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Thakur Educational Trust [Regd.] Thakur College of Science & Commerce [ISO 9001:2000 CERTIFIED, Accredited by NAAC, Bangalore] Project Report on: BANCASSURANCE Submitted By: PARUL SINGH T.Y. Banking & Insurance [Semester VI] Submitted To: University of Mumbai Project Guide: Prof. Venkatesh Academic Year: 2008 – 2009
THAKUR COLLEGE OF SCIENCE & COMMERCE
Thakur Educational Trust [Regd.] Thakur College of Science & Commerce [ISO 9001:2000 CERTIFIED, Accredited by NAAC, Bangalore]
This is to certify that the project entitled is successfully done by MS. PARUL SINGH during the Third Year, sixth Semester of B.Com (Banking & Insurance) under the University of Mumbai through the Thakur College of Science & Commerce, Kandivali, Mumbai — 400101.
Co-ordinator Date: Place:
THAKUR COLLEGE OF SCIENCE & COMMERCE
I, PARUL SINGH, from THAKUR COLLEGE OF SCIENCE & COMMERCE, student of T.Y.BANKING & INSURANCE [SEMESTER VI], Examination Seat No. ______, hereby submit my project report on ―BANCASSURANCE‘‘. I also declare that this project which is the partial fulfillment of the requirement for the degree of T.Y.B.Com (Banking & Insurance) of the MUMBAI UNIVERSITY is the result of my own efforts with the help of experts.
THAKUR COLLEGE OF SCIENCE & COMMERCE
advice and suggestions in fulfillment of this project. I would like to thank my project guide Prof. I convey my deep appreciation to him for sparing their valuable time and efforts. giving me encouragement and for providing me with the material and knowledge to make this project a success. by making available the required books and the internet room which have proved useful to me in successfully completing my project. I am grateful to him for supporting me. I would not have been able to complete this project. I hope that I have succeeded in presenting this project to the best of my abilities. valuable opinions. I am thankful to our college for all the possible assistance and support. I take the opportunity in thanking The Almighty and my parents without whose continuous blessings. Venkatesh for his great help. so as to make me capable of presenting this project.BANCASSURANCE Acknowledgement It gives me immense pleasure in presenting the project on ―BANCASSURANCE‖. THAKUR COLLEGE OF SCIENCE & COMMERCE . Firstly.
it gives birth to BANCASSURANCE. A relationship which amazingly complements each other‘s strengths and weaknesses. When these two join together. Bancassurance is nothing but the collaboration between a bank and an insurance company wherein the bank promises to sell insurance products to its customers in exchange of fees. In this competitive and liberalized environment everyone is trying to do better than others and consequently survival of the fittest has come into effect This has given rise to a new form of business wherein two big financial institutions have come together and have integrated all their strength and efforts and have created a new means of marketing and promoting their products and services. It is a mutual relationship between the banks and insurers. THAKUR COLLEGE OF SCIENCE & COMMERCE . On one hand it is the Banking sector which is very competitive and on the other hand is Insurance sector which has a lot of potential for growth.BANCASSURANCE Executive Summary The Banking and Insurance industries have changed rapidly in the changing and challenging economic environment throughout the world.
Liberalization and tough Competition have brought the Banking as well as the Insurance Industries together to help each other and to provide excellent services to the customers. its various products. It deals with the conceptual part of Bancassurance as well as its practical applications in India. The project also revolves around data. the growth they have experienced since the opening up of a wholly owned subsidiary of SBI Bank that sells insurance products. SWOT analysis is also done so as to identify the various opportunities and threats for Bancassurance in India.BANCASSURANCE OBJECTIVE I would like to present my project ―BANCASSURANCE The project flashes some light on Bancassurance and how it is perceived by people in India. The main focus of this project is on benefits and importance of Bancassurance in India. For secondary data I referred few books and journals and obtained certain information from internet THAKUR COLLEGE OF SCIENCE & COMMERCE . The regulations governing Bancassurance are also dealt with in this project. The survey tries to identify whether the conditions are favourable for it India or not. METHODOLOGY For primary data I visited State Bank Of India for close jist as the project includes the case study of SBI Life Insurance Company. A survey analysis has also been done so as to know the popularity and the growth perspectives of Bancassurance. This project is just a gist about how the Globalization. facts and figures that are necessary to prove the importance of Bancassurance.
THAKUR COLLEGE OF SCIENCE & COMMERCE . So the insurance companies have a huge potential market in the years to come. But the public sector banks are also trying to give them a tough competition e.g. But still few people don‘t know about Bancassurance as a concept.BANCASSURANCE Findings Although the concept is simple enough in theory. Almost many people have a fair idea about Bancassurance and that their banks sell various insurance products. It has been also found out that the banks have various opportunities to cross sell insurance products. The insurance business can go a long way because there is a large population who is still unaware about insurance. So the banks and the insurance companies must tie-up with the right partners. and because of that trust the customers will take the insurance products from banks. This will help them to create a better image in the minds of the customers. The insurance companies also have the opportunity to take advantage of the bank‘s network and other avenues. It is also seen that customers have a lot of trust on the banks. but in practice it has been found to be far from straightforward. It has also clear from the study that the private sector and the foreign banks have better future in Bancassurance. SBI Life Insurance Co. As the brand name of the banks is important so is the brand image of the insurance companies.
products and processes will need to be tailored to bank markets. Else. Trying to sell traditional products may not work so effectively. since the majority of the banking sector is in public sector which has been widely responsible for the lethargic attitude and poor quality of customer service.BANCASSURANCE Recommendations The Insurance companies need to design products specifically for distributing through banks. rather than adjusted to insurer‘s specifications. THAKUR COLLEGE OF SCIENCE & COMMERCE . Banks should also do the settlement of claims which will increase the trust and reliability of the customers on the banks. The employees of the banks who are selling insurance products must be given proper training so that they can answer to any queries of the customers and can provide them products according to their needs. A formal and standard agreement between these banks and the insurance companies should be taken up and drafted by a national regulatory body. it needs to rebuild the blemished image. the bank management and the management of the insurance company should be able to resolve conflicts arising in future. These agreements must have necessary clauses of revenue sharing. In India. For bancassurance to succeed. Banks should also provide after sales services and they should be more aggressive in selling the insurance products. the bancassurance would be difficult to succeed in these banks. In case of possible conflicts.
10. 9. 96 104 THAKUR COLLEGE OF SCIENCE & COMMERCE .BANCASSURANCE TABLE OF CONTENTS Sl. 5. 1. 57 62 LATEST DEVELOPMENT 71 FUTURE OUTLOOK AND RECOMMENDATION SBI LIFE INSURANCE (PROFILE) PRODUCTS OFFERED SBI LIFE INSURANCE (PERSPECTIVE) SURVEY ANALYSIS CONCLUSION 81 11. 45 7. 3. 13. 12. No. 53 8. 20 26 33 38 6. 4. Content INTRODUCTION WHAT IS BANCASSURANCE BANKING ON BANCASSURANCE UTILITIES OF BANCASSURANCE DISTRIBUTION CHANNELS BENEFITS OF BANCASSURANCE BUSINESS MODELS KEY DRIVERS BANCASSURANCE EMERGING TRENDS BANCASSURANCE EMERGING CHALLENGES BANCASSURANCE TACKING LEAD PROBLEM OF BANCASSURANCE ISSUES TO BE TACKLED SWOT ANALYSIS BANCASSURANCE SCENARIO Page No 1 2.
BANCASSURANCE SECTION 1 INTRODUCTION TO Banking Insurance Bancassurance WHAT IS BANCASSURANCE BANKING ON BANCASSURANCE THAKUR COLLEGE OF SCIENCE & COMMERCE 1 .
Banks are now foraying into net banking. Banking is defined as: “Accepting for the purpose of lending of deposits of money from the public for the purpose of lending or investment. drafts or order. Many new things have come up in the banking sector in the recent years.BANCASSURANCE . The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. Introduction to Banking Banking as per the Banking Regulation Act. Banks have adopted the new technology because banking has not remained up to accepting and lending but now it is all about satisfying the needs of the customers.They are trying to provide every kind of service which can satisfy or rather we should say that it can delight the customers. THAKUR COLLEGE OF SCIENCE & COMMERCE 2 . in order to stay ahead in the rat race.” A sound and effective banking system is necessary for a healthy economy. housing finance. repayable on demand through cheques. New services are the order of the day. Entry of private and foreign banks in the segment has provided healthy competition and is likely to bring more operational efficiency into the sector. treasury market. and consumer finance. Banks are also coping and adapting with time and are trying to become one-stop financial supermarkets. The development of the Indian banking sector has been accompanied by the introduction of new norms. merchant banking etc. securities.
England in particular. Together with banking services. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again.term funds for infrastructure development at the same time strengthening the risk taking ability of the country.Today there are 14 general insurance companies and 14 life insurance companies operating in the country. 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. insurance has a deep-rooted history. insurance services add about 7% to the country‘s GDP.” In India.BANCASSURANCE Introduction to Insurance Sector Insurance may be defined as: “It is a contract between two parties where by one party undertakes to compensate the another party for the loss arising due to an uncertain events for which the another party agrees to pay a certain amount regularly. But today also the insurance companies are trying to capture Indian markets as not many people are aware of it. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Insurance in India has evolved over time heavily drawing from other countries. A well-developed and evolved insurance sector is a boon for economic development as it provides long. THAKUR COLLEGE OF SCIENCE & COMMERCE 3 . The Insurance Act. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
It‘s a new concept to Indian market but it is very widely used in western and developed countries. It is predicted by experts that in future 90% of share of premium will come from Bancassurance business only. It‘s a combination of the term ‗Bank‘ and ‗Insurance‘. It is profitable both to Banks and Insurance companies and has a very bright future to be the most develop and efficient means of distribution of Insurance product in very near future. The banking business is also generating more profit by more premium collected by them and they also receive commission like normal insurance agent which increase there profits and better reputation for the banks as there service base also increase and are able THAKUR COLLEGE OF SCIENCE & COMMERCE 4 . In India Bancassurance in guide by Insurance Regulatory and Development Authority Act (IRDA). It means that insurance have started selling there product through banks. All banks and insurance company have to meet particular requirement to get into Bancassurance business. Insurance company can sell both life and non-life policies through banks. Currently there are more and more banking and Insurance Company and venturing into Bancassurance business for better business prospect in future. ‗BANCASSURANCE‘ as term itself tells us what does it means.BANCASSURANCE Introduction to BANCASSURANCE Bancassurance may be defined as: “Selling Insurance products through banks”. 1999 and Reserve Bank of India. The share of premium collected by banks is increasing in a decent manner from the time it was introduce to the Indian market.
Financial Services Banking Insurance Bancassurance Bancassurance THAKUR COLLEGE OF SCIENCE & COMMERCE 5 .describes a package of financial services that can fulfill both banking and insurance needs at the same time. which is also known as Allfinanz . In concrete terms bancassurance. And they have to directly deal with an organization which reduce there pressure to deal with each customer face to face. In all Bancassurance has proved to be boom in whole Banking and Insurance arena.BANCASSURANCE to provide more service to customers and even more customer are attracted toward bank. It is even profitable for Insurance Company as they receive more and more sales and higher customer base for the company. The word is a combination of two words ‗Banc‘ and ‗assurance‘ signifying that both banking and insurance products and service are provided by one common corporate entity or by banking company with collaboration with any particular Insurance company.
More and better insurance starts coming in market. This success coincided with a favorable taxation for life insurance products. But. But this has proven to be a boom for the Insurance and Banking companies together and both the different sector of the industry has shown better result and improvement in their own field due coming of the whole new concept of BANCASSURANCE. in terms of middle and long term savings. as well as with the consumers' growing needs. in the market which has been liberalized recently. This stream of market has just been opened very recently for the Indian market and there is lot of development left to be done by the government and regulatory authority. The share of premium collected by them has increased in constant and decent manner. still which countries have permitted Bancassurance in their market has seen a tremendous boom in that sector. THAKUR COLLEGE OF SCIENCE & COMMERCE 6 . The links between bank and insurance takes place through various ways (distribution agreements. which is due to an inadequacy of the pension schemes in India. But it is a controversial issue as many experts feels that this ides gives banking sector too great a control over financial market in that country. Therefore it has also been restricted in many countries too.BANCASSURANCE The usage of the word picked up as banking and insurance companies merged together and banks sought to provide insurance. creation of a company new company) which gives rise to a complete upheaval concerning marketing strategies and the setting up of insurance products' distribution. joint ventures.
The concept of bancassurance was evolved in Europe. In Asia. However. In Spain. the evolution of bancassurance as a concept and its practical implementation in various parts of the world. However. with their geographical spreading penetration in terms of customer‘s reach of all segments. hardly 20% of all United States banks were selling insurance against 70% to 90% in many Western European countries. Germany and France more than 50% of all new life premiums is generated by banks assurance. Banks. In Middle East. have thrown up a number of opportunities and challenges. have emerged as viable source for the distribution of insurance products. Taiwan and Hong Kong have surged ahead in Bancassurance then that with India and China taking tentative step forward towards it. THAKUR COLLEGE OF SCIENCE & COMMERCE 7 . Belgium. only Saudi Arabia has made some feeble attempts that even failed to really take off or make any change in the system.BANCASSURANCE Bancassurance in its simplest form is the distribution of insurance products through a bank‘s distribution channels. This concept gained importance in the growing global insurance industry and its search for new channels of distribution. It is the provision of insurance and banking products and service through a common distribution channel or through a common base. Europe leads the world in Bancassurance market penetration of banks assurance in new life business in Europe which ranges between 30% in United Kingdom to nearly 70% in France. It takes various forms in various countries depending upon the demography and economic and legislative climate of that country. Singapore.
making use of other distribution avenues becomes a must. unit-linked products and innovative riders. It therefore makes sense to look at well-balanced. companies are increasingly trying to come out with better innovations to stay that one-step ahead. unitized products. New players may find it expensive and time consuming to bring up a distribution network to such standards. But in a huge country like India. For Banks.products with attractive premiums. Progress has definitely been made as can be seen by the number of advanced products flooding the market today . But a hitherto untapped field is the one involving the distribution of these insurance products. Currently. alternative channels of distribution. Alternate channels will help to bring down the costs of distribution and thus benefit the customers THAKUR COLLEGE OF SCIENCE & COMMERCE 8 . if they want to make the most of India's large population base and reach out to a worthwhile number of customers. With the liberalization of the insurance sector and competition tougher than ever before. one can never be too sure about the levels of penetration of a product.BANCASSURANCE The motives behind bancassurance also vary. Yet. Insurance companies see bancassurance as a tool for increasing their market penetration and premium turnover. The customer sees bancassurance as a bonanza in terms of reduced price. high quality products and delivery at the doorsteps. it is n means of product diversification and source of additional fee income. Nationalized insurers are already well established and have an extensive reach and presence. insurance agents are still the main vehicles through which insurance products are sold.
How does it help? Every insurance company has a wants to grow quickly to reduce painful start-up expense overruns. Bancassurance as a concept first began in India when the insurance industry opened up to private participation in December 1999. Banks with their huge networks and large customer bases give insurers an opportunity to do this efficiently. A tie up with a bank with an appropriate customer base can give an insurer a cheap access to these areas. The margins of the banks in their core lending business are declining sharply. Joint venture between the two companies.BANCASSURANCE What is bank assurance? Bancassurance is the distribution of insurance products through a bank's distribution channels. Most of the bancassurance operations fall in the first model. Mergers between a bank and insurer. Opportunities like banassurance augment their income. There are basically four models of bancassurance: Distribution alliance between the insurance company and the bank. It is a service that can fulfill both banking and insurance needs at the same time. THAKUR COLLEGE OF SCIENCE & COMMERCE 9 . Bancassurance enables to have a huge pool of skilled professionals. Selling insurance through traditional methods in these sectors falls very expensive. Bank builds or buys own insurance products. It gives the companies an opportunity to tap the rural sectors.
By leveraging their strengths and finding ways to overcome their weaknesses. is through fee income. Banks that build fee income can cover more of their operating expenses. banks could change the face of insurance distribution. assuming a constant asset base. Though a relatively new concept. In addition. the most important of which is increased return on assets (ROA). which they can leverage in selling them personal line insurance products. It helps to change the traditional mindset of banking companies. Currently banks are not just lending organizations but are emerging as more diverse financial institutions. banassurance has been a phenomenal success in most of the cases. One of the best ways to increase ROA. Sale of personal line insurance products through banks meets an important set of consumer needs. Most large retail banks engender a great deal of trust in broad segments of consumers.BANCASSURANCE Bancassurance enables to develop a sales culture within the bank. and one way to build fee income is through the sale of insurance products. a bank‘s branch network THAKUR COLLEGE OF SCIENCE & COMMERCE 10 . Banks that effectively cross-sell financial products can leverage their distribution and processing capabilities for profitable operating expense ratios. The distribution of insurance products through banks has been beneficial to both insurance and banking companies as well as the customers Why should banks enter in insurance? There are several reasons why banks should seriously consider Bancassurance.
By successfully mining their customer databases. etc. They also have access to multiple communications channels. direct mail. again providing for a lower per-lead cost when advertising through print. and utilizing 'sales techniques‘ and products tailored to the middle market. Banks that make the most of these advantages are able to penetrate their customer base and markets for above-average market share. telemarketing. Banks have extensive experience in marketing to both existing customers (for retention and cross selling) and non-customers (for acquisition and awareness). such as statement inserts.BANCASSURANCE allows the face to face contact that is so important in the sale of personal insurance. European banks have more than doubled the conversion rates of insurance leads into sales and have increased sales productivity to a ratio which is more than enough to make Bancassurance a highly profitable proposition. Banks also enjoy significant brand awareness within their geographic regions. phone. Banks' proficiency in using technology has resulted in improvements in transaction processing and customer service. radio and/or television. THAKUR COLLEGE OF SCIENCE & COMMERCE 11 . leveraging their reputation and 'distribution systems‘ (branch. and mail) to make appointments. Another advantage banks have over traditional insurance distributors is the lower cost per sales lead made possible by their sizable . Other bank strengths are their marketing and processing capabilities. ATMs.loyal customer base.
is available.50 crores. They are: Joint ventures will be allowed for financially strong banks wishing to undertake insurance business with risk participation. For banks which are not eligible for this joint-venture option. Banks cannot become insurance brokers. whichever is lower. including cooperative banks and regional rural banks. This will be on a fee basis with no-risk participation.BANCASSURANCE The Legal Requirements RBI guideline for banks entering into insurance sector provides three options for banks. The Insurance Regulatory and Development Authority (IRDA) guidelines for the bancassurance are: Each bank that sells insurance must have a chief insurance executive to handle all the insurance activities. Commercial banks. Finally. THAKUR COLLEGE OF SCIENCE & COMMERCE 12 . may become corporate agents for one insurance company. any commercial bank will be allowed to undertake insurance business as agent of insurance companies. an investment option of up to 10% of the net worth of the bank or Rs. All the people involved in selling should under-go mandatory training at an institute accredited by IRDA and pass the examination conducted by the authority.
considering the falling interest rates. They are: banking heavily on bancasurance and plans to explore the potential of State Bank of India‘s 9000 plus branches spread across the country and also its 4000 plus associate banks . And pushing risk products through banks is a cost-effective affair for an insurance company compared to the agent route. The company is ba RBI guideline for banks entering into insurance sector provides three options for banks. THAKUR COLLEGE OF SCIENCE & COMMERCE 13 . fee based income coming in at a minimum cost is more than welcome. SBI Life Insurance Company a predominant player in bancassurance is positive about the channel bringing about a transformation in the way insurance has been sold so far. for banks. an alternate channel to hawk risk products through banks.one of the reasons why SBI Life Insurance is not laying much emphasis on increasing its agent force from the present 3000. the channel is yet to pick up pace as of today.BANCASSURANCE Banking on Bancassurance Though much ado was made about bancassurance. while. For insurance companies and banks the convergence brings about benefits for both but then what‘s stopping it from taking off in a big way? Bancassurance primarily banks on the relationship the customer has developed over a period of time with the bank. Most of the insurance companies have already tied up with banks to explore the potential of the channel that has been a success story in Europe and legislations are also in place.
With all the other infrastructure in place already. PR. Says Pradeep Pandey‘ I agree that in our country insurance awareness is low but with falling interest rates. Head. THAKUR COLLEGE OF SCIENCE & COMMERCE 14 . The number is expected to go up to 500. Insurance needs hard selling but banks have never been aggressive about selling financial products. one from each of its bank branches have been identified for the purpose in addition to setting up insurance counters at its banking outlets. SBI Life Insurance Company. One is the insurance salesman of the respective company being posted in the bank.BANCASSURANCE The company plans to appoint Certified Insurance Facilitators (CIFs) in a phased manner at its branches. But the pertinent question is how far will bancassurance succeed when insurance is a product that is sold not bought in our country. The company aims at acquiring 75 percent of the total business through bancassurance and the balance through the other channels by 2007. Various models are used by banks for bancassurance. For now around 320 CIFs. the other is where a select group of wealth management people of the bank sell insurance and the third is where the bank employees are incentivised to hawk insurance products. ‗Out of our present business of around Rs 150-200 crore bancassurance has brought in 50 percent while corporate agency and the agent channel have contributed about 10 percent and 40 percent respectively‘. says Pradeep Pandey. And the cost that banks have to incur is minimal. the cost is only about training a few individuals‘. banks are on the look out for additional revenue and bancassurance can provide them fee based income – insurance is one outlet where income can be gained.
They will have to be term and savings products with not much of complications.‘ Our focus will not be the affluent class but the middle class‘ But in case of SBI Life there is no such emphasis on a segment of the population perhaps considering the wide reach its bank branches have even in the remotest corners of the country. And with technology changing THAKUR COLLEGE OF SCIENCE & COMMERCE 15 . On the contrary Shivaji Dam. In the first phase we plan to sell endowment and pension‘ opines Mr Pandey. While sale of insurance comes at a lower cost through this channel in comparison to the agency route and the insurance company gains much through the large bank network spread across the country the potential can be impeded if bank officials do not actively generate leads. Adds Shivaji Dam. OM Kotak Mahindra Life Insurance begs to differ. The company is targeting around 10 percent of the business during its start up phase. SBI Life Insurance. In other words products that are static and simple‘ OM Kotak Mahindra Life Insurance has tied up with Dena Bank and its own Kotak Bank for bancassurance. Insurers are no doubt optimistic about the channel but it does come with a few limitations. Also it is yet to be seen how far buying shelf space in a bank helps push sale of insurance. Besides the target audience is limited to those individuals who visit the bank during the working hours.BANCASSURANCE And will products sold through bancassurance be any different? ‗The products sold will be the same.‘Yes products will have to be different to be sold through bancassurance. Also SBI Life plans to offer its complete basket of products but OM Kotak will be selling select products. CEO.
A number of insurers have already tied up with banks and some banks have already flagged off bancassurance through soft launches of select risk products. bancassurance would mean a major gain. Fee based income: For banks. Since interest rates have been falling and profit on offtake of credit has been low all banks have been able to do is sustain themselves but not profit much. rules and regulations regarding the same are yet to fall in place. easy to understand and easy to market much of the benefits the bancassurance channel holds. But unless products are simple. Insurance companies are positive about the bancassurance channel raking in volume business at a low cost and banks have been salivating over the fee-based income that it will bring. Will bancassurance click? Bancassurance.BANCASSURANCE at a rapid pace ATMs and internet banking have been reducing the individual‘s visits to the bank which could perhaps be a dampener for bancassurance. While reams have been written about the numerous benefits of bancassurance considering the wide scale availability of risk products it will enable. may remain only on paper. THAKUR COLLEGE OF SCIENCE & COMMERCE 16 . Enter bancassurance and fee based income through hawking of risk products would be guaranteed. the much talked about channel of insurance distribution through banks that originated in France and which has been a success story in Europe is yet to take off here.
banks as also insurers need to work hard on chalking out strategies to sell risk products through this channel especially in an emerging market as ours. Also there are no immediate plans to redesign products to suit the bancassurance. But unless banks set up a trained task force that will focus on hard-selling risk products. making much headway is difficult especially with a financial product that is not so easily bought over the counter. simple products such as an accident cover in other words pure risk products will be sold through this channel enabling savings on solicitation costs of these products.BANCASSURANCE Unique strategies: Before taking the plunge. identifying the target audience is yet another important aspect. Banks have a large depositor base of corporate as well as retail clients they can tap. Through tie-ups some insurers plan to buy shelf space in banks and sell insurance to those who volunteer to purchase them. THAKUR COLLEGE OF SCIENCE & COMMERCE 17 . Reduced costs: While products such as retirement planning will involve an elaborately worked out plan with the help of a financial advisor. So will insurers pass on a part of the gains on cost saving (saving on agent training etc) to customers? At present insurers are non-committal on this one. Identifying Target audience: Besides. Talking of retail clients the lower end and middle-income group customers constitute a major chunk who have over a period of time built a good rapport with the bank staff and thus hold big potential for bancassurance.
Now where should banks draw a line? THAKUR COLLEGE OF SCIENCE & COMMERCE 18 .banks and insurance companies are different. banks may have to part with confidential information about their clients. In such a situation will banks be in a position to fight for the cause of their clients is a major concern? Besides regulatory authorities for both . Moreover. While on the one hand it is an economical proposition to sell risk products through the numerous bank branches spread across the country the fact that claim settlement disputes take an unusually long time in our country is one of the causes for worry.BANCASSURANCE Legal issues: Conversely. the Insurance Regulatory Development Authority (IRDA) has adopted a cautious approach before Bancassurance is flagged off.
Establish a low cost acquisition channel. Leverage service synergies with Bank. Enrich work environment. Creation of Brand Image. THAKUR COLLEGE OF SCIENCE & COMMERCE 19 . Customer retention Satisfaction of more financial need under same roof. Establish sales orientated culture. Revenue diversification More Profitable resources utilization.BANCASSURANCE THE WIN – WIN CONDITION FOR BANKS AND INSURANCE COMPANIES. Quicker Geographical reach. Banks Insurance Revenues and channel of diversification Quality customer access.
BANCASSURANCE SECTION 2 UTILITIES OF BANCASSURANCE For Banks As a source of fee based income Product diversification Building close relations with the customers For Insurance Companies Stiff competition High cost of agents Rural penetration Multi-channel distribution Targeting middle income customers THAKUR COLLEGE OF SCIENCE & COMMERCE 20 .
growing competition and increased horizontal mobility of customers have forced bankers to look elsewhere to compensate for the declining profit margins and Bancassurance has come in handy for them. At the end of the day. A typical commercial bank has the potential of maximizing fee income from Bancassurance up to 50% of their total fee income from all sources combined. THAKUR COLLEGE OF SCIENCE & COMMERCE 21 . letter of credits and other operations. Fee Income from Bancassurance also reduces the overall customer acquisition cost from the bank‘s point of view. merchant fee on point of sale transactions for debit and credit cards.BANCASSURANCE For Banks As a source of fee income Banks‘ traditional sources of fee income have been the fixed charges levied on loans and advances. opportunities and possibilities to earn fee income via Bancassurance route are endless. From the banks‘ point of view. However shrinking interest rate. This kind of revenue stream has been more or less steady over a period of time and growth has been fairly predictable. Fee income from the distribution of insurance products has opened new horizons for the banks and they seem to love it. credit cards. it is easy money for the banks as there are no risks and only gains.
home and contents insurance and travel insurance are also the products which are being distributed by the banks. endowment policies. there are endless opportunities for the banks. through bancassurance a customer gets home loans THAKUR COLLEGE OF SCIENCE & COMMERCE 22 . The traditional products that the Building close relations with the customers Increased competition also makes it difficult for banks to retain their customers. Providing multiple services at one place to the customers means enhanced customer satisfaction. Insurers who are generally accused of being inflexible in the pricing and structuring of the products have been responding too well to the challenges (say opportunities) thrown open by the spread of Bancassurance. depositors‘ insurance and credit shield are the policies conventionally sold through the Bancassurance channels. They are ready to innovate and experiment and have set up specialized Bancassurance units within their fold. For example. education plans. annuities. car insurance. Simple term life insurance. However. quite a lot of innovations have taken place in the insurance market recently to provide more and more Bancassurance-centric products to satisfy the increasing appetite of the banks for such products. return of premium and Takaful products which are doing well in the market. Banassurance comes as a help in this direction also. Medical insurance. critical illness cover.BANCASSURANCE Product Diversification In terms of products. Examples of some new and innovative Bancassurance products are income builder plan.
It would also benefit the customers in terms of wide product diversification. For Insurance Companies Stiff Competition At present there are 15 life insurance companies and 14 general insurance companies in India. the consumer will have access to a wider product mix . Hence in order to compete with each other and to stay a step ahead there was a need for a new strategy in the form of Bancassurance. THAKUR COLLEGE OF SCIENCE & COMMERCE 23 . In a typical Bancassurance model. This enables the bank staff to have a personal contact with their customers. Because of the Liberalization of the economy it became easy for the private insurance companies to enter into the battle field which resulted in an urgent need to outwit one another. encompassing banking and insurance products. Another important advantage that bancassurance brings about in banks is development of sales culture in their employees. banking in India is mainly done in the 'brick and mortar' model. Even the oldest public insurance companies started facing the tough competition. Also.a rather comprehensive financial services package. which means that most of the customers still walk into the bank branches.BANCASSURANCE along with insurance at one single place as a combined product.
For this they are using various distribution channels. The branch network of banks can help make the rural people aware about insurance and there is also a wide scope of business for the insurers.BANCASSURANCE High cost of agents Insurers have been tuning into different modes of distribution because of the high cost of the agencies services provided by the insurance companies. The insurance is sold through agents. People there are still unaware about the insurance as a tool to insure their life. brokers through subsidiaries etc. In order to make the most out of India‘s large population base and reach out to a worthwhile number of customers there was a need for Bancassurance as a distribution model. Hence there was a need felt for a Cost-Effective Distribution channel. These costs became too much of a burden for many insurers compared to the returns they generate from the business. In order to fulfill all the needs bancassurance is needed. Multi channel Distribution Now a days the insurance companies are trying to exploit each and every way to sell the insurance products. THAKUR COLLEGE OF SCIENCE & COMMERCE 24 . Rural Penetration Insurance industry has not been much successful in rural penetration of insurance so far. This gave rise to Bancassurance as a channel for distribution of the insurance products. However this gap can be bridged with the help of Bancassurance.
BANCASSURANCE Targeting Middle income Customers In previous there was lack of awareness about insurance. The agents sold insurance policies to a more upscale client base. So through the venture with banks. the insurance companies can recapture much of the under served market. there was a need felt for Bancassurance. THAKUR COLLEGE OF SCIENCE & COMMERCE 25 . So in order to utilize the database of the bank‘s middle income customers. The middle income group people got very less attention from the agents.
BANCASSURANCE SECTION 3 DISTRIBUTION CHANNELS Career agents Special advisers Salaried agents Bank employees Corporate agency & Brokerage firm Direct response Internet E.Brokerage Outside lead generating techniques THAKUR COLLEGE OF SCIENCE & COMMERCE 26 .
Of particular interest. Distribution is the key issue in bancassurance and is closely linked to the regulatory climate of the country.BANCASSURANCE Marketing and Distribution Channels in Bancassurance One of the most significant changes in the financial services sector over the past few years has been the growth and development of bancassurance. regulatory barriers between banking and insurance have diminished and has created a climate increasingly friendly to bancassurance. The successes demonstrated by various bancassurance operations particularly in Europe have triggered an avalanche of mergers and acquisitions across continents and efforts are on to replicate the early success of bancassurance in other parts of the world as well. Many banks and insurers are looking with great interest at building new revenue through bancassurance including large. The passage of Gramm-Leach Bliley Act of 1999 in US and IRDA Bill in India in 2000 have stimulated the growth of bancassurance by allowing use of multiple distribution channels by banks and insurance companies. is the potential for bancassurance in developing economies such as those of Latin America and Southeast Asia. many believe. Banking institutions and insurance companies have found bancassurance to be an attractive and profitable complement to their existing activities. traditional companies that wouldn't have considered such an approach about a decade ago. Over the years. Bancassurance experience in Europe as well as in other select countries offers valuable guidance for those interested in insurance distribution through the banking channel in developing markets. THAKUR COLLEGE OF SCIENCE & COMMERCE 27 .
With new developments in consumers‘ behaviors. career agents with suitable training. Moreover their level THAKUR COLLEGE OF SCIENCE & COMMERCE 28 . Bancassurers various distribution channels: -Career Agents -Special Advisers -Salaried Agents -Bank Employees / Platform Banking -Corporate Agencies and Brokerage Firms -Direct Response -Internet -e-Brokerage -Outside Lead Generating Techniques Career Agents: Career Agents are full-time commissioned sales personnel holding an agency contract. supervision and motivation can be highly productive and cost effective. Consequently an insurance company can exercise control only over the activities of the agent which are specified in his contract. evolution of technology and deregulation. Despite this limitation on control. They are generally considered to be independent contractors.BANCASSURANCE Traditionally. insurance products have been promoted and sold principally through agency systems in most countries. new distribution channels have been developed successfully and rapidly in recent years.
Some bancassurers. Banks refer complex insurance requirements to these advisors. but rather due to the use of improperly designed remuneration and/or incentive packages. Special Advisers: Special Advisers are highly trained employees usually belonging to the insurance partner.BANCASSURANCE of customer service is usually very high due to the renewal commissions. or other customer service-related awards paid to them. believing that agents might oversell out of their interest in quantity and not quality. The Clients mostly include affluent population who require personalised and high quality service. Usually Special advisors are paid on a salary basis and they receive incentive compensation based on their sales. not due to the nature of this channel. Salaried Agents in bancassurance are similar to their counterparts in traditional insurance companies and have the same characteristics as career agents. The only difference in terms of their remuneration is that they are paid on a salary basis and career agents receive incentive compensation based on their sales. who distribute insurance products to the bank's corporate clients. Salaried Agents: Having Salaried Agents has the advantages of them being fully under the control and supervision of bancassurers. policy persistency bonuses. Such problems with career agents usually arise. however avoid this channel. concerned at THAKUR COLLEGE OF SCIENCE & COMMERCE 29 . Many bancassurers. These agents share the mission and objectives of the bancassurers.
i. due to limited opening hours and to the need to perform other banking duties. However.BANCASSURANCE the bad publicity which they have received as a result of their career agents concentrating heavily on sales at the expense of customer service. The financial advisers either sell in the branch but some banks have also established mobile sales forces.g.e. Platform Bankers: Platform Bankers are bank employees who spot the leads in the banks and gently suggest the customer to walk over and speak with appropriate representative within the bank. If bank employees only act as "passive" insurance sales staff (or do not actively generate leads). the bank employee establishes the contact to the client and usually sells the simple product whilst the more affluent clients are attended by the financial advisers of the bank which are in a position to sell the more complex products. The platform banker may be a teller or a personal loan assistant and the representative being referred to may be a tarined bank employee or a representative from the partner insurance company. In many set-ups. In both cases. the bank employees are assisted by the bank's financial advisers. those customers who actually visit the branch during the opening hours. Platform Bankers can usually sell simple products. e. the time which they can devote to insurance sales is limited. A further restriction on the effectiveness of bank employees in generating insurance business is that they have a limited target market. then the bancassurer's potential can be severely THAKUR COLLEGE OF SCIENCE & COMMERCE 30 . have changed their sales forces to salaried agent status.
This channel can be used for simple packaged products which can be easily understood by the consumer without explanation. Direct Response: In this channel no salesperson visits the customer to induce a sale and no face-to-face contact between consumer and seller occurs. In addition. career agents or special advisers. quite a number of banks cooperate with independent agencies or brokerage firms whilst in Japan or South Korea banks have founded corporate agencies. mailing or telephone offers. these sales channels are more conceived to serve the affluent bank client. However. The reasonable expectation is that personal banking services will increasingly be delivered by Internet banking. production volumes can be very high and profitable to bancassurers. Set-up / Acquisition of agencies or brokerage firms: In the US. The advantage of such arrangements is the availability of specialists needed for complex insurance matters and -in the case of brokerage firms . if bank employees are used as "active" centres of influence to refer warm leads to salaried agents.the opportunity for the bank clients to receive offers not only from one insurance company but from a variety of companies. Internet: Internet banking is already securely established as an effective and profitable basis for conducting banking operations. The consumer purchases products directly from the bancassurer by responding to the company's advertisement.BANCASSURANCE impeded. Bancassurers can also feel confident that Internet banking THAKUR COLLEGE OF SCIENCE & COMMERCE 31 .
Outside Lead Generating Techniques: One last method for developing bancassurance eyes involves "outside" lead generating techniques. providing more than mere standard bank data and current rates. such as seminars. Functions requiring user input (check ordering. what-if calculations. then collect business cards. E-Brokerage: Banks can open or acquire an e-Brokerage arm and sell insurance products from multiple insurers. everyone's target market. service and leads. direct mail and statement inserts. easy distribution and excellent synergy with the internet capabilities. The advantage of this medium is scale of operation.BANCASSURANCE will also prove an efficient vehicle for cross selling of insurance savings and protection products. Banks are well advised to make their new websites as interactive as possible. Such an arrangement can also provide a vehicle for insurance sales. strong brands. field questions on the topic. Seminars in particular can be very effective because in a nonthreatening atmosphere the insurance counselor can make a presentation to a small group of business people. It seems likely that a growing proportion of the affluent population. credit and account applications) should be immediately added with links to the insurer. THAKUR COLLEGE OF SCIENCE & COMMERCE 32 . will find banks with household name brands and proven skills in e-business a very acceptable source of nonbanking products. The changed legislative climate across the world should help migration of bancassurance in this direction.
BANCASSURANCE SECTION 4 BENEFITS OF BANCASSURANCE To Banks To Insurance Companies To Customers THAKUR COLLEGE OF SCIENCE & COMMERCE 33 .
BANCASSURANCE Bancassurance Ventures Must Have Clear Objectives Insurers Banks Be aligned with good Public image of bank Forge relationship Earlier in customer‘s life Lower acquisition costs Penetrate client base Further with more products Leverage positive image Increase customer loyalty& Retention Customers Buy lower-costs products Buy more products from a Single source Get better. more efficient Service Benefits THAKUR COLLEGE OF SCIENCE & COMMERCE 34 .
BANCASSURANCE From the banks point of view: By selling the insurance product by their own channel the banker can increase their income. Banks have face-to-face contract with their customers. They can directly ask them to take a policy.g.: Term insurance products with loans. Banking tele banking. Banks are using different value added services life-E. they can improve overall customer satisfaction resulting in higher customer retention levels. They can easily attract customers & non-customers because the customer & noncustomers also bank on banks. The Bankers have extensive experience in marketing. THAKUR COLLEGE OF SCIENCE & COMMERCE 35 . Banks can cross sell insurance products E. By providing customers with both the services under one roof. Productivity of the employees increases. direct mail & so on they can also use all the above-mentioned facility for Bankassurance purpose with customers & non-customers. And the banks need not to go any where for customers. Increase in return on assets by building fee income through the sale of insurance products.
THAKUR COLLEGE OF SCIENCE & COMMERCE 36 .BANCASSURANCE From the Insurer Point of view: The Insurance Company can increase their business through the banking distribution channels because the banks have so many customers. conversion ratio of leads to sales is likely to be high. Since banks have already established relationship with customers. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas. The selling can be structured properly by selling insurance products through banks. spending habits. investment and purchase capability can be used to customize products and sell accordingly. Customer database like customers' financial standing. Insurers can exploit the banks' wide network of branches for distribution of products. By cutting cost Insurers can serve better to customers in terms lower premium rate and better risk coverage through product diversification. The insurance companies can also get access to ATM‘s and other technology being used by the banks. The product can be customized as per the needs of the customers. Further service aspect can also be tackled easily.
diversified product quality in time and at their doorstep service by banks. Customers could also get a share in the cost savings in the form of reduced premium rate because of economies of scope. insurance services along with other financial services such as banking. i. Any new insurance product routed through the bancassurance channel would be well received by customers. besides getting better financial counseling at single point. Innovative and better product ranges and products designed as per the needs of customers.e. personal loans etc. as banks are a regular visiting place for customers..BANCASSURANCE From the customers' point of view: Product innovation and distribution activities are directed towards the satisfaction of needs of the customer. THAKUR COLLEGE OF SCIENCE & COMMERCE 37 . mutual funds. Bancassurance model assists customers in terms of reduction price. Comprehensive financial advisory services under one roof. Easy access for claims.
BANCASSURANCE SECTION 5 BUSINESS MODELS Corporate Broker Model Agency Model KEY DRIVERS THAKUR COLLEGE OF SCIENCE & COMMERCE 38 .
Insurance products wrapped around the bank's deposit and loan products (Wrapper Model) are also gradually gaining in popularity due to their simple product design while the referral model tie-up has not been able to really take off. • Banks selling products of an insurance affiliate on an exclusive basis.BANCASSURANCE Business Models: The alliance between banks and insurance companies can be structured in varied manners. the bank gets into an agreement with an insurance agency and sells their insurance product to its existing customers. THAKUR COLLEGE OF SCIENCE & COMMERCE 39 . the banks might get into an exclusive agreement with the insurance company. The options available to the banks are: • Banks selling products of their insurance subsidiary exclusively. the products of this insurance subsidiary are not allowed to be sold by any other bank. In this model. depending upon the type of synergy one is looking for. In this setup. In this model. banks setups its own insurance subsidiary and sells its insurance products. Corporate Agency Model is slowly gaining importance across various nations because of ease in implementation and distribution of authority-responsibility relationship. • Banks offering products of several insurance companies as `super market’. In this setup also.
Innovation of products is also possible under the corporate agency arrangement. The broker would make a certain amount of money from dealing commissions and market making and a great deal more from relatively infrequent corporate deals.BANCASSURANCE Here the bank gets into agreement of selling insurance products of as much insurance companies possible and sells it to its customers. Insurance products wrapped around the Bank's loan and deposit products have also been gaining THAKUR COLLEGE OF SCIENCE & COMMERCE 40 . as against referral arrangements. Corporate Broker model A corporate broker is effectively a principal corporate adviser to an investment trust company. This relationship does not end up in long term relationship or exclusive relationships between the bank and the insurance companies. The growth potential of corporate agency system is immense because we can cross sell several products to our customers. Here the bank is acting as a corporate adviser to an insurance company. insurance companies prefer corporate agency tie-ups with banks. Another advantage for banks is that the risk is borne entirely by the insurance company. Here the customers can choose between wide ranges of products but the insurance companies would not prefer this as their products would not be always preferred. Corporate Agency Model In India. Insurance agents sell only insurance or mutual fund products. This model is attractive for the banks as it offers handsome returns (up to 35% in the first year of new business procured) involves very low start-up costs (investment in the time and licensing of employees) and the business risk is underwritten entirely by the insurance companies.
which tends to favour bancassurance development. THAKUR COLLEGE OF SCIENCE & COMMERCE 41 . alongside a more dedicated focus on niche client segments and the distribution of non-life products. banks are starting to embrace direct marketing and Internet banking as tools to distribute insurance products. New and emerging channels are becoming increasingly competitive. bancassurers have shown a willingness to expand their product range to include products beyond those related to bank products. the marketing of more complex products has also gained ground in some countries. A few banks like Allahabad Bank and Bank of India have even migrated from the referral model to the Corporate Agency model. Expanded Bancassurance Models In some markets. Finally. due to the tangible cost benefits embedded in product pricing or through the appeal of convenience and innovation.BANCASSURANCE in popularity due to their mass appeal and simple product design while the referral model tie-ups have not been that successful. Traditional vs. face-to-face contact is preferred. The drive for product diversification arises as bancassurers realize that over-reliance on certain products may lead to undue volatility in business income. Nevertheless. Nevertheless.
Single view of the customer. Sales Staff Management/Training. Integration of the bank and insurance organizations producing a single culture. not selling products. Insurance Companies are seeking new customers using new distribution activities to reach such segment. It might be instructive to examine what succeeded in America for the expansion of bancassurance business. we will see other factors that have played important roles in other countries will also play out in India. Use of Customer Relation Management Tools and Techniques. Focus on Customer Service/satisfaction. THAKUR COLLEGE OF SCIENCE & COMMERCE 42 . Banks are seeking ways to raise additional earnings without commitment of additional capital in a low interest rate environment. Therefore. the biggest driver in India is different at present: banks are seeking an alternative method of redeploying their surplus workers. Providing advice/solutions. The Branch Network/Geographical Coverage. this is a one time only phenomenon.BANCASSURANCE Key driver of Bancassurance Elsewhere in Asia has been the following. Of course. Bank and Insurance products form a complementary range. As noted above. A survey by LIMRA identified the following elements for success of bancassurance: Strength of the Brand. increased competition. over time. reducing margin.
in South Korea. in any given quarter. The most successful products from a sales perspective are those that are linked to banking products (e. while others reflect a lack of incentives to generate sales as well as the natural conflicts between banking and insurance products. For example. each bancassurer must have at least three life partners and three non-life partners. market share attributable to bancassurers was minimal.g. Some are cultural. For example. bancassurance ventures have enjoyed success in Asia. loans and credit insurance) or that are very similar to banking deposits (certainly in the initial stages of the bancassurance operation) and offer superior returns to deposits. Not withstanding the many obstacles to success and challenges faced.. Prior to 1999. banks will need to own insurance companies or work very closely with insurance company THAKUR COLLEGE OF SCIENCE & COMMERCE 43 . Asian companies must overcome a host of challenges. Exhibit 3 shows the impressive emergence of bancassurance in Hong Kong.BANCASSURANCE Requirements for success in Bancassurance Attractive Insurance Product Base Cost-Efficient Distribution System Linked and Leveraged Bank and Insurance Products Concurrent Sale of Bank and Insurance Products Appropriate Structure Based on Level of Integration Between Bank and Insurer Achieving Success To achieve success in bancassurance. albeit over a longer term than the usual time deposits. Some obstacles are country specific. and all of these partners must receive less than 50% of the new business generated by the bank. in their respective sectors. To achieve the level of success of bancassurance.
Each of these approaches involves a different level of value chain ownership and control. Banks must develop successful alliances in the near term and use those experiences to evaluate the opportunity to buy or build insurance companies as regulations changes. There are five key approaches to forming insurance partnerships that form a continuum from complete outsourcing to complete ownership: list rental. working with a third party marketer. alliances will be a critical part of the effort by US banks to establish their insurance business. integrated alliance. As long as regulatory constraints exist. and ownership.BANCASSURANCE partners to restructure the value chain and provide products suitable for bank customers. THAKUR COLLEGE OF SCIENCE & COMMERCE 44 . agency purchase.
BANCASSURANCE SECTION 6 BANCASSURANCE EMERGING Trends Challenges Taking Lead THAKUR COLLEGE OF SCIENCE & COMMERCE 45 .
but bancassurers have begun to finely segment the market.BANCASSURANCE Bancassurance: Emerging Trends Though bancassurance has traditionally targeted the mass market. a quick survey revealed that a large number of banks cutting across public and private and including foreign banks have made use of the bancassurance channel in one form or the other in India. Nevertheless. which tends to favour bancassurance development. Some bancassurers are also beginning to focus exclusively on distribution. However. due to the tangible cost benefits embedded in product pricing or through the appeal of convenience and innovation. THAKUR COLLEGE OF SCIENCE & COMMERCE 46 . New and emerging channels are becoming increasingly competitive. which has resulted in tailor-made products for each segment. face-to-face contact is preferred. Banks by and large are resorting to either ‗referral models‘ or ‗Corporate agency model‘ to begin with. banks are starting to embrace direct marketing and Internet banking as tools to distribute insurance products. In some markets. Bancassurance proper is still evolving in Asia and this is still in infancy in India and it is too early to assess the exact position.
BANCASSURANCE Banks even offer space in their own premises to accommodate the insurance staff for selling the insurance products or giving access to their client‘s database for the use of the insurance companies. it is a common sight that banks canvassing and marketing the insurance products across the counters. Manhattan consulting group in its survey has found positive co-relation between number of products an institution deal in an the attrition levels. As number of banks in India have begun to act as ‗corporate agents‘ to one or the other insurance company. the attrition level tends to decrease sharply as the employee engagement increases. Quantum of products Attrition levels One Product (interest bearing account) One Additional product 2 or more products 27% 20% 17% THAKUR COLLEGE OF SCIENCE & COMMERCE 47 . It showed that with increase in product count.
Bancassurance: The Challenges Banks could be more enduring than individual agents when selling insurance, but bancassurance relationships are not. Since the opening up of the insurance sector in ‘00, as many as six bancassurance alliances have ended in divorce says Economic Times. If bancassurance was termed as marriage between banks and insurance, then the probability of divorces can‘t be ruled out. Critics opine that bancassurance is a controversial idea, and it gives banks too great a control over the financial industry. The challenge to sustain such alliances could be immensely daunting. The difference in regulation, not only across countries but between banks and insurance industry as well has been cited as the primary reason. The difference in trade customs, work culture in these industries is another impediment Sales front: Bank employees are traditionally low on motivation. Lack of sales culture itself is bigger roadblock than the lack of sales skills in the employees. Banks are generally used to only product packaged selling and hence selling insurance products do not seem to fit naturally in their system HR issues: Human Resource Management has experienced some difficulty due to such alliances in financial industry. Poaching for employees, increased workload, additional training, maintaining the motivation level are some issues that has cropped up quite occasionally. So, before entering into a bancassurance
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alliance, just like any merger, cultural due diligence should be done and human resource issues should be adequately prioritized. Public and private divide: Private sector insurance firms are finding ‗change management‘ in the public sector a major challenge. State-owned banks get a new chairman, often from another bank, almost every two years, resulting in the distribution strategy undergoing a complete change. In the private sector, the M&A activity is one of the causes for change. In the past, Dena Bank, which had originally partnered Kotak Mahindra Life, switched loyalty to the public sector Life Insurance Corporation? So did Allahabad Bank, which had a tie-up with ICICI Prudential Life Insurance. Punjab National Bank and Vijaya Bank have been forced to drop their bancassurance partnerships after they chose to set up an insurance broking JV. Group companies dilemma: The other conflict that most insurers face is when they have a bank within their own group. Half of the insurance firms in India are part of a financial group that has a bank. They include ICICI Bank, State Bank of India, ING Vysya, HDFC, Jammu & Kashmir Bank, and Kotak Mahindra Bank. According to Rajesh Relhan, head of bancassurance, Aviva Life, there is a fear among banks that at some point in future their insurance partner may end up cross-selling banking services to their policyholders. Besides, companies that sell predominantly through agents experience channel conflict when both agents and banks target the same customer.
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Operational Challenges: The developments in the 21st century, particularly due to increase in non-life insurance products pose further problems to the bancassurance alliances:
The shift away from manufacturing to pure distribution requires banks to better align the incentives of different suppliers with their own.
Increasing sales of non-life products, to the extent those risks are retained by the banks, require sophisticated products and risk management.
The sale of non-life products should be weighted against the higher cost of servicing those policies.
Banks will have to be prepared for possible disruptions to client relations arising from more frequent non-life insurance claims.
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the banks were earlier not allowed to sell insurance due to the restrictions imposed by Glass-Stegall Act of 1933. who focussed on wealthier individuals. In the US. This growth is primarily due to the aggressiveness witnessed in the private life insurance sector. 50% in Belgium and Italy. The private life insurers have been instrumental in building strong relationships with established banks for bancassurance. 60% in France. in simple terms means distribution of insurance products by banks to their customers. it offers a complete basket of financial advice to customers under one roof. which grew by 129%. As a result of this life insurance was primarily sold through individual agents.BANCASSURANCE Bancassurance: Taking the lead In the last financial year. India has experienced a substantial growth in the life insurance business. One of the drivers for this substantial growth is the contribution of the banking industry. It contributes over 65% of the life insurance premium income in Spain. Apart from having the advantage of reaching out to the potential customers at the remotest of places. The bancassurance model. Bancassurance has been a successful model in the European countries contributing 35% of premium income in the European life insurance market. leading to a majority of the American middle class households THAKUR COLLEGE OF SCIENCE & COMMERCE 51 . The new business premium growth rate for the financial year 2004-05 over the previous financial year is 36%. which acted as a Chinese wall between banking and insurance.
But there is a shift in stance with markets like Japan. bancassurance has simply outshined other THAKUR COLLEGE OF SCIENCE & COMMERCE 52 .BANCASSURANCE being under-insured. It has been estimated that bancassurance would contribute almost 16% of the life premium in the Asian markets in the year 2006 primarily due to the growth expected in India and China. With the repealing of this Act in 1999. bancassurance has a limited share of the total sales primarily because of the near monopoly of the life agents in Japan. which is the largest life market. but the tremendous growth and acceptability in the last three years reflects green pasture in future. the doors were opened for banks to distribute insurance and cater to the large middle class segment In the Asian markets. In India the bancassurance model is still in its nascent stages. taking a more accommodating stance towards this channel. In this phase. The deregulation of the insurance sector in India has resulted in a phase where innovative distribution channels are being explored. South Korea and the Philippines where bancassurance was previously prohibited.
BANCASSURANCE SECTION 7 PROBLEM OF BANCASSURANCE ISSUES TO BE TACKLED THAKUR COLLEGE OF SCIENCE & COMMERCE 53 .
The Problems in Bancassurance
Any bank getting into business of selling insurance cannot afford to have casual approach to it. The staff, if deputed from within the existing bank staff, will have to be specially trained in the intricacies of insurance and the art of salesmanship. These skills will be required at levels different from the requirements in banking operations. They will have to be persons who have an external orientation. The amount of business acquired through the banks depends entirely on the personal skills of specified persons and the corporate insurance executives. An effective and successful specified person might perhaps find it more remunerative to branch off as an insurance agent on his own, instead of being tied to the bank. The options available to the bank to prevent this may lie in developing attractive compensations packages. The relevant issues will be the restrictions imposed by insurance Act as well as relative pressures within the unions of banks of employees. The commitment of senior management is crucial to the success of the persons deputed for the insurance work. The priorities for the managers may depend on the criteria by which they will be appraised at the end of the year. If the progress in insurance is not important criterion, the support to the insurance activities may be reduced. They would see mainstream banking activities as more important for their own future growth. The appraisal and reward systems of the bank have to be appropriately aligned.
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Issues to be tackled
Given the roles and diverse skills brought by the banks and insurers to a Bancassurance tie up, it is expected that road to a successful alliance would not be an easy task. Some of the issues that are to be addressed are: The tie-ups need to develop innovative products and services rather than depend on the traditional methods. The kinds of products the banks would be allowed to sell are another major issue. For instance, a complex unit-linked life insurance product is better sold through brokers or agents, while a standard term product or simple products like auto insurance, home loan and accident insurance cover can be handled by bank branches There needs to be clarity on the operational activities of the bancassurance i.e., who will do the branding, will the insurance company prefer to place a person at the bank branch, or will the bank branch train and put up one of its own people, remuneration of these people. Even though the banks are in personal contact with their clients, a high degree of pro-active marketing and skill is required to sell the insurance products. This can be addressed through proper training. There are hazards of direct competition to conventional banking products. Bank personnel may become resistant to sell insurance products since they might think they would become redundant if savings were diverted from banks to their insurance subsidiaries.
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Factors that appear to be critical for the success of bancassurance are: Strategies consistent with the bank's vision, knowledge of target customers' needs, defined sales process for introducing insurance services, simple yet complete product offerings, strong service delivery mechanism, quality administration, synchronized planning across all business lines and subsidiaries, complete integration of insurance with other bank products and services, extensive and high-quality training, sales management tracking system for reporting on agents' time and results of bank referrals and relevant and flexible database systems. Another point is the handling of customers. With customer awareness levels increasing, they are demanding greater convenience in financial services. The emergence of remote distribution channels, such as PC-banking and Internet-banking, would hamper the distribution of insurance products through banks. The emergence of newer distribution channels seeking a market share in the network.
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BANCASSURANCE SECTION 8 SWOT ANALYSIS Strengths Weaknesses Opportunities Threats THAKUR COLLEGE OF SCIENCE & COMMERCE 57 .
There are more than 900 Million lives THAKUR COLLEGE OF SCIENCE & COMMERCE 58 . Strengths In a country of 1 Billion people. Once Bancassurance is embraced in India with full force. It is therefore essential to have a SWOT analysis done in the context of Bancassurance experiment in India. Bancassurance as a means of distribution of insurance products is already in force in some form or the other.A SWOT Analysis Even though. a lot will be at stake. Huge capital investment will be required to create infrastructure particularly in IT and telecommunications. Banks are selling Personal Accident and Baggage Insurance directly to their Credit Card members as a value addition to their products. banks and insurance companies in India are yet to exchange their wedding rings. sky is the limit for personal lines insurance products. a call center will have to be created. top professionals of both industries will have to be hired. There is a vast untapped potential waiting to be mined particularly for life insurance products. an R & D cell will need to be created to generate new ideas and products. motor or cattle insurance to their customers. Banks also participate in the distribution of mortgage linked insurance products like fire.BANCASSURANCE Bancassurance in India . Banks can straightaway leverage their existing capabilities in terms of database and face to face contact to market insurance products to generate some income for themselves which hitherto was not thought of.
Internet connection is not available even to the managers of operating offices. LIC and GIC both have a good range of personal line products already lined up. A late awakening seems to have dawned upon but it is a case of too late and too little. After discounting the population below poverty line the middle market segment is the second largest in the world after China. Elementary IT requirement like networking (LAN) is not in place even in the headquarters of these institutions. GIC & LIC. therefore R & D efforts to create new products will be minimal in the beginning. Additionally. THAKUR COLLEGE OF SCIENCE & COMMERCE 59 . banks. GIC with 4200 operating offices and LIC with 2048 branch offices are almost already omnipresent. Millions of people travelling in and out of India can be tapped for Overseas Mediclaim and Travel Insurance policies. There are about 200 Million households waiting to be approached for a householder's insurance policy.e. when the need today is of Wide Area Network (WAN) and Vast Area Network (VAN). why not we preempt this move by doing it ourselves? Our other strength lies in a huge pool of skilled professionals whether it is banks or insurance companies who may be easily relocated for any Bancassurance venture.BANCASSURANCE waiting to be given a life cover (total number of individual life policies sold in 1998-99 was just 91. Weaknesses The IT culture is unfortunately missing completely in all of the future collaborators i. The insurance companies worldwide are eyeing on this.73 Million). which is so essential for the development of any Bancassurance project.
first by inflationary pressures on their pockets and then by the tax net. There is already an atmosphere created in the country for liberalisation and there appears to be a political consensus also on the subject. With a good IT infrastructure.BANCASSURANCE The middle class population that we are eyeing at are today overburdened. For a Bancassurance venture to succeed it is extremely essential to have in-built flexibility so as to make the product attractive to the customer. RBI or IRA should have no hesitation in allowing the marriage of the two to take place. Where is the money left to think of insurance? Fortunately. this can really do wonders. LIC schemes get IT exemptions but personal line products from GIC (mediclaim already has this benefit) like householder. Opportunities Banks' database is enormous even though the goodwill may not be the same as in case of their European counterparts. Another drawback is the inflexibility of the products i. This database has to be dissected variously and various homogeneous groups are to be churned out in order to position the Bancassurance products. etc. travel. THAKUR COLLEGE OF SCIENCE & COMMERCE 60 . Other developing economies like Malaysia. Therefore. also need to be given tax exemption to further the cause of insurance and to increase domestic revenue for the country.e. Thailand and Singapore have already taken a leap in this direction and they are not doing badly. it can not be tailor made to the requirements of the customer.
US banks have now again (since late 1990s) turned their attention to insurance mainly life insurance. Also if the unholy alliances are allowed to take place there will be fierce competition in the market resulting in lower prices and the Bancassurance venture may never break-even.BANCASSURANCE This can take the form of merger or acquisition or setting up a joint venture or creating a subsidiary by either party or just the working collaboration between banks and insurance companies. THAKUR COLLEGE OF SCIENCE & COMMERCE 61 . Another possible threat may come from non-response from the target customers. The investors in the capital may turn their face off in case the rate of return on capital falls short of the existing rate of return on capital. the return from Bancassurance must at least match those returns. Any relocation to a new company or subsidiary or change from one work to a different kind of work will be resented with vehemence. Our work force at every level are so well entrenched in their classical way of working that there is a definite threat of resistance to any change that Bancassurance may set in. Since banks and insurance companies have major portion of their income coming from the investments. This happened in USA in 1980s after the enactment of Garn . Threats Success of a Bancassurance venture requires change in approach. A rush of joint ventures took place between banks and insurance companies and all these failed due to the non-response from the target customers. thinking and work culture on the part of everybody involved.St Germaine Act.
BANCASSURANCE SECTION 9 BANCASSURANCE SCENARIO Indian Asian Global THAKUR COLLEGE OF SCIENCE & COMMERCE 62 .
Due to all these movements. universalization of banking operations and diversification in non-banking activities. banks can act as an agent of one life and one non-life insurer. development of new technologies. Interest is market driven and fluctuating and quite narrowing these days. Currently bancassurance accounts for a share of almost 25-30% of the premium income amongst the private players in India. income from bancassurance is the only non interest based income. For the banks. It originated in India in the year 2000 when the Government issued notification under Banking Regulation Act which allowed Indian Banks to do insurance distribution. Banks do not get great margins because of the THAKUR COLLEGE OF SCIENCE & COMMERCE 63 .BANCASSURANCE Indian Scenario The business of banking around the globe is changing due to integration of global financial markets. As per the concept of Corporate Agency. Bancassurance is a new buzzword in India. the boundaries that have kept various financial services separate from each other have vanished. It started picking up after Insurance Regulatory and Development Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency' regulations. The coming together of different financial services has provided synergies in operations and development of new concepts. insurers and the customers. One of these is bancassurance. Bancassurance provides various advantages to banks.
BANCASSURANCE competition This is why more and more banks are getting into bancassurance so as to improve their incomes. In India around 67.000 branches sell the insurance products one can see the reach. THAKUR COLLEGE OF SCIENCE & COMMERCE 64 . The penetration level of life insurance in the Indian market is considerably low at 2. It helps the insurance companies to tap the market at a much lower cost. that no company would be interested in doing so. With almost half of the population likely to be in the 'wage earner' bracket by 2010.3% of GDP with only 8% of the total population currently insured. Thus. This is one method of penetrating the market. India's rural market has huge potential that is still untapped by the insurance companies.000 branches are there for PSU banks alone. Setting up their own networks entails such a huge cost. If all 67. there is every reason to be optimistic that bancassurance in India will play a long inning. As for the customer the competitive nature of the Indian market ensures that the reduction in costs would result in benefits in terms of lower premium rates being passed on to him. Increased competition also makes it difficult for banks to retain their customers. Bancassurance again comes as an answer. As for the insurance company the advantage that bancassurance provides is evident. The insurance company gets improved geographical reach without additional costs. Providing multiple services at one place to the customers means enhanced customer satisfaction.The success of the partnership between the two entities depends on the ‗right model‘ partnership.
American Express Bank. Canara Bank. South Indian Bank.BANCASSURANCE SOME INPORTANT BANCASSURANCE TIE – UPS INSURANCE BANKS Corporation Bank. Union Bank of India. Lakshmi Vilas Bank. Andhra Bank. Allahabad Bank. Bank of India. Deutsche Bank and Catholic Syrian Bank. ICICI Bank. Cooperative Bank. Centurion Bank. THAKUR COLLEGE OF SCIENCE & COMMERCE 65 . ABN Amro Bank. Janata Urban Cooperative Bank. Citibank. Satara LIFE INSURANCE CORPORATION (LIC) District Bank. Bank of Muscat. BIRLA SUN LIFE INSURANCE Development Credit Bank. DABUR CGU LIFE INSURANCE COMPANY PVT LTD HDFC STANDARD LIFE INSURANCE CO. Lord Krishna Bank. Yeotmal Mahila Sahkari Bank. ICICI PRUDENTIAL LIFE INSURANCE CO. Indian Overseas Banks. The Bank of Rajasthan. Federal Bank. Punjab & Maharashtra cooperative Bank. Oriental Bank of Commerce.
The Dhanalaxmi Bank. Associate Bank BAJAJ ALLIANZ GENERAL INSURANCE Krur Vysya Bank. City Union Bank. Citibank. State Bank of India. SBI INSURANCE CO. Karnataka Banks. Amex and Repco Bank UNITED INDIA INSURANCE CO. Standard Chartered Bank. Associate Bank ROYAL SUNDARAM GENERAL INSURANCE CO.BANCASSURANCE NATIONAL INSURANCE CO. ABN Amro Bank. Jammu and Kashmir Bank. South Indian Bank THAKUR COLLEGE OF SCIENCE & COMMERCE 66 . MET LIFE INDIA INSURANCE CO.
it appears that relationships at the branch level currently carry more weight than those at head office. At present. THAKUR COLLEGE OF SCIENCE & COMMERCE 67 . bank branches are an excellent way to extend reach over the huge geographies of India and China. and so far 12 life insurers have entered to compete with the Life Insurance Corporation of India. India opened to private competition only two years ago. Clearly. bancassurance will surely form an important component of the Asian insurance landscape. In China. bancassurance is now emerging in both countries. the regulatory enforced maximum arrangement fee of 8% between banks and insurers has led to the vast majority of sales to date being single premium (or short term) in nature. Nonetheless. Some relations are particularly strong. bancassurance in China and India is in its early days. having been established as joint venture partners. foreigners cannot hold more than a 26% stake. leading to what some observers call ―branch assurance‖ rather than bancassurance. As in many markets in Asia.BANCASSURANCE Bancassurance in Asian market: Two Asian markets of great interest for their potential size are China and India. Although their insurance markets are relatively young. Furthermore. Three-quarters of these new entrants have formed relationships with banks (a number with several banking partners).
especially in Europe. there were hurdles till recently banks were not allowed to do insurance business and vice versa. During the last two decades. among others – by selling insurance products across the counter. so far.BANCASSURANCE Global Scenario Bancassurance has grown at different pace and taken different shapes and forms in different countries depending on the demography. Italy and Belgium. has been basically European. other countries have opted for more traditional networks. In several countries in LatinAmerica. With advent of bancassurance. even if their market share has declined from 85% in 1992 to 54% in 1999. Although it enjoys a penetration rate in excess of 50% in France. Bnacassurance. In China. Spain. their market share has increased from 40% in 1992 to 54% in 1999. The Life insurance market in the UK is largely in the hands of the brokers. bancassurance has taken deep roots in various countries. banks have benefited from recent reforms – financial deregulation. Bancassurance has seen tremendous acceptance and growth across nations. banks are limited to playing the role of tide agents to insurance THAKUR COLLEGE OF SCIENCE & COMMERCE 68 . economic and legislations in that country. the market continues to be dominated by general sales agents. Bancassurance recorded huge growth in Europe but not in USA and Canada. Sales agents also play an important role on a market entirely regulated by the Financial Services & Markets Act (FSMA) which imposes very strict marketing conditions. In Germany. In the US.
In the Philippines. Today. In Hong Kong. It is a good news to bancassurers that only about 25% of the global insurable population is insured. is among the most developed markets in bancassurance. which has sustained a 30% increase per annum on average in the past fifteen years. Bancassurance is yet to be exploited in Singapore. This has concentrated the bancassurance market. which can still provide a good platform for bancassurance to develop. On the Spanish market. Japan has to make a remarkable headway in bancassurance.BANCASSURANCE companies. this high growth rate is not specifically due to bancassurance. and even among them most are underinsured. rather the whole of the life insurance market. However. like France. often European. which today account for 50% of Life insurance premiums in the bancassurance sector. the life insurance sales went up by 240%. In the last decade. it represents over 65% of life insurance premium income compared with 43% in 1992. bancassurance developed more quickly because of the well-established network of regional building societies. many international. alliances have been made between banks and insurance groups. when a Swiss bank introduced bancassurance. THAKUR COLLEGE OF SCIENCE & COMMERCE 69 . There is a huge market potential out there in many countries and especially in India when compared to the global benchmark. Spain. banks are permitted to own 100% of the insurance company. which was originally highly fragmented.
Varied Distributive Tax free status on maturity Small tax relief on premium Narrowing bank margin Products Mainly life insurance products to maximize tax benefits Mostly single premium Mainly nonunitized Regular premium Distribution Major players Multi-bank branches Domestic banks and insurers Bank branches NA Sophistication High Low THAKUR COLLEGE OF SCIENCE & COMMERCE 70 .BANCASSURANCE The following table compares the issues related to bancassurance in India with Europe and Asia (general): Regulation Europe Liberalized Asia (general) Ranging from liberalized to forbidden High growth potential India Supportive Market growth Mature markets but pension reforms can spur growth in the life insurance sector Highly integrated models High growth Bancassurance model Major drivers Tax concessions for life insurance premium paid Squeeze on bank margins Mostly distribution alliances and joint ventures Squeeze on bank margins Insurers‘ growing cost pressure and desire to expand distribution capability Financial deregulation Foreign companies use bancassurance to enter Asian market Mainly life insurance products linked to bank services and increasingly. products geared towards managed savings Mainly bank branches Foreign companies are playing an important role.
RECOMMENDATION INDIAN INSURANCE PROJECTION .2010 THAKUR COLLEGE OF SCIENCE & COMMERCE 71 .BANCASSURANCE SECTION 10 LATEST DEVELOPMENT Online Payment Technology Digital Signature Security & Authentication Stored Value Card FUTURE OUTLOOK.
For example. Moving from a cash. and an increased potential for fraud. check. or charge economy to a world of Internet transactions will require the next generation of bankers and regulators to address issues including security. increased interest in online payment has pushed the development of online payment systems. Online transactions also create certain security risks. Lawyers have mastered all of the rules surrounding these terms and feel comfortable counseling their banking clients. authentication. check.BANCASSURANCE Latest developments in bancassurance The phrase. and bankers alike. The growth of Internet banking has also raised a host of new legal issues. consumer protection and privacy. This article highlights some of the technical and legal issues raised by the Internet's expansion into banking. At the same time. "cash. consumers. THAKUR COLLEGE OF SCIENCE & COMMERCE 72 . financial institutions have been hesitant to implement these new systems until uniform industry and regulatory standards are in place. The development of electronic banking has raised both technical and regulatory concerns. A bank's liability for Internet fraud is far from certain. or charge" still has a comforting ring in the ears of merchants. These common payment terms are readily understood by anyone who has gone shopping or deposited money into a checking account.
As credit card numbers and expiration dates are routed from computer to computer around the Internet.g. the risk of card security breaches increases. Encryption has been used to make online commercial transactions secure. on encryption technology to provide security and authentication. First. the holder of the private key can be assured that online transactions made in his or her name. will not be validated. Privately encrypted and signed messages are then verifiable by anyone with access to the "public key. he or she makes a "key pair. however." each part of which bears a mathematical relationship to the other. to some extent. authenticate electronic communications by providing users with unique digital signatures. can be risky because the Web is an unsecured medium. a bank customer must proceed through the following steps. on a stored-value card). but without his or her digital signature.BANCASSURANCE Online Payment Technologies Credit cards are the predominant payment mechanism for most online retail transactions. Then the customer uses his or her "private" key to encrypt and sign his or her electronic message. and distributes his or her "public" key to all potential message recipients. the customer is given a device for generating a "key" (e. Second. Using credit cards online. Security and Authentication: ENCRYPTION Most of the online payment technologies now in use or in development rely. THAKUR COLLEGE OF SCIENCE & COMMERCE 73 . In creating a unique digital signature. and maintain confidentiality in online transmissions. Digital Signatures Digital signatures employ encryption technology to authenticate electronic transmissions and may be implemented in Internet banking.." At the same time.
The cards are pre-loaded with the electronic equivalent of money (and. at the time of purchase. may be reloaded from a bank account). the cards do not deduct money from a checking account or add charges to a credit account. deduct the purchase price from the value of the card. They are typically plastic cards which contain a magnetic strip or computer chips that are capable of storing a variety of information. including digitized data representing money or value. merchants need special point of sale terminals able to verify the card and the value contained on the card. THAKUR COLLEGE OF SCIENCE & COMMERCE 74 .BANCASSURANCE Stored Value Cards: Another electronic payment mechanism. the "stored-value" card. Stored-value cards resemble credit or debit cards. in some cases. and transmit the information from the merchant's terminal to a financial institution's computer network. is already in use. In order to accept stored-value card transactions. Stored-value cards differ from debit or credit cards in that.
The insurance companies should actively try to involve co-operative and regional rural THAKUR COLLEGE OF SCIENCE & COMMERCE 75 . In emerging markets. margin money on security transaction via the net-banking facility and the ATM network. new entrants have successfully employed bancassurance to compete with incumbent companies. bancassurers could profit from the tendency of governments to privatise health care and pension liabilities. This integration will be a step further towards universal banking and would leverage the efficiencies developed by alliance of banks and insurance companies. customers should be able to pay insurance premium. We recommend following for sustainable and inclusive growth in bancassurance alliances. So the banks should transform themselves to a wholesome entity. bancassurance will likely see further significant development in the coming years.BANCASSURANCE Bancassurance: Future outlook and Recommendations: The outlook for bancassurance remains positive. It will be for customers who want to get a one-stop shop for all financial products. While development in individual markets will continue to depend heavily on each country‘s regulatory and business environment. Bancassurance to Banc-sec-urance: A step towards Universal Banking Securities business seems an automatic extension to bans and insurance. Given the current relatively low bancassurance penetration in emerging markets.g. for e. The market and scope in rural India is immense and largely untapped. This has to be integrated with the internet banking and other IT infrastructure. Involvement of Co-operative banks: Insurance industry has very low penetration rate in India.
Once this sector is deregulated. Such strategic actions require the senior management support not only during the decision stage but also at the time of implementation. Low cost of collecting pension contributions is the key element in the success of developing the pension sector. Portability of pension accounts is a vital requirement which banks can fulfill in a credible framework. Money transfer costs in Indian banking are low by international standards. Involvement of senior bank management and skill development at the operating level at bank branches: The bancassurance alliances should be taken up at the top management level. Their active participation in the process is very much necessary for the success of such initiatives. The bank employees would not be aware of these selling skills if proper training is not given. These co-operative banks will have greater reach in villages of rural India and will also operate at economic cost.BANCASSURANCE banks amongst their potential alliances along with the big and multinational banks. banks would get the dual benefits of managing these huge pension funds and the opportunity to sell mainly health insurance products to these pension sector customers. The employee base that would be interacting with the insurance customers should also be properly trained in order to equip themselves with the skills required in selling insurance products. THAKUR COLLEGE OF SCIENCE & COMMERCE 76 . Bancassurance and pension sector: Pension sector is at the verge of being deregulated.
The collection of premiums would also not be a problem. Normally these customers give post-dated cheques.BANCASSURANCE Focus on Group insurance schemes: Considering the behavior of the Indian customers. Therefore premiums can also be collected in the similar fashion. Banks have huge exposures to house loans. This would be additional revenue to the insurance company as well. Now as far as the customers are concerned. This would be easier in terms of collection of premiums as 1 or 2 members of the family would be working and linking insurance premiums from these savings/ salary accounts would be easier and hassle-free. As joint accounts or individual accounts of families are very prominent. banks can sell them travel insurance at some concessional premiums. though some of the airlines have travel insurance. THAKUR COLLEGE OF SCIENCE & COMMERCE 77 . there is no income from these frequent travelers. Insurance in business activities can also be targeted as banks have considerable exposure to corporate loans. Some concessions to the customers can be given like extension of payment period etc. Targeting frequent travelers (travel insurance): In India. we will have to sell these insurance products to these members of the family as a group. As frequent travelers are targeted by these airlines by giving concessional fares. Tie-ups with residential complex builders: House loans and householder‘s insurance can be linked. group insurance is the way to go about. they would prefer householder‘s insurance also as a package along with the house loans.
2% in the US. Urban sector insurance is estimated to reach US $25 billion by 2010. Estimating the potential of the Indian insurance market from the perspective of macro-economic variables such as the ratio of premium to GDP. as a percentage of GDP is 1. life insurance US $15 billion and non-life insurance US $10 billion. according to Chamber Paper on Insurance Sector : Its Future Perspective. life insurance businesses are anticipated to reach US$ 15 billion and that of non-life insurance US$ 10 billion. In view of Assocham. the non-life insurance will rise to US$ 15 billion by 2010 from its negligible size now and in Urban areas. including US $20 billion by way of life insurance and the rest US $15 billion through non-life insurance schemes. large distances and high costs relative to returns. A large part of rural India is still untapped due to poor distribution. Assocham Papers reveals that India‘s life insurance premium.5% in the UK or 8% in THAKUR COLLEGE OF SCIENCE & COMMERCE 78 .BANCASSURANCE Indian Insurance Business Projected to US$60 Billion by 2010 The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected a 500% increase in the size of current Indian insurance business from US$ 10 billion to US$ 60 billion by 2010 particularly in view of contribution that the rural and semi-urban insurance will make to it. Rural and Semi-Urban Life Insurance business is expected to touch US$ 20 billion figure in next 4 years from current level of less than US$ 5 billion now as rural and semi-urban folk will want themselves to ensure them for better future and their rising purchasing power will motivate them to move towards insurance sector. 6. Assocham has revealed that rural and semi-urban India shall contribute US $35 billion to the Indian insurance industry by 2010.8% against 5.
it is very important to understand the requirements of India's villagers. motivating THAKUR COLLEGE OF SCIENCE & COMMERCE 79 . their daily lives. Nearly 20% of all farmers in rural India own a Kissan Credit cards. the services sector is taking a large and growing share of India‘s GDP. The Paper found that there are a total 124 million rural households. as a whole will not be a big growth area for insurance companies. Assocham findings further reveals that in the coming years the corporate segment. To understand the prospects for insurance companies in rural India. The agent can play a major role in creating awareness. craftsmen. their peculiar needs and their occupational structures. Insurance companies mostly focus on manufacturing sector. weavers. the scope for expansion is modest. casual labourers. however. In both volumes and profitability therefore. There are farmers. Survey suggested that insurer‘s strategy should be to stimulate demand in areas that are currently not served at all. The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels. The Paper found that the rural markets are still virgin territories to a great extent and offer exciting opportunities for insurance companies. This is because penetration is already good and companies receive good services. construction workers and shopkeepers and so on. More often than not. Being an agrarian economy again there are immense opportunities for the insurance companies to provide the liability and risks associated in this sector. The 25 million credit cards used till date offer a huge data base and opportunity for insurance companies. milkmen.BANCASSURANCE South Korea. build consumer awareness and confidence. they are into more than one profession. An extensive rural agent network for sale of insurance products could be established.
Assocham suggests that insurance needs to be packaged in such a form that it appears as an acceptable investment to the rural people.BANCASSURANCE purchase and rendering insurance services. THAKUR COLLEGE OF SCIENCE & COMMERCE 80 . There should be nothing to stop insurance companies from trying to pursue their own unique policies and target whatever needs that they want to target in rural India.
BANCASSURANCE SECTION 11 SBI LIFE INSURANCE (PROFILE) PRODUCTS OFFERED SBI LIFE INSURANCE (PERSPECTIVE) THAKUR COLLEGE OF SCIENCE & COMMERCE 81 .
offers door to door insurance solutions to customers. Agency and Group Corporate. which is the Euro Zone‘s leading Bank. THAKUR COLLEGE OF SCIENCE & COMMERCE 82 . ensuring high standards of customer service and world class operating efficiency. SBI Group has the unrivalled strength of over 14. SBI Life Insurance‘s mission is to emerge as the leading company offering a comprehensive range of Life Insurance and pension products at competitive prices. Cardif is ranked 2nd worldwide in creditor‘s insurance offering protection to over 35 million policyholders and net income in excess of Euro 1 billion.SBI Life has a unique multi-distribution model encompassing Bancassurance. Cardif has also been a pioneer in the art of selling insurance products through commercial banks in France and in 35 more countries. SBI‘s access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion.BANCASSURANCE State bank of India Life Insurance SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of France. arguably the largest in the world.500 branches across the country. SBI Life Insurance is registered with an authorized capital of Rs 1000 crore and a paid up capital of Rs 500 crores.000 Insurance Advisors. Along with its 7 Associate Banks. Cardif is a wholly owned subsidiary of BNP Paribas. State Bank of India enjoys the largest banking franchise in India. Agency Channel. BNP Paribas is one of the oldest foreign banks with a presence in India dating back to 1860. SBI owns 74% of the total capital and Cardif the remaining 26%. comprising of the most productive force of more than 25.
It provides choice of 5 investments funds in a single policy.Horizon II: SBI Life-Horizon II is a unique. This Plan is meant for parents in the age group of 18-57 having a child between the age group of 015 years.Unit Plus II: This is a non participating individual unit linked product. where you need to be a financial market expert. Unit Linked products SBI Life . SBI life. It provides unmatched flexibility to match the changing requirements. SBI Life .BANCASSURANCE Products Offered by SBI Individual Products: A. non participating Unit Linked Insurance Plan in Indian Insurance Industry. This plan offers the flexibility of Unit Linked Plan along with Automatic Asset Allocation which provides relatively higher returns on your money where as increasing death benefits provide higher security to your family. THAKUR COLLEGE OF SCIENCE & COMMERCE 83 .unit plus child plan: SBI LIFE understand you better and hence have developed SBI Life Unit Plus Child Plan to suit you and your needs best.
SBI Life . Their contributions are invested into 4 fund options as per their choice.Horizon II Pension: A unique Unit Linked Pension Plan that will enable the customers to build a kitty good enough to enable them to spend a peaceful and financially sound. It comes with the unique feature of Automatic Asset Allocation by means of which you truly. B. This is a unit linked pension plan wherein the policyholder chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years. type of fund to be invested in and the term the customer wants to pay premium for.BANCASSURANCE SBI Life – Unit Plus Elite: In this policy the customer can choose the type of cover. don‘t need to be an expert to grow your money. SBI Life .Unit Plus II Pension: SBI Life understands the basic needs for pension plan and give the customers financial strength to maintain the life style even after the retirement. THAKUR COLLEGE OF SCIENCE & COMMERCE 84 . They can choose to pay either single premium or pay regular premium for the entire policy term.Horizon II: Pension is a safe and hassle free way to get high returns. Pension Products SBI Life . retired life.
There is also a rebate on high sum assured.Life cover is provided at no cost. There is also flexible benefit premium paying mode. SBI Life .Horizon II Pension. Tax benefit is also provided. The policyholder also has the option of withdrawing a lump sum amount up to particular limit.Immediate Annuity Plan is introduced for Pension Policyholders.BANCASSURANCE SBI Life . SBI Life . THAKUR COLLEGE OF SCIENCE & COMMERCE 85 . It also provides tax benefits.Unit Plus II Pension) at the vesting age.Lifelong Pensions: It is a pension plan wherein the policyholder gets the flexibility to meet the post retirement financial needs.Immediate Annuity: SBI Life . It has been specially designed to cater to the annuity needs of existing policyholders (SBI Life .Swadhan: This is a Traditional Term Assurance Policy with guaranteed refund of basic premium . Pure Protection Products SBI Life .Shield: It offers the customers with the life insurance cover at the lowest cost for a selected term. Tax benefit is also provided.Lifelong Pensions. C. SBI Life . SBI Life . This product provides annuity payments immediately from payment of purchase price. There is also rebate on modes of premium payment.
The SBI Life Insurance provides ―SBI Life – Shield‖ as a Keyman Insurance Policy. Thus at the end of the plan. At the same time. Protection cum Savings Products SBI Life – Sudarshan: SBI Life . D. Option to receive the installments in lump sum at the due date of first installment of Survival benefit. As per IRDA circular only Pure Term Assurance Products may be used as a Keyman Insurance. They can save regularly for the future.Scholar II: Twin benefit of saving for the child's education and securing a bright future despite the uncertainties of life. THAKUR COLLEGE OF SCIENCE & COMMERCE 86 .BANCASSURANCE SBI Life – Shield as a Keyman Insurance Policy: A Keyman insurance policy is taken to protect the organization against the reduction in profit resulting from the death of the Keyman. SBI Life . he will receive a substantial amount of savings along with the accumulated bonuses declared.Sudarshan is an Endowment Policy designed to provide savings and protection to the policyholder and their family. his family will be protected for death risk for the full Sum Assured.
SBI Life . F.Money Back: It is a Traditional Saving Plan with added advantage of life cover and guaranteed cash inflow at regular intervals. There is also flexibility to increase or decrease regular premium and it also provides tax benefits. Money back scheme products SBI Life . The sum assured is based on Term and Premium amount. For Brokers SBI Life . The cover is available at competitive premium rates.BANCASSURANCE E.SARAL ULIP: It is a simple Unit Linked Non-Participating Insurance Plan. THAKUR COLLEGE OF SCIENCE & COMMERCE 87 . The plan has a number of money back options specially suited to the customers needs.Sanjeevan Supreme: It is a Traditional Saving Plan which offers a life cover for the term of the customer‘s choice at the same time does not burden him with liability to pay premiums for the entire term and also provides cash flows at regular intervals.
Group Employee Benefit Products I. Retirement Solutions: SBI Life . SBI Life . the contributions paid continue to accumulate on traditional platform of investments and at the end of the financial year. The object of this scheme is to ensure that the underlying fund is accumulated in such a manner so that the fund will be sufficient to purchase an expected amount of annuity to an employee upon his retirement / to the legal heir in the event of an unfortunate death during service. death whilst in service. an investment income earned on your contributions is credited to your CA-LE fund account. permanent total disability whilst in service.CapAssure Gratuity Scheme: It is a Non-Participating yearly renewable traditional Group Gratuity Scheme. THAKUR COLLEGE OF SCIENCE & COMMERCE 88 .CapAssure Leave Encashment Scheme: It is a Non-Participating yearly renewable traditional group leave encashment scheme. defined as per the scheme rules. SBI Life . an investment income earned on your contributions is credited to your gratuity fund account.CapAssure Superannuation Scheme: It is a Non-Participating yearly renewable traditional group superannuation scheme. retirement. The scheme would also entitle the employee for some benefit. Under this scheme.BANCASSURANCE Group Products: A. the contributions paid continue to accumulate on traditional platform of investments and at the end of the financial year. on his resignation. Under this scheme.
THAKUR COLLEGE OF SCIENCE & COMMERCE 89 .Dhanrashi: It is a traditional non participating Group Savings Linked Insurance scheme. SBI Life . It also provides tax benefits. It gives the option to choose the periodicity of annuity payment. It has attractive returns on savings with twin benefits. It also gives customized annuity options to customers. Along with managing the gratuity fund a life cover on the employee‘s life protect their family financially in case of unfortunate event. the contributions paid continue to accumulate on traditional platform of investments.Group Gratuity cum Life Cover Scheme: It is a Participating yearly renewable traditional Group Gratuity Scheme. Under this scheme. SBI Life . SBI Life . This scheme is applicable for both employer-employee and nonemployer employee groups.BANCASSURANCE SBI Life . Employees can choose the periodicity of the annuity depending upon the needs.Golden Gratuity: It is a yearly renewable unit linked group gratuity plan. It provides Attractive Annuity rates due to group effect.Employer-Employee groups) and other Group Administrators.Swarna Jeevan: It is a Group Immediate Annuity Plan for Corporate Clients (ie. SBI Life . It also provides protection at low cost with no medical examination and also hassle free joining process with no entry charges.Group Immediate Annuity: It is a scheme wherein life annuity is payable at a constant rate through out the life time.
to group of persons who share a common identity or affinity. II. The Product provides cover at an affordable premium due to the benefits of coverage of a wide THAKUR COLLEGE OF SCIENCE & COMMERCE 90 . It is available for both Formal and Informal Groups.Group Leave Encashment cum Life Cover Scheme: It is a Non-Participating yearly renewable traditional group leave encashment scheme. Group Protection Plans SBI Life .Sampoorn Suraksha: SBI Life . 2. SBI Life – Super Suraksha: It is group term assurance non-participating plan. Defined Contribution Scheme: It defines the annual contribution that the employer will deposit into the scheme for each employee. with an advantage of accumulating savings at attractive rates.SWARNA GANGA: It is a unique product that offers life cover.BANCASSURANCE SBI Life .Sampoorn Suraksha is a yearly renewable group term insurance plan which provides life cover at comparatively lower premium than individual insurance to the groups who are engaged in the similar kind of activities.Group Superannuation Scheme: SBI Life provides two types of Superannuation schemes: 1. SBI Life . Defined Benefit Scheme: It defines the amount of benefit that an employee receives at retirement. SBI Life provides SBI Life . Under this scheme. the contributions paid continue to accumulate on traditional platform of investments.
The aim is to indemnify the company for these losses and to allow for business continuity. THAKUR COLLEGE OF SCIENCE & COMMERCE 91 . It is a simple and easy solution to cover the cardholders of a bank/other Financing entity. SBI Life . Group Term with ROP SBI Life . Specialized Term Insurance SBI Life . No medical evidence is required and also there accident death benefit. and the administered savings achieved. B. It is a simple and easy solution which offers dual benefits of life cover protection in the event of death and refund of premium in case of survival up to the end of the cover term.Shield used as Keyman: It is a pure term life cover to protect the organization from adverse financial consequences arising due to death of a key employee. through a Group Master Policy.Super Suraksha in Lieu of EDLI: Life cover available to employees irrespective of their Provident Fund Balance.Credit Guard: It is a Non Participating Group Term Insurance Plan. III. There is a possibility of profit sharing based on the mortality experience of the group.Swadhan (Group): It is a Non Participating Group Term Insurance Plan with Return of Premium.BANCASSURANCE section. SBI Life . Lower premium rates are also available.
It is a transparent plan. SBI Life .BANCASSURANCE C.e. Group Savings Protection SBI Life .Dhanaraksha Plus LPPT: It provides decreasing term cover at a very low cost. D. throughout the cover term or 2/3rd of the cover term. THAKUR COLLEGE OF SCIENCE & COMMERCE 92 .Dhanaraksha Plus RP: It provides decreasing term cover at a very low cost. Group Loan Protection Products SBI Life . Available for various types of individual loan for borrowers of a lending institution through a Group Master Policy.Dhanaraksha Plus SP: It provides decreasing term cover at a very low cost. There are two options for premium payment i. There is Limited Premium Payment Term.Nidhi Raksha RP: It is a unique Plan which will help protect and grow the customers‘ savings. It is offered to deposit holders of the master policyholder (bank/financial institution). There is only one time payment of premium. Available for various types of individual loans for borrowers of a lending institution through a Group Master Policy. Available for various types of individual loan for borrowers of a lending institution through a Group Master Policy. SBI Life . where the benefit available at any point of time is clearly defined in the Certificate of Insurance (COI) issued to the insured group member.
It is a Group Micro insurance product with refund of premiums at maturity.Grameen Super Suraksha: The purpose of this Product is to provide life cover at low costs to groups of economically weaker sections of Society.BANCASSURANCE E. Group Micro Insurance SBI Life . It is a low cost Group term assurance plan for rural people who can seek life insurance protection without maturity benefit.Grameen Shakti: The purpose of this product is to provide life insurance protection to the weaker sections of the society. SBI Life . THAKUR COLLEGE OF SCIENCE & COMMERCE 93 .
SBI has also introduced group insurance to some well managed corporate staffs. banks corporate agents and the traditional agency route to penetrate the insurance market SBI Life is planning to introduce more novel and user friendly products to cater to the requirements of the consumers in different segments. and the initial roll-out was completed by August 2004. SBI‘s stake in the venture is 74% whereas Cardiff has 26% share. It is expected that 2/3 rd of the premium income in expected to come by way of bancassurance and the rest from the traditional agency channel as well as ties up with corporate agents (Sundaram Finance). a joint venture between State Bank of India. SBI -Life is banking on the bancassurance model on the strength of the SBI Groups 10000 plus bank branches and its vast customer base. upper. online premium calculator and facility for group insurance customers to view their individual THAKUR COLLEGE OF SCIENCE & COMMERCE 94 . In addition it is also tapping other. middle and lower income segments /groups and corporate segment. They have launched many products so far incorporating certain features that are introduced for the first time in the country. The project was initiated in April 2004. Besides their own channels they are planning to distribute products through other interested banking channels also. Cardiff provided the technology required. the largest bank in the country and bancassurance major Cardiff of France. channel management. SBI Life has implemented an Internet-centric IT system with browser-based front-office and back-office systems. policy product details.BANCASSURANCE SBI Life Insurance Company (perspective) SBI Life insurance. The bank is looking for business from every customer segment of the bank rural and urban segments. SBI has the largest banking network in the county. Technology is an integral part of this operation.
etc. personal loans and credit cards. over the last two years. This is fully integrated with the core systems through industry standards such as XML. SBI Life Insurance is uniquely placed as a pioneer to usher bancassurance into India. SBI Life Insurance Company is the first among the 14 life insurance companies in the private sector to post a net profit in 2005-06. Even as it plans to scale up operations shortly. generated 11-12 per cent earnings from the investments. SBI‘s access to over 100 million accounts provides a vibrant base to build insurance selling across every region and economic strata in the country. of which income from new policy sales was Rs 4. etc.800 crore. They have consistently. The organization has the facility to pay premiums through credit cards. For the current financial year. Net banking. SBI Life Insurance Company Ltd is looking at tripling its gross premium income in the new financial year.500 crore‖. their target is to achieve a total premium income of Rs 10. standing instructions.622 crore. Their success is largely on the channel strategy and product strategy. The SBI Life ranks second in terms of market share among private life insurers in the country. EDI. THAKUR COLLEGE OF SCIENCE & COMMERCE 95 . In 2007-08. SBI Life earned a total premium income of Rs 5. The company hopes to extensively utilize the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans.500 crore and a first year premium income of Rs 8. There are life insurance players much more aggressive than SBI and they have still not been able to break the record of SBI.BANCASSURANCE savings status on the Web. The another aspect is their superior investment performance.
BANCASSURANCE SECTION 12 SURVEY ANALYSIS THAKUR COLLEGE OF SCIENCE & COMMERCE 96 .
students.Among those who surveyed. However. These included several housewives. professionals.BANCASSURANCE Survey analysis (questionnaire) A survey was conducted of about 50 people who did regular banking transactions and also had an insurance policy. 20% of the respondents were amused with the term bancassurance and didn‘t know anything about it and the services provided by their banks. businessmen. THAKUR COLLEGE OF SCIENCE & COMMERCE 97 . also they were aware about various policies provided by their banks. The following analysis was done on the basis of the survey conducted: Are you aware of Bancassurance? No 20% Yes Yes 80% No Interpretation: .They knew with which Insurance Company their bank has tie up with. 80% of respondents were aware that their bank provided bancaasurance. etc.
there were only 34% people who had taken insurance policy from their respective banks. Remaining 66% respondents didn‘t opt to take a policy from their banks. THAKUR COLLEGE OF SCIENCE & COMMERCE 98 .BANCASSURANCE Have You Taken An Insurance Policy From Your Bank? Yes 34% No No 66% Yes Interpretation: Among the people who were surveyed.
Only 18% have taken life insurance cover from the bank and 42% belong to others category.BANCASSURANCE The Kind Of Insurance Policy Taken From The Bank:- 70 60 50 40 30 23% 20 10 0 63% 42% 18% Deposit Based Loan Based Life Insurance Others Interpretation: Maximum number of insurance taken was related to loan. It was either car insurance or a home insurance. THAKUR COLLEGE OF SCIENCE & COMMERCE 99 . There were 23% who have taken insurance which are deposit based because it is a part of the deposit scheme. Out of the people surveyed 63% said that they have taken a loan based insurance.
65% said that since. 80% said that they took the insurance policy because of security benefits. THAKUR COLLEGE OF SCIENCE & COMMERCE 100 .BANCASSURANCE Reasons For Taking An Insurance Policy:- 90 80 70 60 50 40 30 20 10 0 80% 28% 65% 40% Security Savings Brand Image of Bank Bank Image of Insurance Interpretation: There was a mixed response from the customers. There were 4o% who said that the brand image of the company also mattered. they trusted their bank. they took the policy. Only 28% said that savings was a reason that encouraged them to buy insurance policy.
23% said they would buy insurance from banks because of the brand name and their trust on banks.BANCASSURANCE On Your Choice Which Mode Of Insurance Distribution Channel Would You Prefer To Buy The Policy From? Insurance companies 20% Banks 23% Brokers 7% Agents 50% Interpretation: 50% people preferred agents because they provide personalized services. THAKUR COLLEGE OF SCIENCE & COMMERCE 101 . 20% took insurance from companies because of their trust on the company. Only 7% said that they would buy insurance from brokers.
70% votes were given to foreign banks.BANCASSURANCE Which Bank Do You Feel Would Excel In Bancaasurance? Rate Them Accordingly 100 90 80 70 60 50 40 30 20 10 0 90% 70% 38% Public Sector Banks Private Sector Banks Foreign Banks Interpretation: 90% people said that private sector banks would excel in this because of their aggressive selling policies and they provide quality services to the customers. The public sector banks were given the least votes because of their lazy approach to work. Because foreign banks have proper management and aggressive selling strategies. THAKUR COLLEGE OF SCIENCE & COMMERCE 102 .
BANCASSURANCE Do You Think Bancassurance Has A Good Future? No. But 7% believe that because of the emergence of the new technology such as ATM‘s.95% Interpretation: 95% people said that they believe that Bancassurance has a very bright future because there is an immense potential for the insurance industry in India. THAKUR COLLEGE OF SCIENCE & COMMERCE 103 . Internet banking etc the banks will soon go virtual so there is not much scope for it.5% Yes No Yes.
BANCASSURANCE SECTION 13 CONCLUSION THAKUR COLLEGE OF SCIENCE & COMMERCE 104 .
THAKUR COLLEGE OF SCIENCE & COMMERCE 105 . India is at the threshold of a significant change in the way insurance is perceived in the country. a diverse set of people combined with problems of connectivity in rural areas. but the tremendous growth and the potential reflects a very bright future for bancassurance in India. I have experienced a lot during the preparation of the project. no personal contact with customers.BANCASSURANCE Conclusion The life Insurance Industry in India has been progressing at a rapid growth since opening up of the sector. But after a detailed research in this topic I have found how important bancassurance can be for bankers. With the coming up of various products and services tailored as per the customers needs there is every reason to be optimistic that bancassurance in India will play a long inning. I am contented that all my objectives have been met to its fullest. I have also experienced that though Bancassurance is not being utilized to its fullest but it surely has a bright future ahead. lack of call centers. But the proper implementation of bancassurance is still facing so many hurdles because of poor manpower management. The size of country. Bancassurance will definitely play a defining role as an alternative distribution channel and will change the way insurance is sold in India. I had just a simple idea about Bancassurance. insurers as well as the customers. inadequate incentives to agents and unfullfilment of other essential requirements. The concept of Bancassurance in India is still in its nascent stage. Life Insurance Companies require good distribution strength and tremendous man power to reach out such a huge customer base. makes insurance selling in India a very difficult task.
Bancassurance in India has just taken a flying start.BANCASSURANCE The bridge has been reached and many are beginning to walk those cautious steps across it. It has a long way to go ……….. after all The SKY IS THE LIMIT! THAKUR COLLEGE OF SCIENCE & COMMERCE 106 .
Webliography: www.BANCASSURANCE Bibliography Books: Global Insurance – Karunga Insurance Law and Regulation Vol.com THAKUR COLLEGE OF SCIENCE & COMMERCE 107 .com www.com www.com www.google.insuremagic. 1 – ICFAI Service Marketing – S M Jha Indian Bank – Kalury Nageswara Rai Magazines: Insurance watch Business world Business today Theories and Practices in Insurance.india infoline.sbilife.
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