Bancassurance

Introduction
Bancassurance (Acc to IRDA) refers to - banks acting as corporate

agents for - insurers to - distribute insurance products. term of - France in 1980 To define? - the sale of insurance products through banks distribution channels.

What is Bancassurance?
distribution of insurance products through the bank's distribution channel

insurance products offered through

banks
exploit synergies

Models of bancassurance
I. Structural Classification

II. Product Based Classification

III. Bank Referrals

Models of bancassurance
I. Structural
i. Referral Model

Classification
II. Product Based

ii.
iii.

Corporate Agency
Insurance as fully integrated Joint Venture

Classification
III. Bank Referrals

Models of bancassurance
I. Structural Classification

II. Product Based

i.

Classification
ii.

Stand-alone Insurance Products Blend of Insurance with Bank Products

III. Bank Referrals

Models of bancassurance
I. Structural Classification

II. Product Based Classification

III. Bank Referrals

Bancassurance in india
In the past - insurance policies - were

for a small part of public (financially strong)

Today changed scenario - insurance

policies reach all

SBI Life Insurance Company Limited

Joint venture between the State Bank of India

and BNP Paribas Assurance registered with IRDA on 30.03.2001

State Bank of India BNP Paribas Assurance

--- 74% --- 26%.

Canara HSBC Oriental Bank of Commerce Life

Insurance Company Limited

Share Holdings 1. Canara Bank

2. HSBC Insurance

51%

(Asia Pacific) Holdings Ltd 3. Oriental Bank of Commerce

26% - 23%

Paid up capital of INR 325 Crores.

Commenced its business on 6th of June, 2008

ING Vysya Life Insurance Company Limited

Started operations in India in September 2001 ING Life has a pan India presence in 234 cities,

with over 367 sales teams

Need for bancassurance in india

Improve insurance policy channels (through which insurance policies are sold/marketed so as to make them reach the hands of common man)

Widen the area of working of banking sector (to have a network that is spread widely in every part of the nation)

Improve insurance services (by creating a competitive atmosphere among

ADVANTAGES AND DISADVANTAGES OF BANCASSURANCE

Advantages for the insurance company:

Distribution network helps extend customer base Access to customers Opportunity to vary distribution methods Avoid excessive dependence on a single network

ADVANTAGES AND DISADVANTAGES OF BANCASSURANCE

Advantages for the insurance company:

Trustworthy and reliable image of banks, transferred to insurance companies Reduction in distribution costs (inherent in traditional sales representatives) Quick establishment in a new market (using a local banks existing network)

ADVANTAGES AND DISADVANTAGES OF BANCASSURANCE

Advantages for the Consumer:

Consumer enjoys greater access

Cheaper insurance products (due to the reduction in distribution costs than through traditional channels) The special relationship between the customer and the bank (customers needs and the solutions provided by the bank)

DEMERITS OF BANCASSURANCE

Disadvantage to the bank

Banks lack sales culture It can affect its trust image Selling an insurance product is different from selling a banking product.

trends

Tailor-made products for each segment Some bancassurers focus exclusively on distribution. In some markets, face-to-face contact is preferred. Banks are starting to embrace direct marketing and Internet banking.

trends

Banks by and large are resorting to either referral models or Corporate agency model.
Banks even offer space in their own premises to accommodate the insurance staff. Number of banks in India have begun to act as corporate agents to one or the other insurance company.

challenges

Increasing sales of non-life products

(to the extent those risks are retained by the banks, require sophisticated products and risk management)

Bank employees are traditionally low on motivation

(Lack of sales culture itself is bigger roadblock than the lack of sales skills in the employees)

challenges

Human Resource Management difficulty

(due to such alliances in financial industry)

Private sector insurance firms are finding change management in the public sector Fear of insurance partner

(banks may end up cross-selling banking products to their policyholders)

REGULATIONS UNDER IRDI AND RBI

IRDA (Insurance Regulatory Development Authority) 3 ZONES (ZONE A, B , C) Market Players !

J Hari Narayan
IRDA CHAIRMAN

Conclusion
Bancassurance in India has just taken a flying

start. It has a long way to go after all The SKY IS THE LIMIT!