Banks may not immediately get to sell products of multiple insurance companies as the Reserve Bank of India is not very keen on them being exposed to new risks.
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Unlike a corporate agency where the life insurance company is responsible for missteps by the agent, in a broking model it is the intermediary who takes responsibility for mis-selling.
“Banks are corporate agents (Bancassurance) because they voluntarily applied for corporate agency license and got their licences. They cannot unilaterally be ‘notified’ as brokers now. They have to apply for a broker’s license and obtain it,” said K K Srinivasan, former member, IRDA, in response to a query on whether banks can start selling products of multiple companies.
