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    BANCASSURANCE

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    Bhavsimran S. Syal
    The document discusses bancassurance, which refers to banks acting as agents for insurance companies to sell insurance products. It outlines several bancassurance models and notes their benefits, including expanded customer reach and increased profits. Regulations from RBI and IRDA govern relationships between banks and insurers. While bancassurance improves insurance access, its downsides include potential conflicts of interest and privacy/data concerns. Major Indian banks and insurers engaged in bancassurance partnerships are also listed.

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    BANCASSURANCE

    Uploaded by

    Bhavsimran S. Syal
    3K views15 pages
    The document discusses bancassurance, which refers to banks acting as agents for insurance companies to sell insurance products. It outlines several bancassurance models and notes their benefits, including expanded customer reach and increased profits. Regulations from RBI and IRDA govern relationships between banks and insurers. While bancassurance improves insurance access, its downsides include potential conflicts of interest and privacy/data concerns. Major Indian banks and insurers engaged in bancassurance partnerships are also listed.

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    The document discusses bancassurance, which refers to banks acting as agents for insurance companies to sell insurance products. It outlines several bancassurance models and notes their benefits, including expanded customer reach and increased profits. Regulations from RBI and IRDA govern relationships between banks and insurers. While bancassurance improves insurance access, its downsides include potential conflicts of interest and privacy/data concerns. Major Indian banks and insurers engaged in bancassurance partnerships are also listed.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    3K views15 pages

    BANCASSURANCE

    Uploaded by

    Bhavsimran S. Syal
    The document discusses bancassurance, which refers to banks acting as agents for insurance companies to sell insurance products. It outlines several bancassurance models and notes their benefits, including expanded customer reach and increased profits. Regulations from RBI and IRDA govern relationships between banks and insurers. While bancassurance improves insurance access, its downsides include potential conflicts of interest and privacy/data concerns. Major Indian banks and insurers engaged in bancassurance partnerships are also listed.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    PRESENTED BY : KARMAN KAUR BHAVSIMRAN SINGH

    Concept of Bancassurance Bancassurance as a strategy Bancassurance Models Obstacles To Success

    Need for Bancassurance


    Regulations of RBI and IRDA Merits Demerits

    1.Bancassurance is an alliance between banks and insurance companies for the sale of insurance through banks. 2. According to IRDA, bancassurance refers to banks acting as corporate agents for insurers to distribute insurance products.

    3. Literature on bancassurance does not differentiate if the bancassurance refers to selling of life insurance products or non-life insurance products. 4. Accordingly, here bancassurance is defined to mean banks dealing in insurance products of both life and non-life type in any forms.

    BANKS

    CUSTOMERS

    INSURANCE COMPANIES

    Better utilization of manpower.


    Product diversification

    Convenience One stop shop Reduced price Better service High quality.

    Expand customer base


    Increase in volume and profit

    fee income

    Improved brand equity


    Marketing experience

    Integrated

    model :

    Successful in Europe, players in countries like France, Italy, and Spain operate either through fully owned insurance subsidiaries or through joint ventures that have an exclusive distribution agreement with the bank

    Non-integrated

    model:

    Banks sell insurance through authorized financial advisers as bank staff are not allowed to sell. For instance, UK

    Open

    architecture model:

    Banks usually have non-exclusive distribution agreements with several insurance companies

    Referral

    Model

    Bank shares clients data base, parts with only the business leads to the agents/sales staff of an insurance company for a referral fee or commission

    Corporate

    Agency

    Popular in India - bank as an institution acts as a corporate agent for the insurance company for the purpose of distribution of insurance products for a fee/commission

    Integrated

    Model

    Bank and an insurance company together manufacture, distribute and bear all the risks associated with that business

    In traditional roles neither insurers or banks can effectively do bancassurance.

    BANK CAPABILITIES

    INSURANCE CO.S CAPABILITIES

    *own proprietary database * Strong name recognition & reputation (local & regional) * Managing multiple distribution channels * Cross selling banking products

    * developing insurance products * face to face selling * underwriting experience * managing long tail products

    Satisfied customer increased penetration of insurance products

    * Poor manpower management * Lack of sales culture within the banks * No involvement by the branch manager * Insufficient product promotions * Failure to integrate marketing plan * Marginal database expertise * Poor sales channel linkages * Negative altitude towards insurance.

    Need for bancassurance in India:Researches and present day statistics speak about the need of a well equipped financial structure for a country that helps it to grow economically. The financial resources in the hands of people should be channelized in effective manner so as to increase the returns from the basic financial structure of nation and also the quality of living of people. Insurance policies are instruments/products that play major role in upholding the financial structure of developed countries. Though the teething phase of insurance, one may say is just past, a desirable foothold is yet to be found. With growth in number of middle class families in the country, RBI recognized the need of an effective method to make insurance policies reach people of all economic classes in every corner of the nation. Implementing bancassurance in India is one such development that took place towards the cause.

    The need and subsequent development of bancassurance in India began for the following reasons:
    To improve the channels through which insurance policies are sold/marketed so as to make them reach the hands of common man.
    To widen the area of working of banking sector having a network that is spread widely in every part of the nation. To improve the services of insurance by creating a competitive atmosphere among private insurance companies in the market.

    Regulations under RBI and IRDA:The Reserve Bank of India and the insurance development and regulatory authority have a set of guidelines for companies that couple to form bancassurance. Based on the equity a bank should hold in joint venture, the highest allowable value of equity, the type of banks and insurance companies that can couple together and the operation of bancassurance are all the factors that are regulated by RBI and IRDA. The IRDA has very recently drafted guidelines to promote open architecture in bancassurance. Currently a bank has a tie-up with only one life insurer and one non-life insurer. But in the new model the banks necessarily have to have multiple tie-ups. The country is divided into zones and every bank has to choose multiple insurers within the zones. With this the customer will have a wider range of insurance products offered by different insurers. It will also lead to a deeper penetration in the selling of insurance products.

    Benefits of Bancassurance:1. It encourages customers of banks to purchase insurance policies and further helps in building better relationship with the bank. 2. The people who are unaware of and/or are not in reach of insurance policies can be benefitted through widely distributed banking networks and better marketing channels of banks. 3. Increase in number of providers means increase in competition and hence people can expect better premium rates and better services from bancassurance as compared to traditional insurance companies.

    Demerits of bancassurance:1. Data management of an individual customers identity and contact details may result in the insurance company utilizing the details to market their products, thus compromising on data security. 2. There is a possibility of conflict of interest between the other products of bank and insurance policies (like money back policy). This could confuse the customer regarding where he has to invest. 3. Better approach and services provided by banks to customer is a hope rather than a fact. This is because many banks in India are known for their bad customer service and this fact turns worse when they are responsible to sell insurance products. Work nature to market insurance products require submissive attitude, which is a point that has to be worked on by many banks in India.

    Bancassurance companies:SBI life insurance Company LIC is tied up with Vijaya bank, Oriental bank of commerce, Corporation bank ICICI Lombard Barclays MetLife India Axis bank MetLife India

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