Index

SR
NO

PAGE
NO

PARTICULARS

REMARKS/SIG
N

1
2
3

THE OBJECTIVE OF STUDY

EXECUTIVE SUMMARY
INTRODUCTION TO

7
8
9-10

8
9
10

BANCASSURANCE
MEANING OF BANCASSURANCE
REGULATORY FRAME WORK ININDIA
DISTRIBUTION CHANNELS
ADVANTAGES OF BANCASSURANCE
INDIAN SCENARIO
Need for Bancassurance in India
REASONS FOR BANKS ENTERING

11-12
13-14
15-18
19-22
23-24
25
26-27

11
12

INTO INSURANCE BUSINESS IN INDIA

GLOBAL SCENARIO
BANCASSURANCE EMERGING

28-29
30-33

13
14

TRENDS & CHALLENGES

PROBLEMS IN BANCASSURANCE
FACTORS FOR THE SUCCESS OF

34
35-37

15

BANCASSURANCE
FUTURE SCOPE FOR

38-39

4
5
6
7

BANCASSURANCE

16

UTILITIES OF BANCASSURANCE
SOME INPORTANT BANCASSURANCE

44-45

17
18
19

TIE UPS
INTRODUCTION TO ICICI BANK
HISTORY OF ICICI BANK
TYPES OF INSURANCE PRODUCT

46
47
48-52

20
21
22
23
24
25

ISSUED BY ICICI BANK

Research Methodology
Research Finding, Analysis &Discussion
FINDINGS
RECOMMENDATIONS
CONCLUSION
BIBLIOGRAPHY

53-54
55-63
64
65
66
67

THE OBJECTIVE OF STUDY

To study bancassurance & how does it works.

To study & analyse the service of the bancassurance offer to the customers.
To explain the scope, success & power of the bancassurance.

 To maximize mobilization of peoples savings.

EXECUTIVE SUMMARY

It gives me immense pleasure to present my project for Bancassurance .The whole

experience is a gratifying one especially in terms of knowledge and information.
This project gives you a brief knowledge of the following:
Introduction and meaning of bancassurance, banking company and insurance
company.
Various distributional channels through which bancassurance products are
distributed.

 Advantageous of Bancassurance to banks, to insurance company and the

customers.
Bancassurance in Indian scenario and global scenario comparison of both.
Emerging trends and challenges in bancassurance and the factor for success
of bancassurance.

INTRODUCTION TO BANCASSURANCE

The Banking and Insurance industries have changed rapidly in the changing and
challenging economic environment throughout the world. 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. 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. When these two join together, it gives birth
to BANCASSURANCE.
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. It is a mutual relationship between the banks and

insurers. Its a relationship which amazingly complements each others strengths
and weaknesses.
Standard Chartered Bank Forms Bancassurance Alliance with Eagle
Insurance (09/26/2006). Bajaj Allianz Life Insurance has entered into
bancassurance alliances with five co-operative banks including Manjeri
Cooperative Urban Bank Ltd (Kerala) and Hubli Urban Cooperative). Dena Bank
and Om Kotak Mahindra Life Insurance Company (OMKM) have announced a
strategic alliance for bancassurance for Indian consumers (February, 2003). This
news is just few samples that kept on hitting the headlines one after the other in
past few years. With the beginning of 21st Century, a new revolution in distribution
of insurance products emerged. The synergies between the banking and insurance
industry suddenly came to limelight and picked up like a wild-fire in a very short
span. Equally interesting is the fact that the concept got appreciated across all the
countries; developed and developing countries alike.
Bancassurance, the provision of insurance services by banks, is an
established and growing channel for insurance distribution, though its penetration
varies across different markets. Europe has the highest bancassurance penetration
rate. In contrast, penetration is lower in North America, partly reflecting regulatory
restrictions. In Asia, however, bancassurance is gaining in popularity, particularly
in China, where restrictions have been eased. The research shows that social and
cultural factors, as well as regulatory considerations and product complexity, play a
significant role in determining how successful bancassurance is in a particular
market.

MEANING OF BANCASSURANCE

Bancassurance means selling insurance product through banks. Banks and

insurance company come up in a partnership wherein the bank sells the tied
insurance

company's

insurance

products

to

its

clients.

Bancassurance arrangement benefits both the firms. On the one hand, the bank
earns fee amount (non interest income) from the insurance company apart from the
interest income whereas on the other hand, the insurance firm increases its market
reach and customers. The bank acts as an intermediary, helping insurance firm
reach its target customer in order to increase its market share.
The bank insurance model (BIM), also sometimes known as bancassurance or
allfinanz, is the partnership or relationship between a bank and an insurance
company, or a single integrated organization, whereby the insurance company uses
the bank sales channel in order to sell insurance products, an arrangement in which

a bank and an insurance company form a partnership so that the insurance

company can sell its products to the bank's client base.
The bank and the insurance company share the commission. Insurance policies are
processed and administered by the insurance company.
This partnership arrangement can be profitable for both companies. Banks can earn
additional revenue by selling the insurance products, while insurance companies
are able to expand their customer base without having to expand their sales forces
or pay commissions to insurance agents or brokers.
Bancassurance, the sale of insurance and pensions products through a bank, has
proved to be an effective distribution channel in a number of countries in Europe,
Latin America, Asia and Australia.

REGULATORY FRAMEWORK IN INDIA

In India, the banking and insurance sectors are regulated by two different entities
(banking by RBI and insurance by IRDA) and bancassurance being the
combinations of two sectors comes under the purview of both the regulators. Each
of the regulators has given out detailed guidelines for banks getting into insurance
sector. The RBI requires any bank intending to undertake insurance business to
obtain its prior approval.
RBI guidelines for banks entering into insurance sector provide three options for
banks. They are:
Joint ventures will be allowed for financially strong banks wishing to
undertake insurance business with risk participation.
Any commercial bank will be allowed to undertake insurance business as
agent of insurance companies. This will be on a fee basis with no-risk
participation. Banks are entitled to referral fee on the basis of premium
collected.
The Monetary & Credit Policy of the RBI in October 2002 allowed banks to
undertake referral business through their network of branches subject to
certain restrictions.
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 insurance activities.
Banks are included within the IRDAs Licensing of Corporate Agents
Regulation 2002. All the people involved in selling should undergo mandatory
training at an institute accredited by IRDA and pass the examination conducted
by the authority. Commercial banks, including cooperative banks and
regional rural banks, may become corporate agents for one insurance company.
Banks cannot become insurance brokers.
The whole aim of the present regulatory framework is to ensure that any risks that
may arise from insurance business dont affect banking business. In essence there
should be an arms length relationship between the bank and the insurance
company.

DISTRIBUTION CHANNELS
1. Career agents
2. Special advisers
3. Salaried agents
4. Bank employees
5. Corporate agency & Brokerage firm
6. Direct response
7. Internet
8. E- Brokerage
9. Outside lead generating techniques

10

Traditionally, insurance products were promoted and sold principally through

agency systems only. The reliance of insurance industry was totally on the agents.
Moreover with the monopoly of public sector insurance companies there was very
slow growth in the insurance sector because of lack of competition. The need for
innovative distribution channels was not felt because all the companies relied only
upon the agents and aggressive marketing of the products was also not done. But
with new developments in consumers behaviors, evolution of technology and
deregulation, new distribution channels have been developed successfully and
rapidly in recent years.
Career Agents:
Career Agents are full-time commissioned sales personnel holding an agency
contract. They are generally considered to be independent contractors.
Consequently an insurance company can exercise control only over the activities of
the agent which are specified in the contract. Many bancassurers, however avoid
this channel, believing that agents might oversell out of their interest in quantity
and not quality. Such problems with career agents usually arise, not due to the
nature of this channel, but rather due to the use of improperly designed
remuneration and incentive packages.
Special Advisers:
Special Advisers are highly trained employees usually belonging to the insurance
partner, who distribute insurance products to the bank's corporate clients. The
Clients mostly include affluent population who require personalized and high
quality service. Usually Special advisors are paid on a salary basis and they receive
incentive compensation based on their sales.
Salaried Agents:

11

Salaried Agents are an advantage for the bancassurers because they are under the
control and supervision of bancassurers. These agents share the mission and
objectives of the bancassurers. These are similar to career agents, the only
difference is in terms of their remuneration is that they are paid on a salary basis
and career agents receive incentive compensation based on their sales.
Bank Employees / Platform Banking:
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. The platform banker may be a teller or a personal loan assistant. A
restriction on the effectiveness of bank employees in generating insurance business
is that they have a limited target market, i.e. those customers who actually visit the
branch during the opening hours.
Corporate Agencies and Brokerage Firms:
There are a number of banks who cooperate with independent agencies or
brokerage firms while some other banks have found corporate agencies. The
advantage of such arrangements is the availability of specialists needed for
complex insurance matters and through these arrangements the customers get good
quality of services.
Direct Response:
In this channel no salesperson visits the customer to induce a sale and no face-toface contact between consumer and seller occurs. The consumer purchases
products directly from the bancassurers by responding to the company's
advertisement, mailing or telephone offers. This channel can be used for simple
packaged products which can be easily understood by the consumer without
explanation.
Internet:

12

Internet banking is already securely established as an effective and profitable basis

for conducting banking operations. Bancassurers can feel confident that Internet
banking will also prove an efficient vehicle for cross selling of insurance savings
and protection products. Functions requiring user input (check ordering, what-if
calculations, and credit and account applications) should be immediately added
with links to the insurer. Such an arrangement can also provide a vehicle for
insurance sales, service and leads.

E-Brokerage:
Banks can open or acquire an e-Brokerage arm and sell insurance products from
multiple insurers. The changed legislative climate across the world should help
migration of bancassurance in this direction. The advantage of this medium is scale
of operation, strong brands, easy distribution and excellent synergy with the
internet capabilities.
Outside Lead Generating Techniques:
One last method for developing bancassurance eyes involves "outside" lead
generating techniques, such as seminars, direct mail and statement inserts. Great
opportunities await bancassurance partners today and, in most cases, success or
failure depends on precisely how the process is developed and managed inside
each financial institution.

13

ADVANTAGES OF BANCASSURANCE

Bancassurance is a means of product diversification and a source of additional fee

income for banks. 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 product and delivery at
doorsteps. Bancassurance if taken in right spirit and implemented properly can be a
win-win situation for all the participants viz; banks, insurers and the customers.
Advantages to banks
(A) By selling the insurance product by their own channel the banker can Increase
their income.
(B) Banks have face-to-face contract with their customers. They can directly ask
them to take a policy. And the banks need not to go anywhere for customers.
(C) Banks are using different value added services life-E. Banking, Tele-banking,
direct mail & so on. They can also use all the above-mentioned facility for
Bancassurance purpose with customers & non-customers.
(D) Productivity of the employees increases.
(E) By providing customers with both the services under one roof, they can
improve overall customer satisfaction resulting in higher customer retention levels.

14

(F) Increase in return on assets by building fee income through the sale of
insurance products.
(G) Can leverage on face-to-face contacts and awareness about the financial
conditions of customers to sell insurance products.
(H) Banks can cross sell insurance products E.g.: Term insurance products with
loans.
Advantages to Insurers
(A) The Insurance Company can increase their business through the banking
distribution channels because the banks have so many customers.
(B) Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be utilized to
sell products in those areas.
(C) Customer database like customers' financial standing, spending habits,
investment and purchase capability can be used to customize products and sell
accordingly.
(D) Since banks have already established relationship with customers, conversion
ratio of leads to sales is likely to be high. Further service aspect can also be tackled
easily.
(E) The insurance companies can also get access to ATMs and other technology
being used by the banks.
(F) The selling can be structured properly by selling insurance products through
banks.
(G) The product can be customized as per the needs of the customers.
Advantages to Consumers
(A) Product innovation and distribution activities are directed towards the
satisfaction of needs of the customer.
(B) Bancassurance model assists customers in terms of reduction price, diversified
product quality in time and at their doorstep service by banks.

15

(C) Comprehensive financial advisory services under one roof. i.e., insurance
services along with other financial services such as banking, mutual funds,
personal loans etc.
(D) Easy access for claims, as banks is a regular visiting place for customers.
(E) Innovative and better product ranges and products designed as per the needs of
customers.
(F) Any new insurance product routed through the bancassurance Channel would
be well received by customers.
(G) Customers could also get a share in the cost savings in the form of reduced
premium rate because of economies of scope, besides getting better financial
counseling at single point.
(H) Enhanced convenience on the part of the insured.
Advantages for the legislator:
The role of the oversight authorities or of the government itself is to make laws to
ensure that the risks taken by their countrys financial institutions are actively
managed and controlled in such a way as to maintain sound national finances.
However, events may occur that are outside the control of individual and national
managers, which may impact upon the whole financial system. These risks go
under the name of systemic risk.
For financial institutions, bancassurance can be a means of limiting such systemic
risk because it diversifies the banks sources of revenue, making its business more
stable and thereby safer for its customers too.
On the other hand, certain authorities think that deregulating financial systems to
excess can increase a countrys systemic risk. This is why, in many countries,
banks are still unable to exercise activities outside their core business, in order to
avoid additional sources of risk.
In addition, certain governments have decided to liberalize the financial system,
but progressively, for a more controlled process of deregulation.

16

In other words, supervisory authorities may see bancassurance as an advantage or,

on the contrary, as a potential risk to a countrys financial stability

INDIAN SCENARIO

17

The business of banking around the globe is changing due to integration of global
financial markets, development of new technologies, universalization of banking
operations and diversification in non-banking activities. Due to all these
movements, the boundaries that have kept various financial services separate from
each other have vanished. The coming together of different financial services has
provided synergies in operations and development of new concepts. One of these is
bancassurance.
Bancassurance is a new buzzword in India. 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. It started picking up after
Insurance Regulatory and Development Authority (IRDA) passed a notification in
October 2002 on 'Corporate Agency' regulations. As per the concept of Corporate
Agency, banks can act as an agent of one life and one non-life insurer. Currently
bancassurance accounts for a share of almost 25-30% of the premium income
amongst the private players in India.
Traditionally, the banks and financial institutions are the key pillars of Indias
financial system. Public have immense faith in banks. Share of bank deposits in the
total financial assets of households has been steadily rising (presently at about
40%). Indian Banks have constantly proven their capability reach the maximum
number of households. In India at present there are total of 65700 branches of
commercial banks, each branch serving an average of 15,000 people. Out of these
are 32600 branches are catering to the needs of rural India and 14400 to semiurban branches, where insurance growth has been most buoyant. (196 exclusive
Regional Rural Banks in deep hinterland.) Rural and semi-urban bank accounts
constitute close to 60% in terms of number of accounts, indicating the number of

18

potential lives that could be covered by insurance with the frontal involvement of
banks.

Need for Bancassurance in India

Researches and present day statistics speak about the need of a well equipped
financial structure for a country that helps it to grow economically. The financial
resources in the hands of people should be channelized in effective manner so as to
increase the returns from the basic financial structure of nation and also the quality
of living of people. Insurance policies are instruments/products that play major role
in upholding the financial structure of developed countries. Though the teething
phase of insurance, one may say is just past, a desirable foothold is yet to be found.
With growth in number of middle class families in the country, RBI recognized the
need of an effective method to make insurance policies reach people of all
economic classes in every corner of the nation. Implementing bancassurance in
India is one such development that took place towards the cause. The need and
subsequent development of bancassurance in India began for the following
reasons:

19

 To improve the channels through which insurance policies are sold/marketed

so as to make them reach the hands of common man
To widen the area of working of banking sector having a network that is
spread widely in every part of the nation
To improve the services of insurance by creating a competitive atmosphere
among private insurance companies in the market

REASONS FOR BANKS ENTERING INTO INSURANCE BUSINESS

IN INDIA
Indian insurance market is a hidden gold mine an estimated Rs. 1, 80,000
crore in terms of annual insurance premium.
Sale of insurance through banks will meet an important set of consumer
needs.
Banks branch network allows face to face contact that is so important in the
sale of insurance.
Bank channel can also boost sales productivity.
Banks are best qualified to sell insurance products. They have a wide
distribution reach. Because of the strong ties with the customers they are in a
better position to sell insurance products to them.
Banks can provide integrated financial services under one roof to their
customers.
Another main advantage in tapping the banks retail distribution network is
cutting the cost of distribution by almost 30%. As some of the studies revealed

20

that 50% of an insurers cost structure is directly or indirectly related to

distribution.

Though insurance companies are good underwriters of risk, they are not to
well known for their expertise in investment management. On the other hand,
banks are generally perceived to be not good at managing risk but they are
perceived to be better at investment management. Bancassurance is about
bringing the two attributes together.
According to reliable research sources, bancassurance salesman has a much
faster learning curve, usually around two years as compared with four and a
half years in an insurance company. In that sense, the cost of training is
amortized over a shorter period of time and therefore turns-out cheaper.
Valid reasons why banks should allow insurance salesman to sell insurance
products in their premises:
A. Bank gets a royalty or a commission for every insurance policy sold.
B. The bank gets an investment management fee for managing the insurers
investment.
C. Insurance products, like retirement and pension plans, are growth areas for
banks.
With greater need to downsize - banks can utilize their existing surplus
manpower reducing costs and optimum use of infrastructure.
Instant access to 60,000 + bank branches including in remote areas.
Availability of insurance in rural areas, through cost effective banking
channels.
As banks are increasingly resorting to alternate delivery channels, surplus
space would be available to distribute insurance products.

21

GLOBAL SCENARIO

22

Bancassurance has seen tremendous acceptance and growth across nations.

Although it enjoys a penetration rate in excess of 50% in France, Spain, Italy and
Belgium, other countries have opted for more traditional networks. The Life
insurance market in the UK is largely in the hands of the brokers. With advent of
bancassurance, their market share has increased from 40% in 1992 to 54% in 1999.
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, the market continues to be dominated by general sales
agents, even if their market share has declined from 85% in 1992 to 54% in 1999.
In Asia, there is a need for financial institutions to be proactive and interact with
regulator in order to explore the potential that bancassurance has a complementary
distribution channel.
In several countries in Latin America, banks have benefited from recent reforms
financial deregulation, among others by selling insurance products across the
counter. An example is the Brazilian market where private pension products are
marketed. Bancassurance also took advantage of the large number of national and
especially international partnerships which took place in the 1990s. In some
countries, bancassurance is still largely prohibited. Even in United States, it was
legalized in after much deliberation, when the Glass-Steag all Act was repealed
after the passage of the Gramm-Leach-Bliley Act

23

BANCASSURANCE EMERGING TRENDS & CHALLENGES

Trends
Though bancassurance has traditionally targeted the mass market, but
bancassurers have begun to finely segment the market, which has resulted in
tailor-made products for each segment.
Some bancassurers are also beginning to focus exclusively on distribution.
In some markets, face-to-face contact is preferred, which tends to favour
bancassurance development.
Nevertheless, banks are starting to embrace direct marketing and Internet
banking as tools to distribute insurance products. New and emerging
channels are becoming increasingly competitive, due to the tangible cost
benefits embedded in product pricing or through the appeal of convenience
and innovation.
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. However, 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.

24

Banks even offer space in their own premises to accommodate the

insurance staff for selling the insurance products or giving access to their
clients database for the use of the insurance companies.

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 cant 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 work-load,
additional training, maintaining the motivation level are some issues that has
cropped up quite occasionally. So, before entering into a bancassurance
alliance, just like any merger, cultural due diligence should be done and
human resource issues should be adequately prioritized.
Public and private divide:

25

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 sells predominantly through agents experience channel
conflict when both agents and banks target the same customer.
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.

26

 The sale of non-life products should be weighed 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.

27

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
231 is not important criterion, the support to the insurance activities may be
reduced. They would see mainstream banking activities as more important for their

28

own future growth. The appraisal and reward systems of the bank have to be
appropriately aligned.

FACTORS FOR THE SUCCESS OF BANCASSURANCE

Banks and insurance companies are very different in both value and culture. In
India, the selling of insurance through banks is yet to emerge as regular activity
and, therefore using traditional products and systems may not be appropriate.
The bitter experience of banks in Bancassurance even with innovative products in
the previous year was mainly due to poor marketing, poor publicity, monthly
payments during time of inflation and declining value of money, lack of product
promotion initiated by the branch staff to avoid manual strain in mobilizing and
maintaining accounts for Bancassurance products under different heads and
conventional way of dealing with customer in explaining the merits of taking
Bancassurance products. Fundamental to Bancassurance is the convenience and
accessibility to the customer.
Lower cost of distribution due to higher sales productivity
The potential to be tapped is ample and increasing the clientele base for the
insurance products will reduce the cost of distribution. Banks can leverage their
strengths to develop additional mass.
Mining database

29

Banks have huge database of clients. Bank should ensure relevant and flexible
database systems.
Bank customer relationship
Dealing with high net worth customers may require insurance specialists to address
complex sale issues. Bank officials need to be very clear about service standards,
policy issues, processing issues and sales and marketing supports.
The existing bank branch network/infrastructure
Branch network should be utilized in with more ambiances for selling insurance
products. The costs of infrastructure can be defrayed over a larger products and
services.
Life insurance products based on the insurers desires (sales driven)
Rather than the consumers needs market oriented, in rural and semi-urban areas
also, similar policies can be canvassed for sale. However, in these branches, the
bank should be proactive and innovative in suggest a proper planning for the
payment of premiums.
Information Technology
The banks are technology- savvy now and competing with each other on the
service front. The technology up gradation can ensure more effective utilization of
the synergies the banks posses in Bancassurance. Banks should train and equipped
their staff with the backing of technology, to deliver the requirements, Utilization
of ATMs and debit cards as payments mechanism.
The banks culture
Banks culture must be transformed to sell insurance and it must be ensured that

30

shelf space is adequately provided in a banks retail delivery systems. It is

important to note though, that if the banks culture is not compatible with selling
nsurance, then specialist insurance salesman may be needed.
The decision
On what types of Insurance products to be sold and methods of distribution of
these products are symbiotically related. The effort and expertise required to sell a
product must be in consonance with skills available and cost base of the chosen
distribution method. The success of the banking products is the function of the
increasing strength of the service/ products plus the stages of economic
development at which society living. Similar is the way with Bancassurance as
banking product. India, as a future economic giant in the world economy will not
lag behind in supporting Bancassurance.
Indian banks are known for their innovation and the various products and services
which surfaced, disappeared and later surfaced in a new avatar will certainly do
well for the banking system
Requirements for success in Bancassurance:
1. Attractive Insurance Product Base
2. Cost-Efficient Distribution System
3. Linked and Leveraged Bank and Insurance Products
4. Concurrent Sale of Bank and Insurance Products
5. Appropriate Structure Based on Level of Integration between Bank and Insurer

31

FUTURE SCOPE FOR BANCASSURANCE

By now, it has become clear that as economy grows it not only demands stronger
and vibrant financial sector but also necessitates providing with more sophisticated
and variety of financial and banking products and services. The outlook for
bancassurance remains positive. While development in individual markets will
continue to depend heavily on each countrys regulatory and business environment,
bancassurers could profit from the tendency of governments to privatize health
care and pension liabilities.
India has already more than 200 million middle class population coupled with vast
banking network with largest depositors base, there is greater scope for use of
bancassurance. In emerging markets, new entrants have successfully employed
bancassurance to compete with incumbent companies. Given the current relatively
low bancassurance penetration in emerging markets, bancassurance will likely see
further significant development in the coming years.

32

In India the bancassurance model is still in its nascent stages, but the tremendous
growth and acceptability in the last three years reflects green pasture in future. The
deregulation of the insurance sector in India has resulted in a phase where
innovative distribution channels are being explored. In this phase,
bancassurance has simply outshined other alternate channels of distribution with a
share of almost 25-30% of the premium income amongst the private players.
To be fruitful, it is vital for bancassurance to ensure that banks remain fully
committed to promoting and distributing insurance products. This commitment has
to come from both senior management in terms of strategic inputs and the
operations staff who would provide the front-end for these products. In India, the
signs of initial success are already there despite the fact that it is a completely new
phenomenon. There is no doubt that banks are set to become a significant
distributor of insurance related products and services in the years to come.

33

UTILITIES OF BANCASSURANCE
1. For Banks:
i. As a source of fee based income
ii. Product diversification
iii. Building close relations with the customers
2. For Insurance Companies:
i. Stiff competition
ii. High cost of agents
iii. Rural penetration
iv. Multi-channel distribution
v. Targeting middle income customers
For Banks:As a source of fee based income:
Banks traditional sources of fee income have been the fixed charges levied on
loans and advances, credit cards, merchant fee on point of sale transactions for
debit and credit cards, letter of credits and other operations. This kind of revenue
stream has been more or less steady over a period and growth has been predictable.
However shrinking interest rate, 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. Fee
income from the distribution of insurance products has opened new horizons for
the banks and they seem to love it. From the banks point of view, opportunities

34

and possibilities to earn fee income via Bancassurance route are endless. 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. Fee Income from
Bancassurance also reduces the overall customer acquisition cost from the banks
point of view. At the end of the day, it is easy money for the banks as there are no
risks and only gains.
Product Diversification
In terms of products, there are endless opportunities for the banks. Simple term life
insurance, endowment policies, annuities, education plans, depositors insurance
and credit shield are the policies conventionally sold through the Bancassurance
channels. Medical insurance, car insurance, home, contents insurance, and travel
insurance are also the products, which are being distributed by the banks. 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. 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. They are ready to innovate, experiment, and have set up
specialized Bancassurance units within their fold. Examples of some new and
innovative Bancassurance products are income builder plan, critical illness cover,
return of premium and Take a ful products, which are doing well in the market.
Building close relations with the customers
Increased competition also makes it difficult for banks to retain their customers.
Banassurance comes as a help in this direction also. Providing multiple services at
one place to the customers means enhanced customer satisfaction. For example,
through bancassurance a customer gets home loans along with insurance at one

35

single place as a combined product. Another important advantage that

bancassurance brings about in banks is development of sales culture in their
employees. In addition, banking in India is mainly done in the 'brick and mortar'
model, which means that most of the customers still walk into the bank branches.
This enables the bank staff to have a personal contact with their customers. In a
typical Bancassurance model, the consumer will have access to a wider product
mix - a rather comprehensive financial services package, encompassing banking
and insurance products.
For Insurance Companies:Stiff Competition
At present, there are many insurance companies in India. Because of the
Liberalization of the economy, it became easy for the private insurance companies
to enter into the battlefield, which resulted in an urgent need to outwit one another.
Even the oldest public insurance companies started facing the tough competition.
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. It would also benefit the
customers in terms of wide product diversification.
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. These costs
became too much of a burden for many insurers compared to the returns they
generate from the business. Hence there was a need felt for a Cost- Effective
Distribution channel. This gave rise to Bancassurance as a channel for distribution
of the insurance products.
Rural Penetration

36

Insurance industry has not been much successful in rural penetration of insurance
so far. People there are still unaware about the insurance as a tool to insure their
life. However, this gap can be bridged with the help of Bancassurance. The branch
network of banks can help make the rural people aware about insurance and there
is a wide scope of business for the insurers. 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. For this, they are using various distribution channels.
The insurance is sold through agents, brokers through subsidiaries etc. In order to
make the most out of Indias large population base and reach out to a worthwhile
number of customers there was a need for Bancassurance as a distribution model.
Targeting Middle income Customers
In previous there was lack of awareness about insurance. The agents sold insurance
policies to a more upscale client base. The middle-income group people got very
less attention from the agents. So through the venture with banks, the insurance
companies can recapture much of the under served market. So in order to utilize
the database of the banks middle-income customers, there was a need felt for
Bancassurance.

37

SOME INPORTANT BANCASSURANCE TIE UPS

INSURANCE

BANKS
Corporation Bank, Indian
Overseas Banks, Centurion
Bank, Satara District Bank,

LIFE INSURANCE CORPORATION

Cooperative Bank, Janata

(LIC)

Urban Cooperative Bank,

Yeotmal Mahila Sahkari Bank,
Oriental Bank of Commerce.
The Bank of Rajasthan, Andhra
Bank, Bank of Muscat,

BIRLA SUN LIFE INSURANCE

Development Credit Bank,

Deutsche Bank and Catholic
Syrian Bank.
Canara Bank, Lakshmi Vilas

DABUR CGU LIFE INSURANCE

COMPANY PVT LTD

Bank, American Express Bank,

ABN Amro Bank.
Union Bank of India.

HDFC STANDARD LIFE

INSURANCE CO.

Lord Krishna Bank, ICICI

Bank, Bank of India, Citibank,
ICICI PRUDENTIAL LIFE

Allahabad Bank, Federal Bank,

INSURANCE CO.

South Indian Bank, Punjab &

Maharashtra co-operative Bank.

38

NATIONAL INSURANCE CO.

City Union Bank.

Karnataka Banks, The

MET LIFE INDIA INSURANCE CO.

Dhanalaxmi Bank, Jammu and

Kashmir Bank.
State Bank of India, Associate

SBI INSURANCE CO.

Banks

BAJAJ ALLIANZ GENERAL

Krur Vysya Bank, Associate

INSURANCE
ROYAL SUNDARAM GENERAL

Bank
Standard Chartered Bank, ABN

INSURANCE CO.

Amro Bank, Citibank, Amex

UNITED INDIA INSURANCE CO.

39

and Repco Bank

South Indian Bank

INTRODUCTION TO ICICI BANK

ICICI Bank (Industrial Credit and Investment Corporation of India) is

an Indian multinational banking and financial

services company

headquartered

in Mumbai, Maharashtra, India, with its registered office in Vadodara. In 2014, it

was the second largest bank in India in terms of assets and third in term of market
capitalization. It offers a wide range of banking products and financial services for
corporate and retail customers through a variety of delivery channels and
specialized subsidiaries

in the

areas of investment banking, life, non-life

insurance, venture capital and asset management. The bank has a network of 4,183
branches and 13,498 ATMs in India, and has a presence in 17 countries including
India.
ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in
1994. The parent company was formed in 1955 as a joint-venture of the World
Bank, India's public-sector banks and public-sector insurance companies to provide
project financing to Indian industry. The bank was founded as the Industrial Credit
and Investment Corporation of India Bank, before it changed its name to the
abbreviated ICICI Bank. The parent company was later merged with the bank

40

HISTORY OF ICICI BANK

ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI) , an Indian financial institution, as a wholly owned subsidiary in
1994. The parent company was formed in 1955 as a joint-venture of the World
Bank, India's public-sector banks and public-sector insurance companies to provide
project financing to Indian industry. The bank was founded as the Industrial Credit
and Investment Corporation of India Bank, before it changed its name to the
abbreviated ICICI Bank. The parent company was later merged with the bank.
ICICI Bank launched internet banking operations in 1998.
ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public
offering of shares in India in 1998, followed by an equity offering in the form
of American Depositary Receipts on the NYSE in 2000. ICICI Bank acquired
the Bank of Madura Limited in an all-stock deal in 2001 and sold additional stakes
to institutional investors during 2001-02.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group,
offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the
first Indian company and the first bank or financial institution from non-Japan Asia
to be listed on the NYSE.
In 2000, ICICI Bank became the first Indian bank to list on the New York Stock
Exchange with its five million American depository shares issue generating a
demand book 13 times the offer size

41

TYPES OF INSURANCE PRODUCT ISSUED BY ICICI BANK

We hear about so many insurance policies and the various terms in it. But how
many of us truly understand what the different types of general insurance policies
mean and what they protect? There are essentially two types of insurance, life
insurance and general insurance. While life insurance is a coverage that pays out a
certain amount to the beneficiaries in event of death of the insured, general
insurance protects against the unforeseen losses and damages other than those
covered by life insurance.
Also known as non-life insurance, general insurance offers a gamut of insurance
covers against eventualities such as illness, property damage, motor accidents, etc.
Assets have a value of their own and are susceptible to damages. The specific
general insurance cover can protect the economic value of the asset and prevent
huge financial loses. For example, a home insurance policy can protect your home
and the valuables inside from calamities and theft. In this article, we look at the
different types of general insurance policies and the cover they provide.
General Insurance Types and Features:Motor Insurance
You love long drives and speeding on the highways. But have you secured your
lovable ride? Motor insurance, that includes car insurance and two wheeler
insurance, covers all damages and liability to the vehicle. Moreover, according to

42

the Motor Vehicles Act, 1988, driving a motor vehicle without insurance in a
public place is a punishable offense.
A motor vehicle can be covered either by a Liability Only policy which is a
statutory requirement and covers the legal liability for injury, death, and/or
property damage caused to a third party in the event of an accident caused by or
arising out of the use of the vehicle, or a package policy which includes the
Liability Only policy and also covers the damage to owners vehicle, usually called
O.D. Cover.
The common motor insurance plans include:
Car insurance:-A comprehensive coverage against physical damage and bodily
injury to the car, and also covers against third-party liability.
Two wheeler insurance:-A comprehensive two-wheeler insurance policy provides
hassle-free protection to your bike or scooter against physical damage, theft and
third party liability.
Commercial vehicle insurance:-Commercial vehicle insurance is a Liability Only
policy for commercial vehicles across the various classes of vehicles like goods
carrying vehicles private and public carrier, passenger carrying vehicles,
miscellaneous and special types of vehicles.
Health Insurance
Ill health can result in a major halt in your life and work. Moreover, the escalating
price of health care costs means that you would be shelling out a massive amount
of money to bear the brunt of these costs. This is the reason why you would need

43

health insurance to cover your medical expenses following hospitalization from

sudden illnesses or expenses caused by accidents. This also includes cashless
facility in empanelled hospitals, pre and post hospitalization expenses, and
ambulance charges. Here are some of the common types of health insurance
policies:Individual A health insurance policy, such as Bajaj Allianz Health Guard
Individual policy, provides cover for an individual with cashless hospitalization
and other features. In case you feel that the sum insured of your existing health
insurance plan does not suffice for expenses due to illness or accidents then opt for
a cover such as the Extra Care health insurance policy to extend your health
insurance.
Family Floater Policy A policy such as the Health Guard Family Floater Option
covers family members under a single plan. The fixed sum insured can be availed
by individual member or as a sum total for treatment of one person.
Surgery Cover A Surgical Protection Plan provides a fixed benefit amount for
specified surgeries and helps you to take care of the expensive medical treatment in
a hospital. This benefit plan that is used for the surgical treatment of serious
illnesses such as cancer, kidney failure, and heart attack can be availed as a
standalone plan or a rider.
Comprehensive Health Insurance A high value comprehensive health
insurance policy, such as Health Care Supreme with a wide range of sum insured,
add-on covers, special benefit covers such as maternity benefits and dental
treatments, fulfills all the healthcare needs and ensures complete peace of mind,
regardless of the situation of life you are in.

44

Other health insurance covers: Personal Accident

Hospital Daily cash Allowance
Critical Illness
Travel Insurance
Despite all your planning, a trip abroad can go wrong due to medical eventualities,
and non-medical contingencies such as loss of baggage, trip delay and other
incidental expenses. Travel insurance covers the insured against these misfortunes
while traveling. Catering to people from all walks of life, Bajaj Allianz offers three
different plans Travel Companion, Travel Elite and Student Travel. Choose a
basic plan or go for extended covers as per your requirements.
The different travel insurance policies include: Individual travel policy
Family travel policy
Senior citizens travel policy
Student travel insurance
In addition, there are insurance companies that offer special plans such as a
corporate travel policy or a comprehensive policy for travel to a special place such
as Asia.

45

Home Insurance
Your home is a priceless possession and possibly one of the largest financial
investments that you have made. It needs to be safeguarded from unforeseen
events. Along with your home, property insurance also protects the valuables and
other assets that are the interest of the insured. A comprehensive cover, such as My
Home, for your house as well as the contents ensures that your home is well
protected.

Commercial Insurance
Commercial insurance offers solutions for all sectors of the industry ranging from
automotive, aviation, construction, chemicals, foods and beverages, manufacturing,
oil and gas, pharmaceuticals, power, technology, telecom, textiles, transport and
logistics.
Some common types of commercial insurance include: Property insurance
Marine insurance
Liability insurance
Financial lines insurance
Engineering insurance

46

 Energy insurance
Employee benefits insurance
International insurance solutions.
Fire insurance:-Fire is one truly big problem that may endanger our valuables,
properties and even businesses. Worse it may threaten our lives and those of or
loved ones. Well this would not be very hard unless we are ready to face such
calamity with fire insurance. This will help us become more secured and ready to
face fire cases.

Research Methodology

This project consist data which are collected from various sources.

47

Normally there are two sources of collecting the data i.e. primary data and
secondary data. In this project I have taken both primary as well as secondary data.
TITLE:
Sample size & Data collection: From the total population 100 people are chosen as
sample size for the study and the data is collected through a Structured
Questionnaire.
Target Population:
I had conducted this survey among 100 people, and the target group was mix of
people from the society. I asked the questions to Doctors, Professionals, Professors,
Advocates, Engineers, and general public.
Analysis:
I have used charts, and some other statistical measures to analyze the questions.
Tools and Techniques:
1 Percentage Analysis
2 Factor analyses
Composition
The sample constituted respondents are within the age group of 21-30.
PRIMARY DATA:
Primary data usually consists of the data that are collected or fresh data for
the first time and thus is original in character. Primary data that are used in the
study are:
1.

QUESTIONNARE

2.

VISITING THE BANKS AND ADVICE FROM CUSTOMERS

SECONDARY DATA:

48

Secondary data usually consists of the data that is collected from some
existing literature. It has been already analyzed by someone else earlier and is
derived from that source. Secondary data that is used in the study are:
1.

Newspapers

2.

Websites

3.

Books

4.

Magazines

ANALYSIS PATTERN:

1.

Analyzing data is being shown in chart and graphs

2.

Cross tabulation of data

Research Finding, Analysis &Discussion

1. Do you have insurance
YES
NO
TOTAL

RESPONDENTS
20
5
25

49

PERCENTAGE(%)
80%
20%
100%

INSURANCE
INSURANCE

80

20

YES

NO

2. Which type of insurance do you have?

LIFE INSURANCE
VEHICHLE INSURANCE
HOME INSURANCE
HEALTH INSURANCE
TOTAL

RESPONDENTS
10
7
3
5
25

50

PERCENTAGE(%)
40%
28%
12%
20%
100%

TYPES OF INSURANCE

LIFE INSURANCE

20%

VEHICHLE INSURANCE
40%

HOME INSURANCE
HEALTH INSURANCE

12%

28%

3. Are you aware of Bancassurance?

YES
NO
TOTAL

RESPONDENTS
19
6
25

51

PERCENTAGE(%)
76%
24%
100%

80
70
60

BANCASSURANCE

50
40
30
20
10
0

YES

NO

Interpretation: - Among those who surveyed, 76% of respondents were aware

that their bank provided bancassurance. They knew with which Insurance
Company their bank has tie up with; also they were aware about various policies
provided by their banks. However, 24% of the respondents were amused with the
term bancassurance and didnt know anything about it and the services provided by
their banks.
4. Have You Taken An Insurance Policy From Your Bank.

YES
NO
TOTAL

RESPONDENTS
15
10
25

52

PERCENTAGE (%)
60%
40%
100%

INSURANCE FROM BANK

60
50
Series 1

40
30
20
10
0
YES

NO

Interpretation: Among the people who were surveyed, there were only 60% people who had taken
insurance policy from their respective banks. Remaining 40% respondents didnt
opt to take a policy from their banks.

5. The Kind Of Insurance Policy Taken From The Bank.

DEPOSIT BASED
LOAN BASED
LIFE INSURANCE
OTHERS
TOTAL

RESPONDENTS
7
12
4
2
25

53

PERCENTAGE (%)
28%
48%
16%
8%
100%

KIND OF INSURANCE POLICY

50
45
40
35
30
25
20
15
10
5
0

KIND OF INSURANCE
POLICY

Interpretation : Maximum number of insurance taken was related to loan. It

was either car insurance or a home insurance. Out of the people surveyed 48% said
that they have taken a loan based insurance. There were 28% who have taken
insurance which are deposit based because it is a part of the deposit scheme. Only
16% have taken life insurance cover from the bank and 8% belong to others
Category
6. Reasons For Taking An Insurance Policy.
SECURITY
SAVINGS
BRAND IMAGE OF BANK
BRAND IMAGE OF INSURANCE
TOTAL

RESPONDENTS
13
6
4
2
25

54

PERCENTAGE (%)
52%
24%
16%
8%
100%

SECURITY
SAVING
IMAGE ON BANK
IMAGE OF INSUREANCE

Interpretation : There was a mixed response from the customers. 52% said that
they took the insurance policy because of security benefits. 16% said that since,
they trusted their bank, they took the policy. There was 8% who said that the
brand image of the company also mattered. Only 24% said that savings was a
reason that encouraged them to buy insurance policy.

7. On Your Choice Which Mode Of Insurance Distribution Channel

Would You Prefer To Buy The Policy From.
AGENTS
BROKERS
BANKS
INSURANCE COMPANIES
ONLINE
TOTAL

RESPONDENTS
9
2
4
7
3
25

55

PERCENTAGE (%)
36%
8%
16%
28%
12%
100%

DISTRIBUTION CHANNEL
DISTRIBUTION CHANNEL

36
28
16

12

8
AGENTS

BROKERS

BANKS INSURANCE COMPANY ONLINE

Interpretation : 36% people preferred agents because they provide personalized

services. 28% took insurance from companies because of their trust on the
company. 16% said they would buy insurance from banks because of the brand
name and their trust on banks. Only 8% said that they would buy insurance from
brokers and 12% said that they would buy insurance from online.

8. Which Bank Do You Feel Would Excel In Bancassurance?

Rate Them Accordingly.
PUBLIC SECTOR
BANK
PRIVATE SECTOR
BANK
FOREIGN BANKS
TOTAL

RESPONDENTS

PERCENTAGE (%)

12%

17

68%

20%

25

100%

56

RATINGS OF BANCASSURANCE

PUBLIC SECTOR BANK; 12%

FOREIGN BANKS; 20%

PRIVATE SECTOR BANK; 68%

Interpretation:-68% people said that private sector banks would excel in this
because of their aggressive selling policies and they provide quality services to the
customers. 20% votes were given to foreign banks, because foreign banks have
proper management and aggressive selling strategies. The public sector banks were
given the least votes i.e12% because of their lazy approach to work.

9. Do You Think Bancassurance Has A Good Future.

YES
NO
TOTAL

RESPONDENTS
20
5
25

57

PERCENTAGE (%)
80%
20%
100%

BANCASSURANCE HAS A GOOD FUTURE

90
80
70
60
Series 1

50
40
30
20
10
0
YES

NO

Interpretation:-80% people said that they believe that Bancassurance has a

very bright future because there is an immense potential for the insurance industry
in India. But 20% believe that because of the emergence of the new technology
such as ATMs, Internet banking etc the banks will soon go virtual so there is not
much scope for it.

FINDINGS

58

 Although the concept is simple enough in theory, but in practice it has been
found to be far from straightforward.
Almost many people have a fair idea about Bancassurance and that their
banks sell various insurance products. But still few people dont know about
Bancassurance as a concept.
It has been also found out that the banks have various opportunities to cross
sell insurance products. The insurance companies also have the opportunity
to take advantage of the banks network and other avenues.
It is also seen that customers have a lot of trust on the banks, and because of
that trust the customers will take the insurance products from banks.
As the brand name of the banks is important so is the brand image of the
insurance companies. So the banks and the insurance companies must tie-up
with the right partners. This will help them to create a better image in the
minds of the customers.
It has also clear from the study that the private sector and the foreign banks
have better future in Bancassurance. But the public sector banks are also
trying to give them a tough competition e.g. SBI Life Insurance Co. The
insurance business can go a long way because there is a large population
who is still unaware about insurance.

RECOMMENDATIONS

59

 The Insurance companies need to design products specifically for

distributing through banks. Trying to sell traditional products may not work
so effectively.
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.
Banks should also provide after sales services and they should be more
aggressive in selling the insurance products.
Banks should also do the settlement of claims which will increase the trust
and reliability of the customers on the banks.
In India, 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, it needs to rebuild the blemished image. Else, the
bancassurance would be difficult to succeed in these banks.
A formal and standard agreement between these banks and the insurance
companies should be taken up and drafted by a national regulatory body.
These agreements must have necessary clauses of revenue sharing. In case
of possible conflicts, the bank management and the management of the
insurance company should be able to resolve conflicts arising in future.
For bancassurance to succeed, products and processes will need to be
tailored to bank markets, rather than adjusted to insurers specifications.
Banks and Insurance companies should apply all the skills and potential in
this area and take advantage of the same and they should improve the
products from time to time according to the needs of the customers.

CONCLUSION

60

The life Insurance Industry in India has been progressing at a rapid growth since
opening up of the sector. The size of country, a diverse set of people combined
with problems of connectivity in rural areas, makes insurance selling in India a
very difficult task. Life Insurance Companies require good distribution strength
and tremendous man power to reach out such a huge customer base.
The concept of Bancassurance in India is still in its nascent stage, but the
tremendous growth and the potential reflects a very bright future for bancassurance
in India. 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. But the proper implementation of bancassurance is still
facing so many hurdles because of poor manpower management, lack of call
centers, and no personal contact with customers, inadequate incentives to agents
and unfulfillment of other essential requirements. I have experienced a lot during
the preparation of the project. I had just a simple idea about Bancassurance. But
after a detailed research in this topic I have found how important bancassurance
can be for bankers, insurers as well as the customers. I am contented that all my
objectives have been met to its fullest.

BIBLIOGRAPHY

61

www.google.com
www.rbi.org.in
www.askjeeves.com
www.wikiepedia.com
www.insuranceforum.com

62