Bancassurance: An overview

The purpose of distribution channel is to make the right quantity of the right product available at the right place and at the right time. Distribution is supposed to create time, place, and possession utility. A distribution channel is expected to perform the selling function of moving through the stages of awareness, interest, desire and action. Therefore, distribution channels need to be selected very carefully because every product requires a unique and different distributional channel, which in turn is determined, by the skill expertise and the cost base of the chosen distribution method. Appropriate distribution channels are needed through which the insurance companies can get the maximum benefits n serves the customers in manifold ways.

The time has come for the industry to gradually move from traditional individual agents towards new distributional channel with a paradigm shift in creating awareness and not just selling products. The need of the hour is Multi-channel distribution. Many Financial Consultancy Firms, Share Broking Firms, Companies working as Investment advisers have taken up corporate agencies and sell insurance to the existing customers and spread their insurance selling to new customers through the referrals given by their clientele. Another significant thing that is happening is the addition of Banks as corporate agents and marketing insurance through the banks

[...] Another area that could be of interest to bankers to sell insurance is exploiting the corporate customers and tying up for insurance of the employees of corporate clients, which would be an avenue with easy access. In most cases of corporate accounts, banks take up the activity of salary disbursement of employees, and offering personal loan facilities. Here, gives an opportunity to provide insurance cover as well Thus, The Major Opportunities In Bancassurance Can Be Jotted As Follows: 1. Finance and Repayment Products: These products help in covering the loss to the financial Institutes, who grant loans and credit to the individuals, in case of disability or death of the borrower. [...]

[...] The policy is an annually renewable one and terminates on the customer reaching the maximum age. These products are priced very affordably, and therefore, offer pure protection only, and there would be no returns on maturity. Usually, the products have a fixed start date every year, and therefore, those joining in the middle pay proportionate premiums in the first year. Customers receive a certificate of insurance/acknowledgement while the bank is the master policyholder. An attempt has also been made in the industry to provide the popular recurring deposit in the bank with the value addition of life insurance cover. [...]

[...] This project stresses on “Bancassurance” as an alternative channel of distribution, which is all set to change the Insurance Scenario. Introduction to Bancassurance With the evolution of interconnected financial services, more and more financial institutions are forced to offer wide range of sophisticated products to their clients. It is no longer possible for any financial institution operating in global-sized market to survive without additional sources of revenues. This has prompted two big classes of financial institutions to combine their strengths and create a new means of marketing their products and services. [...]