Bancassurance

- an Effective Distribution Model

Kamalji Sahay,
CEO, Star
T he bancassurance model will remain one
of the popular models for insurance sector
for at least another decade, feels Kamalji Sahay,
we have access to the database of our promoter
banks and the premium collections effected at
the bank branches are directly credited to our
Union Dai-ichi chief executive officer, Star Union Dai-ichi Life account in a seamless manner. The customer
Insurance Company, maintaining that the model base of the two banks - more than 48 million
Life Insurance is extremely efficient and very cost effective. - provides great scope for us to cross sell our
Company, “Yes, we can entirely depend on this model and products. Additionally, the regional rural banks
we do not intend to have our own distribution sponsored by the two banks provide more than
swears by the channel for the time being, says Sahay, who 1,400 branches to tap the life insurance business
heads the joint venture insurance company st up in the rural areas,” says Sahay vouching for the
bancassurance
by Bank of India and Union Bank of India and bancassurance model.
model. This is Japanese insurance major Dai-ichi Mutual Life
Insurance Company.” QUITE ON TARGET
one model that “I am saying so after doing a lot of due The insurer, which received its license in
helps insurance diligence. In our case, the cost of operations for December 2008, has seen its premium income
the half-year has been just 64% of the premium reach Rs 250 crore at the end of the third quarter
companies, he collection, where as this is much higher in the in December 2009. Says Sahay: “We had a very
tells executive case of insurance companies which depend on ambitious target for the first year, that is Rs 400
their own channels. The captive network of the crore by the end of financial year 2009-2010, and
editor N. Mohan banks can be very effectively made use of by in all likelihood, we will be crossing Rs 500 crore
in an interview. insurance companies opting for this distribution mark by this time frame, because the last quarter
model. There are no hassles of overheads, is always the most productive quarter.”
A report: establishing offices and looking out for customer The company has a pan India footprint. Sahay
data,” he adds. says he could do very good business in some of
However, the model is likely to reach a plateau the backward areas in north India and in cities
in about 10 years when insurance companies and towns like Gorakhpur, Varanasi, Dhanbad,
like his will have to think of creating other Bokaro and Ranchi. “We have been able to make
distribution models, says Sahay. He also adds determined foray into the rural areas just because
that bancassurance is one of the models by the of the bancassurance model because the banks
insurance regulator and there are no constraints had their branches in these areas. ULIP and
placed on insurance companies opting for this endowment products were in high demand in
model. It is poised to be one of the preferred these areas,” he elaborates.
distribution channels for insurance operators, Technology induction is very high on the
he says. priority list of the company. It is ahead of many
While opting of its peers, according to Sahay. “We have already
for this model, implemented a core insurance system - LifeAsia
the insurance - which is partly integrated with the systems of
Kamalji companies do our promoter banks, especially the customer
Sahay says have access to the database. Of the 23 private insurance companies,
an insurance customer database only eight have deployed technology in a big way
company of the banks, and automated their processes. We have done it
can entirely
which is a major in the very first year of our operations.”
depend on
bancassurance fillip, besides the
model facility to integrate CUSTOMER PORTAL
the transaction The company has already set up a customer portal
system with that of and customers can connect to the system by logging
the banks. “Today, on to the portal 24x7 and can find policy data, fund

14 BANKING FRONTIERS JANUARY 2010

KSahay Jan 10.indd 2 1/12/2010 4:03:58 PM

 details, premium due details with facility
to print premium receipts, change address,
etc, on real time basis. It is now in the
process of enabling its customers to make
online payment of premiums.
Besides, there is going to be an
employee portal and a distribution
portal. Along with these initiatives the
company has also launched automated
SMS alerts, e-mail alerts and a full fledged
contact centre for its customers as a part
of its communication strategy.
REVERSE MORTGAGE
Star Union Dai-ichi Life Insurance
has been in the limelight recently when
it tied up with Central Bank of India to
launch a unique reverse mortgage plan,
which Sahay says, enables a person to
enjoy his retirement with dignity. “I must
tell you something about this innovative
reverse mortgage product specially suited
to Indian cultural values and ethos. The
Sud Life Reverse Mortgage Loan- Annuity
Plan aims to provide financial security
to senior citizens who have assets but
not enough liquidity to lead a life with
dignity. Senior citizens can approach
Central Bank of India, which is a partner
bank of ours, to avail a reverse mortgage
loan against their existing property. The
bank will act as a master policy holder and
buy for the senior citizens a life annuity
from us. The senior citizens do not have
to repay this loan and in case the legal
heirs wish to retain the property all they
need to do is to repay the loan amount to
the bank with the accrued interest on it.
The Reverse Mortgage Loan- Annuity can
be paid in yearly, half-yearly, quarterly
or monthly installments. There are two
options under the plan. Through the first
option, the senior citizens can receive
the stated annuity throughout their life
time and no amount will be refunded
thereafter. Through the second option,
senior citizens will receive comparatively
This is Our Life Rajneesh Kapoor
KSahay Jan 10.indd 3
lower annuity, which will be adequately
compensated for by the return of the
original purchase price to the banks or
N E WS S R I L A N K A
their legal heirs thereafter as the case may
be. The annuity installments depend on
the purchase price, age of the annuitant
and the option selected.”
NEW PRODUCTS
The company recently came out with
a slew of products to add to its existing
bouquet of products cater to the specific
needs of the various segments. Three of
these are under group plan - SUD Life
Group Leave Encashment Plan, SUD Life
Group Gratuity Scheme and the SUD Life
Reverse Mortgage Loan - Annuity Plan. The
three individual plans are SUD Life Instant
Endowment Plan, SUD Life Pure Term Plan
and SUD Life Premier Protection Plan.
Its existing products - Dhan Suraksha
ULIP and Dhan Suraksha Premium ULIP,
under unit linked life insurance plans,
Prabhat Tata under unit linked child
benefit plan, Immediate Annuity Plan
and Dhruv Tara unit linked pension
plan under pension plans, and Jeevan
Safar endowment + whole life plan,
Instant Endowment Plan and Pure Term
Assurance Plan under traditional life
insurance plans have been attractive
schemes, which received good response
and helped the company to achieve a
record of sorts in premium collection in
the first year of its operations.
Sahay, a veteran of the Indian life
insurance sector, says the insurance sector
in India has a huge potential. “We are
totally geared to meet the requirements
of the prospective customers. I am of the
view that most of the banks will now
enter this segment through partnerships,
in the case of public sector banks through
a workable public private partnership
model, like ours,” he adds.
mohan@bankingfrontiers.com
BANKING FRONTIERS
3 The Asian Development Bank has
signed a new trade financing agreement
with Bank of Ceylon to provide essential
finance to Sri Lanka’s exporters and
importers. The program, called Trade
Financing Facility Program, also helps
banks to develop relationships with
international peers, which promotes
partnership and knowledge sharing
in the future. ADB already has similar
agreements with DFCC Vardhana Bank
and NDB.
3 Commercial Bank of Ceylon has
launched its global credit card in
Bangladesh. There are two types of cards
called ‘Combank Global Gold Card’ and
‘Combank Global Classic Card’.
3 Central Bank of Sri Lanka is setting
up an export-import bank to fast-track
Sri Lanka’s international trade, governor
Nivard Cabraal said. The proposed
exim bank will have an initial capital of
Lankan Rs 200 million rupees and may
be financed by both government and
commercial sources.
3 DFCC Vardhana Bank, the everyday
banking unit of DFCC Bank, has joined
forces with Sampath Bank to offer
extensively enhanced ATM network
facilities with wider location coverage
in the island. The proposed network
comprises over 212 ATM points spread
across the island.
3 The People’s Bank, Bank of Ceylon,
National Savings Bank and the State
Mortgage and Investment Bank will be
participating in housing loan scheme
for government servants to recognize
their contribution to nation building. The
applicable interest rate varies between
4% - 11%, depending on the size of the
loan. Lankan Rs 5000 million has been
allocated to enhance the loan scheme.
JANUARY 2010 15
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