Irdai Chairman Debasis Panda Calls on Bankers to Focus on Core Responsibilities Rather Than Solely Selling Insurance

Debasis Panda, Chairman of the Insurance Regulatory and Development Authority of India (Irdai), has advised bankers to prioritise their primary responsibilities over solely selling insurance. This statement follows similar advice from Finance Minister Nirmala Sitharaman. Panda acknowledged the importance of bancassurance in expanding insurance access but stressed the need for caution to prevent neglecting core banking activities.

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Insurance companies benefit from banks' extensive networks, which provide cost-effective distribution channels. However, Panda noted that issues have emerged within the bancassurance system, including mis-selling. He emphasised the need for collaboration to address these problems and restore trust. "The banca channel is a very useful channel. But of late, a lot of ills have crept into the system. We all need to sit together, thrash out that, restore that confidence," he stated.

Bancassurance and Mis-selling Concerns

Sitharaman also highlighted the potential negative impact of mis-selling insurance policies by banks. She pointed out that such practices could inadvertently increase borrowing costs for customers. Many major banks have established insurance companies and earn significant commissions from selling insurance products, making it a profitable venture.

Panda reiterated his vision for a developed India where everyone has comprehensive insurance coverage. He urged all stakeholders to work towards this goal. The Irdai has implemented a progressive regulatory framework with operational flexibility for industry players to support this vision.

Regulatory Developments and Risk Management

The Irdai's role includes maintaining financial stability, safeguarding policyholders' funds, and ensuring insurers fulfil their commitments. Panda mentioned that the regulator is transitioning to an improved risk management framework. This new approach will consider both liabilities and capital buffers to ensure entities remain solvent at all times.

Panda's remarks underscore the need for balance in bancassurance practices while maintaining focus on core banking functions. By addressing mis-selling and enhancing risk management, the industry can work towards a more secure financial environment for all stakeholders involved.