by 30-35 CEOs from life and non-life insurance companies as also a similar number of other industry executives, was called for consultation on formulation of Regulations for the Insurance Laws (Amendment) Ordinance 2014.
"It was basically on the new Ordinance which has come into force. IRDA has to frame the regulation on that and it was a consultative meeting. IRDA sought the industry opinion," PTI said quoting an insurance company CEO. The Insurance Laws (Amendment) Ordinance 2014 was promulgated to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999, in accordance with the Insurance Laws (Amendment) Bill 2008.
Some of the key elements of the Ordinance include enhancement of the foreign equity cap from 26 per cent to 49 per cent, allowing insurance companies to raise capital through new and innovative instruments and empowering IRDA to regulate key aspects of insurance company operations in areas like solvency, investments, expenses and commissions.
It will also substantially enhance penalty provisions to ensure compliance with Insurance Laws by companies, which is essential to uphold the consumer interest.
