bank assurance in india final 1
TRANSCRIPT
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Bancassurance In India
INTRODUCTION OF INSURANCE IN INDIA
The Insurance sector in India governed by Insurance !ct, /036, the 7ife
Insurance &orporation !ct, /081 and -eneral Insurance Business ('ationalisation
!ct, /09", Insurance Regulatory and $evelopment !uthority (IR$! !ct, /000 and
other related !cts. :ith such a large population and the untapped market area of this
population Insurance happens to be a very big opportunity in India. Today it stands
as a business growing at the rate of /8;"# per cent annually. Together with banking
services, it adds about 9 per cent to the country
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Bancassurance In India
HISTORY OF INSURANCE SECTOR
The business of life insurance in India in its e*isting form started in India in
the year /6/6 with the establishment of the )riental 7ife Insurance &ompany in
&alcutta. Some of the important milestones in the life insurance business in India are
given in the table /.
TABLE 1 MILESTONE!S IN THE LIFE INSURANCE BUSINESS
IN INDIA
Year Mile"to#e" i# the li$e i#"%ra#&e '%"i#e"" i# I#(ia
/0/" The Indian 7ife !ssurance &ompanies !ct enacted as the first statuteto regulate the life insurance business
/0"6 The Indian Insurance &ompanies !ct enacted to enable the
government to collect statistical information about both life and non;
life insurance businesses
/036 @arlier legislation consolidated and amended to by the Insurance !ct
with the obective of protecting the interests of the insuring public.
/081 "28 Indian and foreign insurers and provident societies taken over
by the central government and nationalised. 7I& formed by an !ct of
=arliament, vi. 7I& !ct, /081, with a capital contribution of Rs. 8crore from the -overnment of India.
The -eneral insurance business in India, on the other hand, can trace its roots
to the Triton Insurance &ompany 7td., the first general insurance company
established in the year /68# in &alcutta by the British. Some of the important
milestones in the general insurance business in India are given in the table ".
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Bancassurance In India
TABLE ) MILESTONE!S IN THE *ENERAL INSURANCE
BUSINESS IN INDIA
Year Mile"to#e" i# the +e#eral i#"%ra#&e '%"i#e"" i# I#(ia
/0#9 The Indian ercantile Insurance 7td. set up, the first company to
transact all classes of general insurance business
/089 -eneral Insurance &ouncil, a wing of the Insurance !ssociation of
India, frames a code of conduct for ensuring fair conduct and sound
business practices
/016 The Insurance !ct amended to regulate investments and set
minimum solvency margins and the Tariff !dvisory &ommittee setup.
/09" The -eneral Insurance Business ('ationaliation !ct, /09"
nationalised the general insurance business in India with effect from
/st Aanuary /093.
/#9 insurers amalgamated and grouped into four companies vi. the
'ational Insurance &ompany 7td., the 'ew India !ssurance
&ompany 7td., the )riental Insurance &ompany 7td. and the nited
India Insurance &ompany 7td. -I& incorporated as a company.
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Bancassurance In India
HISTORY OF BANCASSURANCE
!fter Cirst 'arasimham &ommittee report, Indian banking system gone
through huge reforms like merchant banking, lease and term finance, capital
market D e?uity market related activities, hire purchase, real estate finance and so on.
Cew years back banks of India entered into another financial instrument that by end of march;"##1 which was far less than world. It also indicates that a vast maority of population remain outside the reach
of the insurance, especially in rural and semi;urban areas, in the conte*t of the
absence of social security schemes.
In year "##2, due to these vulnerable statistics, IR$! introduced an additional
channel of distribution in way long traditional distribution model of Insuranceindustry called Bancassurance.
The prospects of bancassurance in India is really bright because of following
reasons+
Indian economy is growing with 0> of growth rate.
Increasing === (purchasing power parity.
%uge inflow of C$I.
@*pansion of middle income class Indians.
%uge banking infrastructure across urban, semi urban E rural India.
B!S@7 ')R;II ("##0
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Bancassurance In India
DEFINITION
The sale of insuranceand other similar products through abank. This can
help the consumer in some situations4 for e*ample, when a bank re?uires lifeinsurance for those receiving a mortgage loan, the consumer could purchase the
insurance directlyfrom the bank. Some critics feel that bancassurance gives the bank
too much control. Bancassurance is not legal in all countries, but it is legal in the
nited States.
A#other rea"o#" are
BANK INSURANCE COM,ANY
&ustomer retention Revenue and channel
diversification
Satisfaction of more financial
needs under the same roof.
Fuality customer access
Revenue diversification Fuicker geographical reach
ore profitable resource
utiliation
&reation of brand e?uity
@nriched work environment 7everage service synergies with
Bank
@stablish sales orientated culture @stablish a low cost ac?uisition
channel
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Bancassurance In India
BANCASSURANCE STRUCTURE
BANCASSURANCE MODEL
ost of the partnerships in India fall into the Fir"t Mo(el, where banks have
offered their services as distribution channels for insurance products through their
branch network. In terms of the present regulatory framework, Banks have taken up
a corporate agency for marketing insurance products for an agreed referral feeD
commission. The regulations provide for one bank tying up with only o#e life and
o#enon;life insurer, while insurers have the choice to tie;up with any number of
banks.
Cor the Se&o#( Mo(el, we have e*amples of SBI Li$eand ICICI ,r%(e#tial
where separate oint ventures were floated to make a foray into the life insurancebusiness as private sector players.
!s yet, there are no instances of the Thir( and Fo%rth Mo(el" in India.
There is also a need for the evolution of regulations to accommodate these two
models.
It can be seen that in the Indian conte*t most of the players on both sides have
opted for the Fir"t Mo(el, a decision, which is in a way ?uite prudent. !s banks are
averse to assume risk and long;term commitments, a tentative coming together, akin
to dating without any firm or long;term commitment on either side, rather than
plunging into a marriage alliance, which would be ?uite costly and cumbersome to
e*tricate oneself from, make business sense.
6
Di"tri'%tio#
Allia#&e
oi#t .e#t%re
Bet2ee# 'a#3
4 I#"%rer
Mer+er 'et2ee#
Ba#3
4 I#"%rer
B%il( or '%5
O2# i#"%ra#&e
O6eratio#
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Bancassurance In India
BANCASSURANCE RE*ULATIONS IN INDIA
Bancassurance in India is a very new concept, but is fast gaining ground. 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. @ach of
the regulators has given out detailed guidelines for banks getting into insurance
sector. %ighlights of the guidelines are reproduced below+
RBI *UIDELINES
RBI guideline for banks entering into insurance sector provides threeoptions for
banks. They are+
17 ! bank can form a 0oi#t 8e#t%re with an insurance company for doing
bancassurance business. There will be ri"3 6arti&i6atio# in this model, i.e.4
through oint venture the bank can underwrite or perform the principal function
of insurance.
)7 Cor banks, which are not eligible for this oint;venture option, an i#8e"tme#t
o6tio#of up to /#> of the net worth of the bank or Rs.8# crores, whichever is
lower, is available. The bank can invest in the insurance company to provide
infrastructure and service support.
97 Cinally, any commercial bank will be allowed to undertake insurance business
as a &or6orate a+e#tof insurance companies. This will be on a fee basis with
#o-ri"3 6arti&i6atio#.
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IRDA *UIDELINES
!s per the recommendations of the alhotra &ommittee on Reforms in the
Insurance Sector, the Insurance Regulatory E $evelopment !uthority (IR$! !ct
/000 was passed by Indian =arliament. IR$! is constituted to regulate, promote and
ensure orderly growth of insurance and reinsurance business. !ccording to IR$!, a
private sector participant has to fulfill the following criteria for entry into insurance
sector+
(a inimum paid;up capital of Rs./## crores
(b Investment in policyholders< funds only in India
(c Restriction of international companies to
minority e?uity holding of "1>
The I#"%ra#&e Re+%lator5 a#( De8elo6me#t A%thorit5 :IRDA; +%i(eli#e"$or the 'a#&a""%ra#&e are
1;Chie$ I#"%ra#&e E
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Bancassurance In India
NEED AND SUCCESS OF BANCASSURANCE
In their natural and traditional roles and with their current skills, neither banks
nor insurance companies could effectively mount a bancassurance start;up alone.
Colla'oratio# i" the 3e5 to making this new channel work. The motive behind
bancassurance may differ from that of banker to that of an insurer.
NEED FOR BANKS
The motives behind banks selling insurance are >,ro(%&t Di8er"i$i&atio#!
and a source of >A((itio#al Fee-Ba"e( I#&ome!.
,ro(%&t Di8er"i$i&atio#Banks, without the e*ception of public sector banks
have become fle*ible, cost;conscious, competitive, customer;oriented and hi;
tech. Thanks to the innovations in the financial services, resulting in an
evolution of interconnected services, the movement towards O#e-Sto6
Fi#a#&ial S%6ermar3etis catching up. Banks today, are forced to offer wide
range of sophisticated products to their clients. The traditional products that the
banks offer are no longer sufficent, and there is an urgent need for product
diversification resulting in the need for Bancassurance.
A((itio#al Fee-Ba"e( I#&ome The opportunity to augment HFee-Ba"e(
I#&ome!is another alluring factor which has given impetus to the concept of
Bancassurance in India.
It is no longer possible for any financial Institution operating in global;sied
market to survive without additional sources of revenues. Banks today are finding
it hard to make money. @arlier banks used to make money from the interest
income4 mainly from the difference in interest rates on what they charged on
advances and those they paid on deposits. The net margin used to be the biggest
contributor to their bottom;line. -rowing market competition, however is weighing
down heavily on bank
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Bancassurance In India
NEED FOR INSURER
Cor insurance company it acts as a tool for increasing their Mar3et ,e#etratio#
and ,remi%m T%r#o8erJ
Sti$$ Com6etitio# !t present there are /8 life insurers and /2 general
insurers in India. The 7iberaliation of the economy resulted in the entry of a
number of private companies into the battlefield resulting in an urgent need to
outwit one another. @ven the 26;year old 7I& started feeling the heat of
competition. %ence to outwit each other and to stay a step ahead there was a
need for a new strategy in the form of Bancassurance.
Hi+h Co"t o$ A+e#t" Insurers have been turning in great numbers to
alternative modes of distribution because of the high costs they have paid for
agency services. These costs became too much of a burden for many insurers
compared to the returns they generate. %ence there was a need felt for
bancassurance as a Co"t-E$$e&ti8e Di"tri'%tio# channel.
R%ral ,e#etratio# Insurance industry has not been much successful in rural
penetration so far. %owever, Bancassurance could help bridge this gap. The
e*isting wide network of banks in rural areas can be utilised for selling
insurance products. %ence, there was need for bancassurance.
M%lti-Cha##el Di"tri'%tio# Insurers today are trying to gain entry into the
market through various distribution channels. !part from the traditional
agents, there was a need for a 2ell-'ala#&e(, alternative distribution channel.
Insurers started leveraging on multi;channel distribution. !nd, hence aroused
the need for Bancassurance in order to make the most of India5s large
population base and reach out to a worthwhile number of customers.
Tar+eti#+ Mi((le-I#&ome C%"tomer" )ver the last decade, life insurance
agents have sold fewer and larger policies to a more upscale client base.iddle;income customers, who comprise the '%l3 o$ 'a#3 &%"tomer", get
little attention from most life agents. By capitaliing on bank relationships,
insurers will recapture much of this under served market. %ence, to capture
the large database of bank
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Bancassurance In India
BANCASSURANCE .ENTURES MUST HA.E CLEAR
OBECTI.ES
I#"%rer" Ba#3"
Be ali+#e( 2ith +oo( ,e#etrate &lie#t 'a"e
,%'li& ima+e o$ 'a#3 F%rther 2ith more 6ro(%&t"
For+e relatio#"hi6 Le8era+e 6o"iti8e ima+e
Earlier i# &%"tomer!" li$e I#&rea"e &%"tomer lo5alt5
Lo2er a&?%i"itio# &o"t"
C%"tomer"
B%5 lo2er-&o"t" 6ro(%&t"
B%5 more 6ro(%&t" $rom a Si#+le "o%r&e
*et 'etter@ more e$$i&ie#t Ser8i&e
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Bancassurance In India
BENEFITS OF BANCASSURNCE
Bancassurance is an important tool in the hands of Bankers, Insurers and
&ustomers to ma*imie their benefits at the same time, as everybody is a winner in
this system.
The Ba#&a""%ra#&e Co#&e6t I" So /ell De"i+#e( That@
HEAD BANK /INS TAIL INSURER /INS
!nd If The &oin %ad ! Third Side Truly :e &an Say That The C%"tomer Al"o/i#"7 Thus, it is /i#-/i#situation for all.
Th%"@ The Be#e$it" O$ Ba#&a""%ra#&e Ca# Be Co#"i(ere( From The Follo2i#+
,oi#t O$ .ie2
17 Benefit To Banks
)7 Benefit To Insurers
97 Benefit To &ustomers.
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Bancassurance In India
BENEFITS TO BANKS
There Are Si+#i$i&a#t A(8a#ta+e" To Ba#3" ,arti&%larl5 I# The Li+ht
O$ The Cha#+i#+ I#tere"t S&e#ario O$ Ba#3i#+ I# I#(ia7 The5 Are
Fee-Ba"e( I#&ome Cor banks, Bancassurance would mean a maor gain.
Since interest rates have been falling and profit on off take of credit has been
low, all banks have been able to do is sustain themselves but not profit much.
%ence the banks today have shifted their focus from F%#(-'a"e( revenue
(loans E advances to Fee-'a"e(income. @nter bancassurance and fee based
income through hawking of risk products would be guaranteed, thus giving an
additional boost to the banks bottom line. E K /6 cr accounts L Rs./3,8## cr in commission
I#&rea"e( Ret%r# O# A""et" :ROA; )ne of the ways to increase R)!,
assuming a constant asset base, is through fee income. Banks that build fee
income can cover more of their operating e*penses. The sale of insurance
products builds fee income. Banks that effectively cross;sell financialproducts can leverage their distribution and processing capabilities for
profitable operating e*pense ratios.
I#&rea"e" Sta$$ ,ro(%&ti8it5 Bancassurance gives an opportunity to the
bank staff to harness their sales skills and adapt to the changing business
environment. Selling of insurance products provides bank employees with
new challenges and enhanced skills thus improving their productivity and
efficiency.
,ro$ita'ilit5 Bancassurance provides financial benefits in the form of
commissions, profits from new business, bank
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Bancassurance In India
E#ha#&e" C%"tomer Relatio#"hi6 Bancassurance results in high customer
relationship with the bank by providing more services. It seeks C%"tomer
Lo5alt5 by offering satisfactory and e*panded base for services. Selling
whole range of financial services to clients increases C%"tomer Rete#tio#7
Creati#+ A U#i8er"al Ba#3i#+ ,lat$orm + Bancassurance offers a good
opportunity to increase the bank
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Bancassurance In India
,ro8i(e" Com6etiti8e A(8a#ta+e =rovides &om6etiti8e A(8a#ta+e over
the non;bancassurers. %aving been accustomed to the customer
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Bancassurance In India
BENEFITS TO CUSTOMERS
A8aila'ilit5 O$ A Com6lete ,a&3a+e &ombined bank and insurance
products will find Com6lete Sol%tio# to the customers7 Banks and Insurance
companies are converging towards a model of global retail financialinstitution offering a wide array of products. It leads to the creation of O#e-
Sto6 Sho6where a customer can apply for mortgages, pensions, savings and
insurance products.
Re(%&e( Co"t" + Bancassurance gives the insurance company the benefit of
cost;effective distribution channel, the benefit ultimately passing on to the
customers in way of reduced premiums. The customer gains as the costs are
reduced.
*oo( %alit5 ,ro(%&t =roduct innovation and distribution activities are
directed towards the satisfaction of the needs of the customer. Since banks
can understand the needs of the customers in a better way, the customer gets a
good ?uality product. !lso, he gets the advantage of a &%"tomie(product as
per his need and re?uirements.
Time Sa8i#+" 4 Co#8e#ie#&e The customers can get risk coverage at bank
itself which saves time and adds to the customer
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Bancassurance In India
BANCASSURANCE A S/OT ANALYSIS
Banking and Insurance are very different businesses. The latter has a
greater risk and hence is a more capitalied one. oreover, the two have
different time horions, with life insurance in particular, focusing on thelong run. !lso Bankers and Insurers come from diametrically opposite
work cultures where the former are accustomed to ,%ll type of
environment; meaning dealing with walk in customers, the latter are
trained to go out and solicit customers; the so;called ,%"hmarketing
techni?ue.
%owever. @very coin has two sidesM similarly4 Bancassurance
enables banks and insurance companies to complement each other
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Bancassurance In India
STREN*THS
Ba#&a""%ra#&e S&ore" O8er The Other I#"%ra#&e Di"tri'%tio# Cha##el"
O# A&&o%#t O$ The Follo2i#+ Rea"o#"
Banks have&re(i'ilit5 established and enoy a wide network of branches evenin remotest areas.
Banks enoy 6ri(e o$ 6la&e in the hearts of people because of their long
presence and sustained image.
Banks understand r%ral 6"5&holo+5because of their incessant interaction with
the public and fle*ibility of approach.
Inspite of the hype created regarding total branch mechaniation (TB andfull computeriation of branches, this is mostly in metro and urban centers. The
rural and semi;urban branches still function using traditional ma#%al
o6eratio#systems.
The bankers have a branch network to make $a&t to $a&e &o#ta&t with the
customers and a great deal of trust over the customers.
Indian banks have built fairly intimate ties with customers by effectively
leveraging the Indian propensity of tr%"t i# 'a#3i#+. Such customer bases
offer an e*citing opportunity of reaching potential life insurance buyers atrelati8el5 lo2 &o"t7
!s banks understand customer
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Bancassurance In India
O,,ORTUNITIES
!lthough banks and insurance companies are yet to e*change their wedding
rings, Bancassurance is already in some form in India. Banks are selling personal
accident and baggage insurance for its credit card members, issued mortgage linked
insurance products like fire, motor or cattle insurance to their customers and
establishing face to face relationship with their customers by leveraging their
e*isting capabilities.
The O66ort%#itie" For Ba#&a""%ra#&e Ca# Be Di"&%""e( A" Belo2
In a country of 1 Billio# 6eo6le, sky is the limit for insurance products. !fter
discounting the population below poverty line the middle market segment is the
second largest in the world after &hina. The insurance companies worldwide
are eyeing on this, why not tap this market ourselves.
There is a vast untapped potential waiting to be mined particularly for li$e
i#"%ra#&e 6ro(%&t". There are more than Gillion lives waiting to be given
a life cover.
There are about ) illion households waiting to be approached for a
ho%"ehol(er" i#"%ra#&epolicy.
illions of people traveling in and out of India can be tapped for O8er"ea"
Me(i&laimand Tra8el I#"%ra#&epolicies.
In urban and metro areas, where affluent customers clamor for many services
like lockers and safe deposit systems, there is a good opportunity to market
many property related general insurance policies like $ire i#"%ra#&e@ '%r+lar5
i#"%ra#&e a#( me(i-&are i#"%ra#&e.
&ommercial entities and corporates enoying various banking facilities may be
advised to opt for >Ke5 ,er"o#!insurance to cover their downside risk.
Banks in their normal course of functions lend finance in the form of loans for
cars, or for buying a house to clients. They can &ro"" "ell insurance products
and combine it as a package.
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Bancassurance In India
THREATS
No#-Re"6o#"e From The Tar+et *ro%6" !nother possible threat may
come from non;response from the target customers. This happened in USAin
1G"after the enactment of St -ermaine !ct. ! rush of oint ventures took
place between banks and insurance companies and all these failed due to the
non;response from the target customers.
H%ma# Re"o%r&e Challe#+e" Success in bancassurance venture re?uires a
change in mindset. Though we have a large talent pool, the inability to sell
comple* insurance products on the part of bank professionals and their
reluctance to learn can be severe setback. There has to be a change in the
thinking, approach and work culture.
I#ter$ere#&e /ith Ba#3!" ,ro(%&t" Insurance in India is perceived more asa "a8i#+" o6tio#than providing risk cover. %ence, there is a feeling among
bank employees that it could eat into the sales of regular bank saving
products. !lso, selling of investment cum risk oriented products through
banks may adversely affect the FD 6ort$olioof the bank.
O66o"i#+ Ri"3 Ma#a+eme#t C%lt%re" The downside of mi*ing banking
and insurance activities is likely to result in a clash between opposing risk
management cultures i.e. in banking, risk management is dominated by
concerns about asset ?uality, while the principal source of concern ininsurance is behavior of liabilities. -iven such different management
approaches, coming together of banking and insurance may increase
operational risk at both the establishments.
Re6%tatio#al Co#ta+io# There would be a problem of Re6%tatio#al
Co#ta+io#! i.e. loss of market confidence towards one in a conglomerate
leading to loss of confidence on the other because of identical brand
recognition, similar management and consolidated financial reporting etc.
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Bancassurance In India
INDIAN SCENARIO
Immediately after the opening up of the Indian insurance sector from the
hold of the government insurance companies, the activity has fueled up. :hat
remained as a strong hold for the government owned insurance companies is
immediately under threat. In less than one year, private insurance companies are
eager to board the bandwagon of Bancassurance. @yeing the lucrative market of
insurance in India maority of banks from both public and private sector are forming
alliances with either the sector insurance companies or with new private insurers to
take advantage of huge untapped potential.
Some O$ The Ba#&a""%ra#&e Tie-%6" i# I#(ia Are
LIFE INSURANCE
COM,ANY
BANKIN* ,ARTNER
%$C& Standard 7ife Insurance &o. 7td. nion Bank )f India, Indian Bank, %$C&
Bank.
I&I&I =rudential 7ife Insurance &o 7td. 7ord Orishna Bank, I&I&I Bank, Bank of
India, &itibank, !llahabad Bank, Cederal
Bank, South Indian Bank, and =unab and
aharashtra &o;operative Bank
Birla Sun 7ife Insurance &o. 7td. Bank of Raasthan, !ndhra Bank, Bank of
uscat, $evelopment &redit Bank,
$eutsche Bank and &atholic Syrian Bank,
Oarur Nysya Bank 7td
SBI 7ife et 7ife India Insurance &o.
7td.
SBI, B'= =aribas
Oarnataka Bank, $hanalakshmi Bank and
AEO Bank
!NIN! life Insurance &anara Bank, 7akshmi Nilas Bank,
!merican @*press Bank and !B' !R)
Bank
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Bancassurance In India
NON-LIFE INSURANCE
COM,ANY
BANKIN* ,ARTNER
Baa !llian -eneral Insurance &o.
7td.
Oarur Nysya Bank and 7ord Orishna Bank,
=unab E Sind Bank
'ational Insurance &o. 7td. &ity nion Bank, Niaya Bank
Royal Sundaram -eneral Insurance
&ompany
Standard &hartered Bank, !B' !R)
Bank, &itibank, !me* and Repco Bank.
nited India Insurance &o. 7td. South Indian Bank, =unab 'ational Bank,!ndhra Bank, $hanalakshmi Bank, Indian
Bank
'ew India !ssurance &o 7td. nion Bank )f India, SBI, &orporation
Bank, and nited :estern Bank.
"6
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Bancassurance In India
THE FUTURE OF BANCASSURANCE
!lthough Bancassurance ventures in 7atin !merica and !sia have
followed different paths, they share the same obectives and re?uirements
for success. !ll recognie the value of the bank
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Bancassurance In India
SCO,E FOR BANCASSURANCE IN INDIA
By now, it has become clear that as economy grows it not only
demands stronger and lively financial sector but also necessitates to
provide with more sophisticated and variety of financial and bankingproducts and services. Orueger ("##2 pointed out that the history of the
'orth !merica is a case in reference of one of financial growth and
deepening in tandem with economic growth. !s India is being considered
one of the developing countries among the @merging market economies,
financial sector has also developed much vibrant with the financial
reforms.
Significantly, Indian financial system has recorded an average
growth of over 6.8 per cent for the last four years, with macroeconomic
and financial stability (RBI, "##1 and indications are that it may grow
at even improved rate in the near future provided there is good
monsoon. @*perience also showed that economic growth had
powerfully supported the e*pansion of middle income class in most of
the !sian countries, and now it is the turn of India. @*perience reveals
that at the early growing stage of the economy the primary financial
needs are met by the banking system and thereafter as the economy
moves on to advanced pedestal, the need for the other non;bankingfinancial products including insurance, derivatives, etc., were strongly
felt. oreover, as India has already more than "## million middle class
populations coupled with vast banking network with largest depositor
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Bancassurance In India
UESTIONNAIRS
:1; /HAT IS BANCASSURANCEJ
A#"7 Bancassurance is the distribution of insurance products through a bank5s own
distribution channels. Bancassurance offers convenience, risk diversion and financial
advisory services with the availability of different product ranges for its bank clientsaccording to their needs.
:); HO/ DOES BANCASSURANCE /ORKJ
A#"7 The success of Bancassurance has been limited to life insurance mostly,
primarily because of the matching of banking products with the personal financial
needs of individuals and families.
:9; /HAT ARE THE CHALLEN*ES FACE BY THE BANKSJ
A#"7 =rivate sector insurance firms are finding Hchange management< in the publicsector, a maor challenge.
:=; /HAT ARE THE ,RODUCT OFFERS BY BANKJ
A#"7 =roduct offered by bank are as follows+
(/SBI 7ife Q nit =lus &hild =lan
("SBI 7ife Q 7ifelong pensions
(3SBI 7ife Q Swadhan
(2SBI 7ife Q !nnuity
:; /HAT IS THE MAIN MOTI.E OF ,OLICYHOLDRS FOR TAKIN* ANINSURANCE ,OLICYJ
A#"7 There was mi*ed response from the customer. The reason like saving ,
security, brand image of bank, brand image of insurance.
:; DO YOU THINK BANCASSURANCE HAS A *OOD FUTUREJ
A#"7 es. Bancassurance has a good future because there is an immense potential
for the insurance industry in India.
:; /HY SHOULD BANKS ENTER INSURANCEJ
A#"7 There are several reasons why banks should seriously considerBancassurance, the most important of which is increasedRet%r# o# A""et" :ROA;.
)ne of the best ways to increase R)!, assuming a constant asset base, is through
fee income. Banks that effectively &ro""-"ell $i#a#&ial 6ro(%&t"can leverage their
distribution and processing capabilities for profitable operating e*pense ratios.
3/
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Bancassurance In India
CONCLUSION
In India the bancassurance model is still in its #a"&e#t "ta+e", but
the tremendous growth and acceptability in the last three years reflects
+ree# 6a"t%re i# $%t%re7 :ith almost half of the population likely to bein the 2a+e ear#er 'ra&3et '5 )1, there is every reason to be
o6timi"ti&that bancassurance in India will play a long inning.
$uring the proect, I came to know the role that Bancassurance
plays in the Banking E Insurance sector. Before I started this proect, I
only had a brief idea of this concept, but during my proect due to
interaction with several Bankers and Insurers, I realied what this concept
actually meant. !lso interaction with several customers made me realiethe present position of Bancassurance. . I can now firmly and proudly say
that every obective that I had laid in mind for this =roect is met to its
fullest e*tent.
I am also confident that though Bancassurance is not being utilied
to its full potential, it surely has a bright future. :e are at the threshold of
a significant change in the way insurance in the country is poised to be in
the days to come and we would be catalysts of this change, as Insurance
Sector will take greater leaps in near future. Bancassurance will definitely
play a defining role as an alternative distribution channel and will &ha#+e
the 2a5 i#"%ra#&e i" "ol( i# I#(ia. Riding the wave of convergence,
banks will ideally be positioned to capture consumer data and hence,
provide the best of services to the customers.
The bridge has been reached and many are beginning to walk those
cautious steps across it. Bancassurance in India has ust taken a flying
start. It has a long way to goMM after all The SKY IS THE LIMIT
3"
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Bancassurance In India
BIBLIO*RA,HY
2227ir(a7&om
2227h($&i#"%ra#&e7&om
I#"%ra#&e C%"tomer Ser8i&e K7B7S K%mar7