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Bancassurance

Bancassurance

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Published by Vidyashree Mishra

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Published by: Vidyashree Mishra on May 14, 2010
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04/08/2013

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EXECUTIVE SUMMARY
The life insurance industry in India has been progressing at a rapid pacesince opening up of the sector in 2000. The size of the country, a diverse set of  people combined with problems of connectivity in rural areas, makes insuranceselling in India a very difficult proposition. Life insurance companies requireimmense distribution strength and tremendous manpower to reach out to such ahuge customer base.This distribution will undergo a sea change as various insurancecompanies are proposing to bring insurance products into the lives of thecommon man by making them available at the most basic financial point, thelocal bank branch, through bancassurance.
BANCASSURANCE: TWINTHRUST is the process through which insurance products are sold tocustomers at their local banks. With a banking network of 65,000 branchesserving more than 300 million retail banking customers, insurance can beavailable at affordable prices to people even in remote corners of thecountry. Twin here signifies the combination of a Bank and an Insurancecompany the two being the largest institutions of financial services andrevenue earners in the domain of finance. Thrust (force that drivessomething forward) ...thrust in this case is symbiotic n mutual(ly beneficial)helping in the upward/northward growth of both businesses and theeconomy as a whole.
The relationship is symbiotic; but there are challenges. The most commonchallenges to success are poor manpower management, lack of a sales culturewithin the bank, no involvement by the branch manager, insufficient product promotions, failure to integrate marketing plans, marginal database expertise,
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 poor sales channel linkages, inadequate incentives, resistance to change, negativeattitudes toward insurance and unwieldy marketing strategy. Even insurers and banks that seem ideally suited for a bancassurance partnership can run into problems during implementation. Before targeting the market, it is essential to doa SWOT analysis.One more important obstacle in development of bancassurance in India has been a set of regulatory barriers. Some of these have recently been cleared withthe passage of the Insurance (Amendment) Act, 2002. Looking at the west wheresales through the banking network have been a roaring success, the Indian banking sector has far to go. But one thing stands obvious. If insurance in India isto succeed, it can only be through the bancassurance channel.Thus the scope of this project is limited to the following parameters :-
Emergence of bancassurance in India
Relevance of bancassurance in the Indian Financial Sector,
Utilities and Advantages to Banks, Insurance Companies and theCustomers;
Regulatory Norms ( RBI and IRDA),
Models of bancassurance and
SWOT Analysis.To be able to understand to what extent bancassurance has reserved a place in thelives of the people in the country a survey analysis has been conducted.
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INTRODUCTION
The business of banking around the globe is changing due to integration of the global financial markets, development of new technologies, universalizationof banking operations and diversification in non-banking financial activities. Dueto all these movements, the boundaries that have kept various financial servicesseparate from each other have vanished. The coming together of differentfinancial services has provided synergies in operations and development of newconcepts. One of these is
Bancassurance
.
Bancassurance simply means selling of insurance products by banks.
Bancassurance, which is
also called Allfinanz
-
.
a
 
one-stop financial service tomeet the requirements of banking services and also to provide reliableprotection to customers
.Bancassurance is identified as an
alternativedistribution channel
,the key issue which is closely
linked to the regulatoryclimate of the countryto improve the non-interest income of banks
.In this arrangement, insurance companies and banks undergo a tie-up, asystem in which a bank has a corporate agency with an insurance company to sellits products.
By selling insurance policies the bank earns revenue apart frominterest. It is called as fee-based income. This income is purely risk free forthe bank since the bank simply plays the role of an intermediary forsourcing business to the insurance company.
The distribution of insurance products through banks is beneficial not onlyto the insurance and banking companies, but also to the customers. The growth of 
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