Soon, your bank would be selling policies of more than one insurance company. The Reserve Bank of India (RBI) has allowed banks to act as insurance brokers. At present, all banks sell policies as corporate agents of insurers.
A corporate agent is allowed to sell insurance policies of only one company but under broking licence there is no restriction on the number of tie-ups that a bank can have with insurers. Also, while under the corporate agency model the bank acts as the agent of the insurance company under the broking channel, the fiduciary responsibility of the bank is towards the policyholder.
RBI guidelines in this regard state that banks may undertake insurance business by setting up a subsidiary or joint venture (JV). The guidelines further state that banks are not allowed to undertake insurance business with risk participation departmentally, and may do so only through a subsidiary or JV set up for the purpose.
The Union Budget 2013 had announced that banks would be permitted to act as insurance brokers, following which the insurance regulator came out with guidelines on the same.