BANCASSURANCE

Importance of Bancassurance

• Learning Objectives:

At the end of this session, you will be able to:

• Understand the history and concept of Bancassurance

• Understand meaning and Importance of Bancassurance as a distribution channel
• Explain the advantages of Bancassurance for Insurers, Banks and customers
• Explain the models of Bancassurance
• Understand classification of various products sold through bancassurance channel
• Explain the various delivery channels of Bancassurance
• Understand legal framework for Bancassurance in India
• Learn how to drive sales through bank assurance channel
Concept and History of Bancassurance
Origin
The concept of Bancassurance evolved
in Europe.
Bancassurance seems to have made
the greatest impact in France where it
originated in late 70’s
55% to 60% of the life insurance
business in France comes through
banks.
Indian History
IRDA came into existence in 2000 and
the Government of India notification
(Banking Regulation Act) dated August
3rd 2000, laid out the Bancassurance
clearance.
Notification of IRDA, October 2002 –
Paved way for Banks as Corporate
Agents. RBI regulations allowed Banks
to participate as Corporate Agency with
“No Risk Participation” or JV with “Risk
participation”.
Evolution – Bancassurance

Traditional Channels of New Channels post

Distribution formation of IRDA
   
 Individual Agents  Corporate Agents
 Direct Sales Team  Brokers
Regulators

IRDA for Insurance Companies

RBI for Banks

Meaning and Definition

In simple words, Bancassurance is a partnership between a Bank and an

Insurance company where in the insurance company uses the Bank’s
channels to sell its insurance products.
Need and Importance of Bancassurance

 Customer’s first exposure to financial system in India has been through Banks. People have
been doing business with banks for years and have come to trust them. Insurance also has its
foundation built on mutual trust.
 
 Tying up with a well-known bank and bank trusted by its customers is therefore the natural
choice for many insurance companies to develop their business in India.

 Indian Insurers face a tough challenge of lowering underwriting losses and lowering combined
ratios to improve profitability. Generally Bancassurance channel has shown lower combined
ratio as a channel in comparison with other channels .
Advantages to Insurers/Banks/Customers

Insurers Banks Customers

• Higher market • This increases overall • Need not go to
penetration profitability Insurance companies
• Increase in overall • Increase in Product • Customized Products
revenue Portfolio • All financial advisory
• Huge geographical reach • Effective use of its services available under
• Reduction of operational existing infrastructure one roof.
cost and resources.
• Cross selling and up
selling
Legal Framework for Bancassurance in India

• In India Banks operate as corporate agents for an insurer as per IRDA (Licensing of
Corporate Agents) Regulations 2002.

• The Corporate Agent regulations were amended in August, 2015 and new
regulations came into effect from 1st April, 2016.

• From April 1, 2016 norms have been revised under which corporate agents like
banks are allowed to tie-up with three life, three non-life and three standalone
health insurance companies.

• Earlier, the Bancassurance model meant that banks could only sell products of
one life, one non-life and one standalone health insurer.
Bancassurance Channel -Models

The bank becomes a corporate agent of an

insurer and taps its customer base to sell MODEL 1
insurance products.

As a referral model, the bank supports the MODEL 2

insurance company with its data base.

Banks

Insurance
Customers
companies
Classification of Products sold through Bancassurance Channel

Bancassurance Products

Standalone Blended/
Products Complementary Products
Banking – Type of Products

   
ASSET PRODUCTS LIABILTY
  PRODUCTS
 
( What is owed to the bank by its customers) ( What bank owes to its customers)
   
 Home Loans Current
   Accounts
 
 Home Equity Loans  Savings Accounts
     
Vehicle
  Loans Deposits
  (Fixed/Recurring etc..)
 Personal Loans
 
 Gold Loans
  
Educational Loans
  
Business
  Loans/Term Loan
 Credit Cards
Various Delivery Channels for Bancassurance
Cross-Selling and Up-Selling – Must Know
Techniques
Cross-selling is the action of selling among or between clients, markets, traders, etc. or the action or practice of selling
an additional product or service to an existing customer.

Cross-selling allows you to service any additional needs of the client and decreases the need for your client to consider
your competitor's products and services. Cross-selling efforts are rewarded because customer retention increases
dramatically when a customer purchases more than one product or service. Make sure you consider all the possible
additional products you can sell when you are talking to every customer.

E.g. Selling Health Insurance to existing Motor Insurance customers

Upselling is a sales technique where a seller tries to sell more enhanced and expensive product than the product the
customer initially decided to buy. Often, up-selling is simply exposing the customer to products or services that he or
she may not have already considered.

E.g.. Selling Add On covers to Package Policy Customers

Driving Sales through Bancassurance Channel

I. Bank Staff Training.

 
2. Cultivating and maintaining relationships with Bank Personnel
 
3. Focus on Customer Service/satisfaction.
  Maintenance of Service quality levels
 Increasing Customer Satisfaction
 
 
 
4. Providing advice/solutions, not selling products.
 
6. Motivating Bank personnel
 
 Regular Meetings
 Joint calls
Other Tips to Keep Bank Personnel Motivated

 Help them to visualize achievement of goals

 Recognize all accomplishments – whether big or small
 Build credibility and image in front of bank teams
 Emphasize the importance of their role in the business and in helping clients
 Practice recognition techniques like “Best Territory/Branch of the month”
 Conduct regular review of the goals and maintain connect with them
 Maintain tracker of conversations along with points discussed in the last
call/meet.
 Maintain privacy and confidentiality of any personal and sensitive information
shared.
 Respect personal space and preferences