PNB, Vijaya stop selling Principal policies

MUMBAI: Punjab National Bank and Vijaya Bank — the two key partners of insurance broking firm Principal PNB Insurance Broking Company — have completely stopped selling insurance policies. This, market observers say, could be the first step of banks severing their ties with the Principal Group. Principal PNB Insurance Broking Company is a joint venture between the Principal Group, PNB, Vijaya Bank and Berger Paints and it sells insurance policies of many insurance companies. In the past, both Delhi-based PNB and South-based Vijaya Bank had said that they were not very keen on continuing their relation with the Principal Group. However, both banks decided to stop offering policies being marketed by the broking arm to their customers this April. Officials from both banks said that they have stopped selling policies since they were not earning a significant level of fee income through this route. Bank officials also pilferage customer data as yet another reason for discontinuing the activity. The move by both banks to discontinue selling insurance products may come as a setback to the insurance broking company since both banks have a huge network of branches. While PNB has about 3,000 branches with most of them in northern India, Vijaya has about 1,000 branches in the South. Under the tie-up, Principal holds 26%, PNB has 30%, Berger Paints has 25% while Vijaya Bank holds 19% stake. According to insurance regulations, a bank can distribute products of only one company through the corporate agency route. However, it is possible for a bank to float a broking arm which can, in turn, sell insurance products of various companies. Besides PNB, HSBC has floated an insurance broking arm in India.

Source: ET