Scribd Logo
Upload

Welcome to Scribd!

  • 32 views

    What Is Bancassurance

    Uploaded by

    fazriman78
    Bancassurance is an arrangement where banks sell insurance products from their partner insurance companies. It benefits both parties as banks earn commissions and insurance firms gain more customers through the banks' large distribution networks. In India, the top four models of bancassurance include pure distributor, strategic alliance, joint venture, and financial service group. Bancassurance is growing rapidly in India as it provides banks with fee-based revenue opportunities and allows insurance firms to expand their market reach through banks' over 100 million customers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    What Is Bancassurance

    Uploaded by

    fazriman78
    32 views2 pages
    Bancassurance is an arrangement where banks sell insurance products from their partner insurance companies. It benefits both parties as banks earn commissions and insurance firms gain more customers through the banks' large distribution networks. In India, the top four models of bancassurance include pure distributor, strategic alliance, joint venture, and financial service group. Bancassurance is growing rapidly in India as it provides banks with fee-based revenue opportunities and allows insurance firms to expand their market reach through banks' over 100 million customers.

    Original Description:

    What is Bancassurance.

    Original Title

    What is Bancassurance

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Bancassurance is an arrangement where banks sell insurance products from their partner insurance companies. It benefits both parties as banks earn commissions and insurance firms gain more customers through the banks' large distribution networks. In India, the top four models of bancassurance include pure distributor, strategic alliance, joint venture, and financial service group. Bancassurance is growing rapidly in India as it provides banks with fee-based revenue opportunities and allows insurance firms to expand their market reach through banks' over 100 million customers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    32 views2 pages

    What Is Bancassurance

    Uploaded by

    fazriman78
    Bancassurance is an arrangement where banks sell insurance products from their partner insurance companies. It benefits both parties as banks earn commissions and insurance firms gain more customers through the banks' large distribution networks. In India, the top four models of bancassurance include pure distributor, strategic alliance, joint venture, and financial service group. Bancassurance is growing rapidly in India as it provides banks with fee-based revenue opportunities and allows insurance firms to expand their market reach through banks' over 100 million customers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    What is Bancassurance?

    Bancassurance means selling insurance through banks. Banks and insurance


    companies collaborate in a partnership, where the bank sells the partner insurance
    company’s products to its customers.

    Banks and insurance companies collaborate to form a partnership in which the bank
    sells the insurance firm’s products to its customers. This arrangement of selling an
    insurance product through banks is known as Bancassurance.

    This arrangement profits both the bank and the insurance company, as the bank
    earns a commission amount from the insurance company while the insurance firm
    broadens its market share and customers. The bank acts as a mediator by helping
    an insurance firm reach its target customers to increase its market reach.

    Importance of Bancassurance
    The importance of Bancassurance are listed as follows:

     Cost-effectiveness: Insurance companies look to Bancassurance as a cost-effective


    mode of distribution.
     Helpful environment: Given that the customers already trust the bank with their money,
    they are also generally more willing to consider new products from the same financial
    institution, thereby creating an enabling environment to sell the products.
     Commission-based income: A bank is able to income base and increase its overall
    productivity by strengthening its branch network, goodwill and client base by presenting
    itself as a one-stop-shop for its customers, therefore improving customer

    Bancassurance is a relatively new idea in the financial sector. The belief behind
    Bancassurance is to combine the marketing capabilities and selling-culture of
    insurance companies with the distribution network and sizeable customer base of
    banks.

    In this arrangement, insurance products are traded through the broad distribution
    sections of the banking services accompanied by a comprehensive range of banking
    and investment products. In short, Bancassurance has a tremendous chance, if
    appropriately implemented, to be a win-win situation for banks, insurers and the
    customer.

    Bancassurance Models
     Pure distributor: In this model, the bank sells the products of an individual insurer
    exclusively, either bundled with the bank’s products or in stand-alone basis.
     Strategic alliance: In this model, a higher degree of involvement is made in product
    development, service terms and management by the bank.
     Joint venture: The bank and the insurance company form a new corporation in which
    they both hold shares. The shareholding may be equal for both parties, though it not
    essential.
     Financial service group: In this model, an insurance company may make/acquire a bank
    or a bank may create/purchase an insurance company. Here, a larger conglomerate may
    look to create multiple financial services companies, including a bank and an insurance
    company, and may utilise the synergies that come with operating both the businesses.

    Bancassurance in India
    In India, the first three models are practised, but the laws do not permit either banks
    or insurers to own an insurance company or bank wholly.

    The insurance sector in India is expanding rapidly. Both banks and insurance
    companies perceive bancassurance as an opportunity to increase the Indian
    financial industry’s future income and footprint. Non-life insurance products are
    featured to a lesser extent as compared to life insurance products. The banks have a
    customer base of more than 100 million and therefore are in a perfect situation for
    taking bancassurance forward.

    Bancassurance in India is gaining ground extremely fast despite being a very new
    concept. In India, the banking sector is under the control of Reserve Bank of India
    and insurance sector is managed by the Insurance Regulatory and Development
    Authority (IRDA). Since Bancassurance contains constituents from both industries, it
    comes under the influence of both regulators. Each of the regulators (RBI and IRDA)
    have given out comprehensive regulations for the bank’s involvement in the
    insurance sector.

    This degree of possible fee-based revenue creation by banks in India from


    bancassurance is the temptation for banks to get involved in the space.

    However, many customers are also bypassing the bancassurance channel and
    purchasing insurance online directly through self-service channels. Aegon Life is one
    of the pioneers for the online channel of distributing life insurance in India. A
    fantastic term insurance plan that you can purchase online is the Aegon Life iTerm
    Plus Insurance Plan which also offers a term Plan with cover for 36 Critical Illnesses.

    You might also like