Besides, with LIC owning a majority stake in IDBI Bank, it will be impossible to find a buyer, say experts, given that the bidders were looking at an exclusive bancassurance deal with IDBI Bank.
“It is unlikely that LIC will use bancassurance in a big way. Even in the past, where LIC had a stake in banks, it routed very small portions of its business through the banking channel,” said Kawatkar. “This is so because LIC has a strong agency force, which is unionized and is unlikely to allow the bancassurance channel.”
Open architecture in bancassurance allows banks to sell products of at least three insurance companies in the same line of business.
As of fiscal 2017, LIC had a network of 1.13 million agents, while the combined number of agents in the private sector is around 957,000.
IDBI Federal Life sources 45-50% of its business through IDBI Bank.
“Even if LIC pushes for open architecture, we, as an insurance company, will stand to benefit, given the scale and brand of LIC. It will push penetration of insurance products, create awareness and will help us grow the insurance pie. I think there will be market for both to exist,” said Vighnesh Shahane, chief executive officer and whole-time director, IDBI Federal Life Insurance.