Kathmandu. The Government of India is preparing to introduce the Insurance Amendment Bill in the winter session of Parliament. The most important change will be an ‘open architecture’ for individual agents. This means that the same agent will now be able to work with multiple insurance companies (life, non-life and health).
This will be a big setback for giants like LIC Bharat and SBI Life. The new insurance premium income comes largely from the agents. The new system will shake up the entire insurance market in India.
This bill will include many important provisions. However, the most discussed issue is the open architecture for individual agents. This means that insurance agents will no longer be tied to a single company. They will be able to work for multiple life, non-life and health insurance companies at the same time.
This change can prove to be a big setback for companies like LIC and SBI Life. 92 percent of LIC’s personal new business premium comes from agents. SBI Life has a 28 percent stake. This means that the business of both companies depends to a large extent on their agents.
Now, if the agent wants, they can sell insurance policies not only from LIC but also from other companies. This could weaken LIC’s market hold and significantly benefit private companies.
