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.
Different Models of bancassurance and 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
this project would study and address the issues related to
bancassurance,
Particularly in India. Strategic considerations at macroeconomic
level on
Future outlook have also been discussed along with suggestions
and
Recommendations to sustain the growth that it has witnesses till
now.
The Case Study and Analysis is done as per the information
provided to me
by Mr. Rajesh Sheth Marketing Manager of Bank of India, Mr.
Rakesh L.
Singh and Shivaji Chandra Panchamukh SDM (Sales Department
Managers) of HDFC Standard Life Insurance Survey analysis as
well as
SWOT analysis of bancassurance.

Research & Methodology

This project consist data which are collected from various sources.
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.

PRIMARY RESEARCH
Primary Research has been done to validate the information given
in the project.
This research has been extensively done via visit to a bank (BANK
OF India) and
An Insurance company (HDFC Standard Life Insurance). Interview
from Rajesh
Sheth, Marketing manager of Bank of India and two SDM (Sales
Department
Managers) of HDFC Standard Life Insurance Mr. Rakesh L. Singh
and Shivaji
Chandar Panchamukh have really proved helpful in completion of
the project.

SECONDARY RESEARCH

The secondary data about the project is collected through various

sources i.e.
Books on the very topic.
Various Websites.
Newspaper Articles.
Magazines containing the information about the topic.

Objective of this project

Primary Objective of my study on the topic Bancassurance is

that this is
Relatively a new concept in India and thereby I would like to
enhance my
Understanding and improve my knowledge regarding this topic &
above all I
Would definitely want to apply this information so gathered in my
future career
Prospects. Whereas the main objective of making this thesis
stands to is research on
The Bancassurance strategy adopted by the banking companies.
Today the customer

Is the king of the market and to satisfy his wants and needs the
industry has to?
Adopt many strategies. The customers want everything under,
one roof, by thinking
Of this point the banking industry came up with
BANCASSURANCE. Survey
Analysis of the customers is also done. 50 customers views are
taken into
Consideration on Bancassurance which are shown through pie
diagram and bar
Diagram in this project.
INDEX
SL. No. CONTENTS PAGE
NO.
1. Introduction
1.1 Introduction to bancassurance
1.2 Introduction to banking
1.3 Introduction to insurance
1.4 Meaning of bancassurance
1.5 Bancassurance = insurance product + banks reach
1.6 Regulatory Framework in India
1-7
2. Bancassurance Models
2.1 Structural classification
2.2 Product based classification
2.3 Bank referrals
8-11
3. Distribution Channels 12-16
4. Advantages of bancassurance
4.1 Advantages to banks
4.2 Advantages to insurers
4.3 Advantages to consumers
17-19
5 Indian scenario
5.1 Reasons for banks entering into insurance
Business in India
5.2 Policies Sold by Indian Insurance players via
Bancassurance
20-25

6. Global scenario
6.1 Bancassurance business conducted by companies
6.2 Bancassurance in India VS Bancassurance in
Asia & Europe
26-30
7. Survey Analysis 31-36
8. SWOT Analysis
8.1 Strength
8.2 Weakness
8.3 Opportunity
8.4 Threats
37-41
9. Bancassurance: Emerging Trends and Challenges 42-45

SECTION 1- Introduction
Introduction to bancassurance
Introduction to banking
Introduction to insurance
Meaning of bancassurance
Bancassurance = insurance product + banks reach
Regulatory Framework in India
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.
Introduction to Banking
Banking as per the Banking Regulation Act, Banking is
Defined as: Accepting, of deposits of money from the public
For the purpose of lending or investment; repayable on demand
through cheques,
Drafts or order.
A sound and effective banking system is necessary for a healthy
Economy. 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. Many new things have come up in the banking
sector in the recent
Years. 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.
The development of the Indian banking sector has been
accompanied by
The introduction of new norms. New services are the order of the
day, in order to

Stay ahead in the rat race. Banks are now foraying into net
banking, securities, and
Consumer finance, housing finance, treasury market, merchant
banking etc. They
Are trying to provide every kind of service which can satisfy or
rather we should
Say that it can delight the customers.
Entry of private and foreign banks in the segment has provided
Healthy competition and is likely to bring more operational
efficiency into the
Sector. Banks are also coping and adapting with time and are
trying to become one stop
Financial supermarkets. The market focus is shifting from mass
banking
Products to class banking with the introduction of value added
and customized
Products.
Introduction to Insurance Sector
Insurance may be defined as: It is a contract between two parties where by one party
undertakes to
Compensate another party for the loss arising due to an uncertain
events for which
Another party agrees to pay a certain amount regularly.
In India, insurance has a deep-rooted history. Insurance in India
has
Evolved over time heavily drawing from other countries, England
in particular. The
Insurance sector in India has come as a full circle from being an
open competitive
Market to nationalization and back to a liberalized market again.
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.
The Insurance Act, 1938 was the first legislation governing all
forms
Of insurance to provide strict state control over insurance
business. Today there are

14 general insurance companies and 14 life insurance companies

operating in the
Country. But today also the insurance companies are trying to
capture Indian
Markets as not many people are aware of it.
The insurance sector is a colossal one and is growing at a
speedy rate
Of 15-20%. Together with banking services, insurance services
add about 7% to the
Countrys GDP. A well-developed and evolved insurance sector is
a boon for
Economic development as it provides long- term funds for
infrastructure
Development at the same time strengthening the risk taking
ability of the country.
Bancassurance- Meaning
Bancassurance is the term used to
Describe the sale of insurance products in a
Bank. The word is a combination of banque
Or bank and assurance signifying that both
Banking and insurance is provided by the
Same corporate entity. Bancassurance is the distribution of
insurance products
Through the banks distribution channel. It is a phenomenon
wherein the insurance
Products are offered through the distribution channels of the
banking services along
With the complete range of banking and investment products and
services. In
Concrete terms Bancassurance, which is also known as Allfinanzdescribes a
Package of financial services that can fulfill both banking and
insurance needs at
The same time? As the name suggests, the concept started in
France in
1980. Bancassurance has achieved remarkable success
particularly in Europe.
Bancassurance represents over 65% of the premium income in
life insurance in

Spain, 60% in France, 50% in Belgium and Italy. Bancassurance

tries to exploit
Synergies between both the insurance companies and banks.
Bancassurance = Insurers Product + Banks reach:
To put in simple words, bancassurance is
The provision of insurance banking products and
Services through the distribution channel of a
Bank or to a common client base. The usage of
The word started picking up when the financial
Markets witnessed mergers and alliances between the two
booming segments
Banking and insurance. According to a recent study,
bancassurance is on the rise,
Particularly in emerging markets. Worldwide, insurers have been
successfully
Leveraging bancassurance to gain a foothold in markets with low
insurance
Penetration and a limited variety of distribution channels.
Banks world over have realized that offering value-added services
such as
Insurance, helps to meet client expectations.
Competition in the Personal Financial Services area is getting
`hot in India.
Banks seek to retain customer loyalty by offering them a vastly
expanded
And more sophisticated range of products.
Customers also want a one-stop shop for all their financial
needs. Therefore
Banks are trying to provide more services and integrate them into
their business
Model. Bancassurance is one such initiative. Further the risks
involved in doing this
Business is very low.
Banks are also trying to integrate this business into their own
business. Customers
Would also get this benefit as these products are offered not only
by their sales
Force but also by net banking and other IT enabled services like
ATM etc.

Insurance companies also have a wide range of insurance

products catering to a
Wide range of needs. Bancassurance is beneficial for insurance
companies as well
As they would be cutting costs and cross-selling apart from the
wider reach of their
Insurance products.
In a country like India, where the need of insurance is not felt by
customers,
Insurance companies should try to exploit every opportunity of
selling their
Insurance products which Bancassurance promises.

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.

SECTION 2- Models, Channels and Advantages

Bancassurance Models
Distributional channels
Advantages of bancassurance
1. to Banking Companies
2. to Insurance Company
3. to Customers
Models of Bancassurance
Models of Bancassurance
Structural Classification Product based classification Bank
Referrals
Stand-alone insurance products
Referral Model
Blend of Insurance,
With Bank Products
Corporate Agency
Insurance as Fully Integrated Financial Service/ Joint
ventures

Structural Classification
a) Referral Model
Banks intending not to take risk could adopt
Referral model wherein they merely part with their
Client data base for business lead of commission. The
Actual transaction with the prospective client in referral
Model is done by the staff of the insurance company
Either at the premises of the bank or elsewhere. Referral
Model is nothing but a simple arrangement, wherein the bank,
while controlling
Access to the clients data base, parts with only the business leads
to the agents/
Sales staff of insurance company for a referral fee or commission
for every
Business lead that was passed on. In fact a number of banks in
India have already
Resorted to this strategy to begin with. This model would be
suitable for almost all
Types of banks including the RRBs /cooperative banks and even
cooperative
Societies both in rural and urban. There is greater scope in the
medium term for this
Model. For, banks to begin with can resort to this model and then
move on to the
Other models.

b) Corporate Agency
The other form of non-sick participatory distribution channel is
that of
Corporate Agency, wherein the bank staff as an institution acts
as corporate agent
For the insurance product for a fee/commission. This seems to be
more viable and
Appropriate for most of the mid-sized banks in India as also the
rate of commission
Would be relatively higher than the referral arrangement. This,
however, is prone to
Reputational risk of the marketing bank. There are also practical
difficulties in the

Form of professional knowledge about the insurance products.

This could, however,
Be overcome by intensive training to chosen staff, and packaged
with proper
Incentives in the banks coupled with selling of simple insurance
products in the
Initial stage. This model is best suited for majority of banks
including some major
Urban cooperative banks because neither there is sharing of risk
nor does it require
Huge investment in the form of infrastructure and yet could be a
good source of
Income. This model of bancassurance worked well in the US,
because consumers
Generally prefer to purchase policies through broker banks that
offer a wide range
Of products from competing insurers.

c) Insurance as Fully Integrated Financial Service/

Joint ventures
Apart from the above two, the fully integrated financial service
involves
Much more comprehensive and complicated relationship between
insurer and bank,
Where the bank functions as fully universal in its operation and
selling of insurance
Products is just one more function within. This includes banks
having wholly
Owned insurance subsidiaries with or without foreign
participation. The great
Advantage of this strategy being that the bank could make use of
its full potential to
Reap the benefit of synergy and therefore the economies of
scope. This may be
Suitable to relatively larger banks with sound financials and has
better
Infrastructure. As per the extant regulation of insurance sector
the foreign insurance
Company could enter the Indian insurance market only in the
form of joint venture,

Therefore, this type of bancassurance seems to have emerged out

of necessity in
India to an extent. There is great scope for further growth both in
life and non-life
Insurance segments as GOI is reported have been actively
considering to increase
The FDIs participation up to 49 per cent.

I. Product based classification

(a) Stand-alone Insurance Products
In this case bancassurance involves marketing of the insurance
Products through either referral arrangement or corporate agency
without mixing
The insurance products with any of the banks own products/
services. Insurance is
Sold as one more item in the menu of products offered to the
banks customer,
However, the products of banks and insurance will have their
respective brands too.

(b) Blend of Insurance with Bank Products

This method aims at blending of insurance products as a value
Addition while promoting the banks own products. Thus, banks
could sell the
Insurance products without any additional efforts. In most times,
giving insurance
Cover at a nominal premium/ fee or sometimes without explicit
premium does act
As an added attraction to sell the banks own products, e.g., credit
card, housing
Loans, education loans, etc. Many banks in India, in recent years,
has been
Aggressively marketing credit and debit card business, whereas
the cardholders get
The insurance cover for a nominal fee or (implicitly included in
the annual fee)
Free from explicit charges/ premium. Similarly the home loans /
vehicle loans, etc.
Have also been packaged with the insurance cover as an
additional incentive.
III. Bank Referrals

There is also another method called 'Bank Referral'. Here the

banks do not
Issue the policies; they only give the database to the insurance
companies. The
Companies issue the policies and pay the commission to them.
That is called
Referral basis. In this method also there is a win-win situation
everywhere as the
Banks get commission, the insurance companies get databases of
the customers and
The customers get the benefits.

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
Insurers
Individual
Agents
Corporate
Agents
Brokers Referrals
Direct
Business
Banks Others
1234567
Private
Insurers
59.71 16.87 8.92 0.83 7.06 6.61
LIC 98.37 1.25 0.32 0.06 0.00 0.00
Total 85.67 6.38 0.31 0.31 2.32 2.17
New Business (Life) Undertaken under various
intermediaries (2005-2006)

Distribution Channels

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.
Distribution Channels diagram

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:

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-to-face 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:

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.

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.
(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.
(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.
SECTION 3-Scenarios

Indian Scenario
Global Scenario
INDIAN SCENARIO

Indian Scenario
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 semi-urban 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 potential lives that could be covered by insurance
with the frontal
Involvement of banks.

Reasons for banks entering into insurance

business in India
Indian insurance market is a hidden goldmine 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 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.

Policies sold by Indian Insurance players via

bancassurance
Company % of policies
ICICI Prudential 15% in 2002, 30% in 2004
SBI Life 15% in 2002, 50% in 2004
Birla Sun Life 25% in 2002, 40% in 2004
ING Vyasa Life 10% in 2002
Aviva Life 50% in 2002, 70% in 2004
Allianz Bajaj Life 25% in 2003
Royal Sundaram Allianz 40% in 2002
HDFC Standard Life 10% in 2002, 40% in 2004
MetLife 25% in 2002

Global Scenario
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. Market

share per
Distribution network for insurance products across various
countries has been
Detailed in the below diagram.

Bancassurance business conducted by companies

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-Steagall Act
was repealed
After the passage of the Gramm-Leach-Bliley Act.

Bancassurance in India vs. Bancassurance in Asia &

Europe
The following table compares the issues related to bancassurance
in India with
Europe and Asia (general):
Europe Asia (general) India
Regulation Liberalized Ranging from Supportive
Liberalized to forbidden
Market
Mature
Markets but
Pension
High growth potential High growth
Growth reforms can
Spur growth in
The
Life insurance
Sector

Bancassuranc
E model
Highly
Integrated
Models
Mostly distribution
Alliances and joint
Ventures
Distributive
Major drivers
Tax
Concessions
For life
Squeeze on bank
Margins.
Tax free
Status on
Maturity
Insurance
Premium paid
Insurers growing cost
Pressure and desire to
Expand distribution
Capability.
Financial deregulation
Foreign companies use
Small tax
Relief on
Premium.
Narrowing
Bank margin
Squeeze on
Bank margins
Bancassurance to enter
Asian Markets
Products
Europe
Mainly life
Insurance

Products to
Maximize tax
Benefits
Asia (general)
Mainly life insurance
Products linked to bank
Services and
Increasingly, products
Geared towards managed
India
Mainly no unitized
Savings
Mostly single
Premium
Regular
Premium
Distribution Multi-bank
Branches
Mainly bank branches Bank
Branches
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-Steagall Act
was repealed
After the passage of the Gramm-Leach-Bliley Act

SECTION 4- Analysis
Survey analysis
SWOT analysis

Survey analysis (questionnaire)

A survey was conducted of about 50 people who did regular
banking transactions
And also had an insurance policy. These included several
housewives, businessmen,
Professionals, students, etc. The following analysis was done on
the basis of the
Survey conducted:

Are you aware of Bancassurance?

Interpretation: - Among those who surveyed, 80% 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, 20% of the respondents were
amused with the
Term bancassurance and didnt know anything about it and the
services provided by
Their banks.
Yes 80%
No 20%
Yes
No

Have You T aken An Insurance Policy From Your

Bank?
Interpretation: Among the people who were surveyed, there
were only 34%
People who had taken insurance policy from their respective
banks. Remaining
66% respondents didnt opt to take a policy from their banks.

The Kind Of Insurance Policy Taken From The

Bank:

Deposit Based Loan Based Life Insurance Others

Yes
34%
No
66%

No
Yes

23%
63%

18%
42%
0
10
20
30
40
50
60
70

Interpretation: Maximum number of insurance taken was

related to loan. It
Was either car insurance or a home insurance. Out of the people
surveyed 63% said
That they have taken a loan based insurance. There were 23%
who have taken
Insurance which are deposit based because it is a part of the
deposit scheme. Only
18% have taken life insurance cover from the bank and 42%
belong to others
Category.

Reasons For Taking An Insurance Policy:-

Security Savings Brand Image of Brand Image of

Bank Insurance
Interpretation: There was a mixed response from the
customers. 80% said that
They took the insurance policy because of security benefits. 65%
said that since,
They trusted their bank, they took the policy. There was 40% who
said that the
Brand image of the company also mattered. Only 28% said that
savings was a
Reason that encouraged them to buy insurance policy.
80% 28% 65% 40%
0
10
20
30
40
50
60
70
80

90

on Your Choice Which Mode of Insurance

Distribution
Channel Would You Prefer To Buy The Policy From?
Interpretation: 50% people preferred agents because they
provide personalized
Services. 20% took insurance from companies because of their
trust on the
Company. 23% said they would buy insurance from banks
because of the brand
Name and their trust on banks. Only 7% said that they would buy
insurance from
Brokers.
Banks
23%
Brokers
7%
Agents
50%
Insurance
Companies
20%

Which Bank Do Y ou Feel Would Excel in

Bancassurance?
Rate Them Accordingly
Public Sector Private Sector Foreign Banks
Banks 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. 70% 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 because of their lazy approach to work.
38%
90%
70%
0
10
20
30

40
50
60
70
80
90
100

Do You Think Bancassurance Has A Good Future?

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. But 7% 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.
No, 5%
Yes, 95%
Yes
No

SWOT Analysis:
Banking and Insurance are very different
Businesses. Banks have less risk but the
Insurance has a greater risk. Even though, banks
And insurance companies in India are yet to
Exchange their wedding rings, Bancassurance as
A means of distribution of insurance products is
Already in force in some form or the other.
Banks are selling Personal Accident
And Baggage Insurance directly to their Credit
Card members as a value addition to their
Products. 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 previously was not thought of.
The sale of insurance products can earn banks very significant
Commissions (particularly for regular premium products). In
addition, one of the
Major strategic gains from implementing bancassurance
successfully is the

Development of a sales culture within the bank. This can be used

by the bank to
Promote traditional banking products and other financial services
as well.
Bancassurance enables banks and insurance companies to
complement each others
Strengths as well.
It is therefore essential to have a SWOT analysis done in the
context
Of bancassurance experiment in India. A SWOT analysis of
Bancassurance is given
Below:

Strengths:
in a country like India of one
Billion people where sky is the
Limit there is a vast untapped
Potential waiting for life insurance
Products. 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.
Banks have the credibility established with their constituents
because of a
Variety of services and schemes provided by them. They also
enjoy pride of
Place in the hearts of people because of their long presence and
sustained
Image.
Banks also enjoy a wide network of branches, even in the
remotest areas that
Can facilitate taking up the task on a large and massive scale,
simultaneously.
Banks are very well aware with the psychology of the customers
because of
Their interaction with the customers on regular basis. Because of
this the

Bankers can guess the attitude and diverse needs of the

customers and could
Change the face of insurance distribution to personal life
insurance.
with the help of banks trained staff, its brand name and the
confidence and
Reliability of people on the banks, the selling of insurance
products can be
Done in a more proper way.

Weaknesses:
In spite of growing emphasis on total branch
Mechanism and full computerization of bank
Branches, the rural and semi-urban banks have
Still to see information technology as an
Enabler. The IT culture is unfortunately
Missing completely in all of the future
Collaborations. The internet connections are also not properly
provided to the
Staff.
to undertake the distribution of the insurance products, the
bank employees
Have to undergo certain minimum period of training, followed by
a test and
Then get them licensed. Moreover the standards of the
examination have been
Raised in the recent past making it difficult for many examinees
to clear the
Same.
There is lack of personalized services because the
Traditional insurance agent is considered a member of the
Family and hence is able to render a personalized service
During and after the sales process. However that may not be
The case in regards to a bank employee.
there are many differences in the way of thinking and business
approaches
Of bankers and the managers of insurance companies. Banks are
traditionally
demand-driven organizations with a reactive selling philosophy.
Insurance

Organizations are usually need-driven and have an aggressive

selling
Philosophy.

Opportunities:
There is a vast untapped potential waiting to
Be mined particularly for life insurance
Products. There are more than 900 million
Lives waiting to be given a life cover (total
Number of individual life policies sold in
1998-99 was just 91.73 million).
There are many people in many areas that are still unaware
about the
Insurance and its various products and are waiting that somebody
should
Come and give them the information about it.
In urban and metro areas, where the customers are willing to
get many
Services like lockers and safe deposit systems and other products
and
Services from banks, there is a good opportunity to market many
property
Related general insurance policies like fire insurance, burglary
insurance and
Medi-claim insurance etc.
Banks' database is enormous even though the goodwill may not
be the same.
This database has to be dissected and various homogeneous
groups are to be
Churned out in order to position the Bancassurance products.
With a good IT
Infrastructure, this can really do wonders.

Threats:

Success of a Bancassurance venture requires

Change in approach, thinking and work culture
On the part of everybody involved. The 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. Any relocation to a

New company or subsidiary or change from one work to a

different kind of
Work will not be easily acceptable by the employees.
another possible threat may come from non-response from the
targeted
Customers. If many joint ventures took place between banks and
insurance
Companies then it may happen that the customers may not
respond to such
Ventures as happened in U.S.
Insurance in India is perceived more as a saving option than
providing risk
Cover. So this may create an adverse feeling in the minds of the
bankers that
Such products may lessen the sales of regular bank saving
products. Also
Selling of investment and good return products may affect the FD
Portfolio
Of the banks.
If no strict norms are there for such ventures then many unholy
ventures may
Take place which may give rise to tough competition between
bancassurers
Resulting in lower prices and the Bancassurance venture may
never break
Because of such situations.

SECTION 5- Bancassurance Trends and

Opportunities
TRENDS
CHALLENGES
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

favors
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.
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:

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.
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

SECTION 6- OUTLOOK OF BANCASSURANCE

Factors for the success of Bancassurance
Future scope for Bancassurance
Findings
Recommendations
Factors for the success of Bancassurance
Lower cost of distribution
Due to higher sales
Productivity
The existing bank branch
Network/infrastructure
Information Technology
Mining database
Bank customer
Relationship
The decision
The banks culture
Life insurance products based
On the insurers desires (sales
Driven)
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
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 possess 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
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
Insurance, 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.

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.
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.

Findings
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? So the insurance
companies have a
Huge potential market in the years to come.
The banks fail to provide personalized services as are provided
by the
Agents. So banks will have to improve in that area. They should
provide after
Sales services to the customers.

Recommendations
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.

SECTION 7- Case Study

Bank of India
HDFC (Standard Life Insurance)

BANCASSURANC
E
BANK OF India
Bank of India was founded on 7th September,
1906 by a group of eminent businessmen in
Mumbai (previously known as Bombay), India.
Prudence and high standard of customer service
Has been the corner stones of the Bank's growth
During these 102 years. Today, the Bank ranks
As a premier bank with over 2865 branches in
India and 25 foreign branches/offices with an
Asset base of more than USD 32 Billion as on

31st March 2007. Corporate credit, export

Finance, forex and care for customer have
Created strong brand equity for Bank of India.
The Bank entered into bancassurance tie up with ICICI
Prudential Life
Insurance Co Ltd, for selling life insurance products in
December2001. The
Number of branches engaged in selling life insurance products
was gradually
Increased from 595 to 710. Various initiatives were undertaken for
giving thrust to
This business, like identifying Marketing Managers exclusively for
Insurance
Business in high potential areas. This has resulted in increase in
volume of business
And referral commission by 90% over the previous year.
The Bank has signed agreement for tie-up with National Insurance
Co Ltd (NICL)
For selling their Non-life insurance products on referral basis. All
branches in 47
Zones, as against 29 major Zones last year, have been authorized
to undertake
Referral business. 53 major branches were identified across the
country where
NICL agreed to open their Extension Counters for giving thrust to
insurance
Business. Due focus was also given through efforts by their Zones
/ branches and
Marketing Managers. This has resulted in increased business and
referral
Commission.
The Bank is into Bancassurance business since December 2001
and they are
Into tie up to undertake insurance business of behalf of ICICI
Prudential Life
Insurance Co Ltd for selling life insurance products & National
Insurance Co
Ltd. for non-life insurance products.

According to them the Bancassurance business have definitely

proved to be
An advantage to the banking industry because it helps the bank
in generating
Additional income thereby providing them with an edge over their
Competitors and improving their profit position.
For purpose of entering into bancassurance business the bank
used 2
Channels:
one partys distribution channel gained access to the client base
of
Other party.
Through a joint venture with ICICI Prudential Life Insurance Co
Ltd
& National Insurance Co Ltd
The reasons that made the bank take up this business include
competitive
Pressures, high operating cost, shift in the attitude of the people
to invest into
Insurance business for tax benefits, earning additional income
(fee based).
The distribution channels undertaken by the bank for
distributing the
Insurance products include:
Employment of salaried agents to promote and sell products.
Bank employees themselves undertake the business of
promoting and
Selling products.
The Bank has also received IRDA stipulated training for
insurance agents;
Advisors so as to make them familiar with the insurance
regulations and
Product information, so that they can source the insurance plans
to the right
Customer.
As far as the bank employees who are involved in the selling of
insurance

Products are concerned, a dedicated team of employees from

Bank of India
Are employed in the branch to guide them and resolve various
issues.
As the concept of bancassurance is new, the Bank in order to
educate the
Bank customers and make them aware, use various techniques:
Display material.
Through direct interaction with customers.
Through Bank employees.
According to the Bank, people prefer buying insurance products
from the
Bank and there are no target customers as such. There are
different plans for
Different target audience; which depends on the type of policy
that is being
Promoted & sold.
Some of types of Non-Monetary incentives that the Bank
provides to agents/
Employees for doing well include:
Rewards/Recognition.
Dinner/ Lunch with zonal & senior managers.
Vacations (count station) with family.
Internal competition.
As the number of activities of a Bank increases, the number of
frauds and
Unwanted manipulation also increases. To curb these HDFC
Standard Life
Undertake the following measures:
Proper and timely audit.
Regular training for the employees in the organization is
undertaken.
Ban
K
Insure
Nce

SECTION 8 CONCLUSION
BIBLIOGRAPHY

WEBLIOGRAPHY
Conclusion
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.
I have also experienced that though Bancassurance is not being
utilized to its
Fullest but it surely has a bright future ahead. India is at the
threshold of a
Significant change in the way insurance is perceived in the
country. Bancassurance

Will definitely play a defining role as an alternative distribution

channel and will
Change the way insurance is sold in India.
Short Term Medium term Long term
2005-06 2006-09 2010 onwards

The figure above shows the marriage of the two- banks and
insurance companies
Seems to be successful till today & their relationships will be
firmed to bond
Together, thus, according to me; they can make a good couple in
the years to come.
The bridge has been reached and many are beginning to walk
those
Cautious steps across it. Bancassurance in India has just taken a
flying start. It has a
Long way to go .. After all The SKY IS THE LIMIT!
Some Banks yet
To firm up
Partnerships
Insurers
Partnered with
Select banks
Under Corp
Agency
Change in
Regulations
Could impact
Current
Arrangements
Most banks
Have short term
Agreements; a
Stage of
Realignments
May occur
Stage of
Polarization:
Emergence of
Winners
Strong
Alignments with
Banks with cross
Investments and
Exclusivity.
Broking
Arrangements

Bibliography
Webliography

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

Ban
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Insurance