Bancassurance

Bancassurance in India: Issues & Implications

By

Dr. Amit Kumar Dwivedi

Amity Business School

Amity University

Jaipur

Punit Kumar Dwivedi

Lecturer (Finance)

Vidya Dayini P.G. College

Santoshnagar, Hyderabad

Introduction: - As per the investigation made by Graham Morris the opening of insurance industry to private sector participation in December1990 has led to the entry of 20 new players, with 12 in life Insurance Sector & 8 in the non-life insurance sector.  Almost without exception these companies are seeking to utilize multiple distribution channels such as –

1) Traditional Agencies

2) Bancassurance

3) Brokers &

4) Direct Marketing

Bancassurance is seen by many to be a significant or even the primary channel.

The banking & Insurance industry have charged rapidly in the changing and challenging economic environment through out the globe.  In the competitive & open environment each & every one wants to do better than others.  And they know that if they are not able to provide better service the won't survive in Industry.  Insurance companies are also to be competitive by cutting cost & serving in the better way to customers.  Now the time has come to choose and adopt appropriate distribution channel.

The insurance Industry has indeed awakened to deregulated environment in which several private companies have partnered with multinational insurance Insurance companies.  Despite a billion of population, India still has a low insurance percentage of 1.95 and it is in 51st   position in world.  Despite of the fact that India boosts a saving rate around 25%, less than 5% is spending on insurance.  (Sources).

To streamline the saving in to insurance Bancassurance is the best channel to tackle four challenges facing the insurance industry,

* Product innovation

* Distribution

* Customer Service &

* Investments

Definition: The Bancassurance is the distribution of insurance products through the bank's distribution channels.  It is a...