Bank mergers may affect insurance distribution scene

Bank mergers in India are likely to impact the insurance sector as many insurers have selected banks as their bancassurance partners. Bancassurance is the sale of life, pension and investment products through the branch network of a bank. The recent merger announcement of HDFC Bank and Centurion Bank of Punjab is expected to impact the business of Aviva Life Insurance and ICICI Lombard General Insurance Co. Centurion Bank is the bancassurance partner for these two insurers. The arrangements might be discontinued because HDFC Bank sells life and non-life insurance policies of group companies HDFC Standard Life Insurance and HDFC General Insurance. Insurers find recruiting and training individual agents a time-consuming and costly process. There are also issues like agency attrition and small-sized policies procured by agents. V Srinivasan, chief financial officer of Bharti Axa Life Insurance, said that the one bank-one insurer concept was not right and would lead to skewed scenario. A bank should be allowed to be a broker and sell the policies of different insurers, he said.