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SBI Life to toe bancassurance

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The Governor of Andhra Pradesh, Dr C. Rangarajan (left), sharing thoughts with Mr P.A. Balasubramanian, member IRDA, Mr R. Krishnamurthy, MD and CEO, SBI Life Insurance Co Ltd and Mr M.A. Krishnan, Chief General Manager, Development Banking, SBI, at a meet in Hyderabad on Monday.

HYDERABAD, Aug. 19

SBI Life Insurance Co Ltd, the joint venture between the State Bank of India and the French insurance major Cardif SA, has decided to retune its business model to bancassurance once again following the clearance of bancassurance model by the authorities recently.

SBI initially planned to adopt the bancassurance model — distribution of insurance products through the vast network of the bank branches. However, the insurance joint venture could not implement the model for want of clearances from the regulators, its Managing Director and Chief Executive Officer, Mr R. Krishnamurthy, said.

Addressing newspersons here on Monday on the eve of launching `Super Suraksha', a group insurance scheme aimed at the account holders of regional rural banks (RRBs) sponsored by SBI in Andhra Pradesh, Mr Krishnamurthy said the board of SBI Life would shortly meet to consider the business model and finalise targets for the current fiscal year.

Currently, 21 branches of SBI are engaged in selling the products of SBI Life. With a vast network of 65,000 branches, the bank is planning to sell its products through at least 100 branches by the year-end. To successfully adopt the bancassurance model, SBI Life would initiate the process of training the bank staff for the Certified Insurance Officers programme covering a training of 100 hours on insurance, he said.

Stating that all the eight products launched by SBI Life so far were well received by the customers, Mr Krishnamurthy said the insurance company was currently in the process of finalising details on products to be launched shortly.

The new product portfolio include pure endowment, critical illness, pension product, housing loan mortgage and also life insurance linked to Kisan Credit Cards.

All the products would be launched during the next couple of months, while the pension product would be introduced by the year-end.

However, the Andhra Pradesh Governor, Dr C. Rangarajan, cautioned the banks on the bancassurance model.

"While bank branches can be used as appropriate outlets, it has to be emphasised that banks should maintain an `arms length' distance from the insurance business. People talk of `firewalls' separating one type of business from another. The financial strength of each entity needs to be protected. It may also be noted that there is a difference between selling a bank product like `deposits' and `insurance'. In the case of insurance, very often it becomes necessary to impress on the clients the need to take insurance and also to apprise them of the different elements in the insurance cover. ... Bank officials are not used to `hard-sell', which may become necessary in the case of insurance."

Stressing on the need to introduce new insurance products that meet the changing needs of the people, Dr Rangarajan advised the insurance players to pay attention to product innovation, appropriate pricing and speedy settlement of claims with a goal of offering competitive products at reasonable cost.

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