IRDA could revise its recommendation on compensation and discounts for the bancassurance model in the light of recent deals where banks have picked up equity stakes in insurance companies at a discount. In July, PNB had entered into an agreement with Metlife India to pick up stake of 30 % in Metlife India Insurance Company for an undisclosed sum. The insurance regulator, which had insisted upfront payments and discount on equity, is treated as advance commission, amortised over three years, may now bring such payments and discounts out of the ambit of the advance commission. According to sources the regulator was looking into the issue and would come out with bancassurance guidelines soon. Generally upfront payments or equity discounts act as an incentive for banks to offer their distribution network to an insurer.

IRDA could revise its recommendation on compensation and discounts for the bancassurance model in the light of recent deals where banks have picked up equity stakes in insurance companies at a discount. In July, PNB had entered into an agreement with Metlife India to pick up stake of 30 % in Metlife India Insurance Company for an undisclosed sum. The insurance regulator, which had insisted upfront payments and discount on equity, is treated as advance commission, amortised over three years, may now bring such payments and discounts out of the ambit of the advance commission. According to sources the regulator was looking into the issue and would come out with bancassurance guidelines soon. Generally upfront payments or equity discounts act as an incentive for banks to offer their distribution network to an insurer.

Several Banks are planning to buy equity stakes in insurance companies which is mutually beneficial for both partners. Axis Bank has picked up equity stake in Max Life while PNB bought 30% stake in Metlife. Syndicate is also planning to buy 26% stake in Aviva life. IRDA’s new set of regulations for bank assurance could further facilitate the transactions and would be positive for the insurance sector.

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