When banks become brokers
Canadian brokers have had their share of territorial skirmishes with banks over the sale of insurance products, so imagine if Canadian regulators followed India’s lead and considered allowing banks to register themselves as insurance brokers.
The Insurance Regulatory and Development Authority (IRDA) is actively considering permitting banks to register themselves as insurance broking entities, according to the Times of India.
Indian banks currently sell insurance products by acting as corporate agents of insurance companies. Banks are not registered by the insurance regulator and they are accountable only to the insurance companies. The insurance companies are held liable for any problems with the banks’ sale of insurance.
Banks are allowed to represent only one life and one non-life insurance company.
Under the new proposal, banks would be allowed to register as brokers. They would be able to sell policies of all companies and be registered and regulated by IRDA.
How insurers can boost retention rates
How can an insurance company boost its retention levels?
One way would be for an insurer to cut the insurance broker out of the loop, deal with the broker’s client directly, and offer a lower premium based on the absence of a broker commission. The legality of this option is subject to debate in a U.S. court.
Source 1 Benefits, a U.S. insurance brokerage, has sued the insurer Delta Dental Plans Association for cutting it out of the commission on a policy for the Chicago police union.
Source 1 Benefits complained to court that Fraternal Order of Police (FOP) Lodge 7, which represents nearly 23,000 employees and their relatives, had been one of its established clients when the brokerage began an annual test of the insurance market for 2013.
The brokerage’s complaint alleges that Delta Dental directly solicited the FOP after it realized it was going to lose the account to New York-based
MetLife.
By eliminating the commission and other fees for Source 1, Delta was able to reduce its premium by about 8.5%, to $856,000, compared with the insurer's original proposal of $935,000, according to the complaint.
These allegations have not been proven in court. The insurer has denied any wrongdoing, saying the lawsuit should have been directed against Delta Dental of Illinois, a nonprofit member of the association.
Source: Chicagobusiness.com
