Bancassurance

Introduction
Bancassurance (Acc to IRDA)

refers to - banks acting as corporate

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

What is Bancassurance?
distribution of insurance products
through

thebank'sdistributionchannel
insuranceproducts offered through

banks
exploit synergies

Models of bancassurance
I. Structural Classification
II. Product Based Classification
III. Bank Referrals

Models of bancassurance
I. Structural

Classification

II. Product Based

Classification
III. Bank Referrals

i.

Referral Model

ii.

Corporate Agency

iii.

Insurance as fully
integrated Joint Venture

Models of bancassurance
I. Structural Classification
II. Product Based

i.

Stand-alone Insurance
Products

ii.

Blend of Insurance with

Bank Products

Classification
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

51%

26%

2. HSBC Insurance

(Asia Pacific) Holdings Ltd

3. Oriental Bank of Commerce -

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
private insurance companies in the market)

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 are 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)

J Hari Narayan
IRDA CHAIRMAN

Market Players !

Conclusion
Bancassurance in India has just taken a

flying start. It has a long way to go after all

The SKY IS THE LIMIT!