Bancassurance
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Bancassurance is the distribution of insurance products through banks to leverage their large customer bases. It originated in Europe and has seen more development in Asia, particularly Singapore, Taiwan, and Hong Kong. In India, banks were permitted to enter insurance in 2002 and bancassurance is regulated by both the RBI and IRDA. Bancassurance provides benefits to all parties by offering customers convenient one-stop shopping and banks and insurers new revenue streams and market penetration. Major Indian bancassurance partnerships include SBI Life, LIC, ICICI Lombard, and Axis-MetLife.
Bancassurance
- 2. INTRODUCTION BANCASSURANCE IS THE CONVERGENCE OF THE BANKING AND INSURANCE. IT WAS DEVELOPED IN EUROPE. IN ASIA SINGAPORE, TAIWAN AND HONG KONG ARE AHEAD IN BANCASSURANCE , WITH INDIA AND CHINA TAKING TENTATIVE STEPS TOWARDS IT.
- 3. WHAT IS BANCASSURANCE DISTRIBUTION OF INSURANCE PRODUCTS THROUGH BANKS DISTRIBUTION CHANNEL. IT IS BASICALLY SELLING INSURANCE PRODUCTS AND SERVICES BY LEVRAGING THE VAST CUSTOMER BASE OF A BANK AND FULFILLS THE BANKING AND INSURANCE NEEDS OF THE CUSTOMERS AT THE SAME TIME.
- 4. BANCASSURANCE IN INDIA IN THE YEAR 2002 THE BANKS OF INDIA WERE PERMITTED TO DO INSURANCE BUSINESS FOR THE FIRST TIME. IT WAS REGULATED BY BOTH RBI AND IRDA AS IT IS COMBINATION OF BANK AND INSURANCE.
- 5. NEED OF BANCASSURANCE IN INDIA TO IMPROVE THE CHANNELS THROUGH WHICH INSURANCE POLICY ARE SOLD/MARKED SO AS TO MAKE THEM REACH THE HANDS OF COMMON MAN TO WIDEN THE AREA OF WORKING OF BANKING SECTOR HAVING A NETWORK THAT IS SPREAD WIDELY IN EVERY PART OF THE NATION. TO IMPROVE SERVICES OF INSURANCE BY CREATING A COMPITATIVE ATMOSHPHERE AMONG PRIVATE INSURANCE COMPANIES IN MARKET
- 6. RBI GUIDELINE FOR BANCASSURANCE JOINT VENTURE WILL BE ALLOWED FOR FINANCIALLY STRONG BANKS WISHING TO UNDERTAKE INSURANCE BUSINESS WITH RISK PARTICIPATION. FOR BANKS WHICH ARE NOT ELIGIBLE FOR THIS JOINT VENTURE OPTION, AN INVESTMENT OPTION OF UP TO 10% OF THE NET WORTH OF THE BANK OR Rs. 50 CRORE, WHICH EVER IS LOWER, IS AVALIABLE. ANY COMMERCIAL BANK WILL BE ALLOWED TO UNDERTAKE INSURE BUSINESS AS AGENT OF INSURANCE COMPANIES. THIS WILL BE A FEE BASIS WITH NO RISK PARTICIPATION.
- 7. IRDA GUIDELINE FOR BANCASSURANCE EACH BANK THAT SELLS INSURANCE MUST HAVE A CHIEF INSURANCE EXECUTIVE TO HANDLE ALL THE INSURANCE ACTIVITIES; ALL THE PEOPLE INVOLVED IN SELLING SHOULD UNDER-GO MANDATORY TRAINING AT AN INSTITUTE ACCREDITED BY IRDA AND PASS THE EXAMINATION CONDUTED BY THE AUTHORITY; COMMERCIAL BANKS MAY BECOME THE CORPORATE AGENTS FOR ONE INSURANCE COMPANY. BANKS CANNOT BECOME INSURER BROKER.
- 8. ADVANTAGE FOR THE BANKS REVENUE DIVERSIFICATION SATISFACTION OF MORE FINANCIAL NEEDS UNDER THE SAME ROOF CUSTOMER RETENTION-INCREASE IN CUSTOMER LOYALITY MORE PROFITABLE RESOURCE UTILIZATION ENRICHED WORK ENVIORMENT ESTABLISH SALES ORIENTED CULTURE
- 9. ADVANTAGE FOR THE INSURANCE COMPANIES REVENUE AND CHANNEL DIVERSIFICATION QUALITY CUSTOMER ACCESS QUICKER GEOGRAPHICAL REACH CREATION OF BRAND EQUITY INCRESE IN VOLUME AND PROFIT IMPROVED BRAND EQUITY
- 10. ADVANTAGE FOR THE CUSTOMER ENHANCED CONVENIENCE ONE STOP SHOPPING FOR ALL FINANCIAL SERVICES INNOVATIVE AND BETTER PRODUCT RANGES MORE CREDIBLE SOLUTION
- 11. BANCASSURANCE COMPANIES SBI LIFE INSURANCE COMPANIES LIC IS TIED UP WITH VIJAY BANK, ORIENTAL BANK OF COMMERCE AND CORPORATION BANK ICICI LOMBARD AXIS BANK METLIFE INDIA
- 12. CONCLUSION FOR BANK IT JUST ACTS AS A MEANS OF PRODUCT DIVERSIFICATION AND ADDITIONAL FEE INCOME; FOR INSURANCE IT ACTS AS A TOOL FOR INCREASING THEIR MARKET PENETRATION AND PREMIUM TURNOVER FOR CUSTOMER IT ACT AS A BONAZA IN TERMS OF REDUCED PRICE, HIGH QUALITY PRODUCTS AND DELIVERY TO DOORSTEPS SO EVERYBODY IS WINNER HERE