Bancassurance(2)

8/6/2019 Bancassurance(2)

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BANCASSURANCEBANCASSURANCESales and Distribution Channel

Group No.3

Arpita Tripathi

Heena Agarwal

Amit Sinha

Ravi Chauhan

Ankur Gupta


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BANCASSURANCEBANCASSURANCEAccording to IRDA, bancassurance refers to banksacting as corporate agents for insurers to distribute

insurance products.

Accordingly, here bancassurance is defined to

mean banks dealing in insurance products of both

life and non- life type in any forms

In simple terms we can say Bancassurance tries to

exploit synergies between both the insurance

company and banks.


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AGENDAAGENDA

y Economics of Bancassurance

y Stages in Bancassurance sales

y

Need for Bancassurancey Regulator guidelines

y Important Bancassurance tie up in INDIA

y

The way ahead


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Economics of BancassuranceEconomics of Bancassurance

y Economics is the social science that studiesthe production, distribution andconsumption of goods and services.

y Bancassurance.y Production product development, product

procurement or product bundlingy Distribution marketing and distribution

channels

y Consumption purchase of service(insurance) out of savings or borrowedfunds. This leads to insurance sales by banks.


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Need for BancassuranceNeed for Bancassurance

y Banks dwindling core earnings

y Interest income

Retail lending- personal loans, credit cards,housing loans

Commercial / corporate

y Investment income

y Fee incomey Other economic factors

Risk based capital


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Bancassurance in INDIABancassurance in INDIA

In our country the banking and the

insurance sectors are regulated by two

different entity. They are :-

y Banking is fully governed by RBI &

y Insurance sector is by IRDA


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Guidelines given by RBI:Guidelines given by RBI:--

y Any commercial bank will be allowed toundertake insurance business as the agentof insurance companies & this will be on feebasis with no-risk participation.

y The joint ventures will be allowed forfinancial strong banks wishing to undertakeinsurance business with risk participation.

y An investment option of:-i) Up to 10% of the net worth of the bank or

ii) Rs 50 crores. Whichever is lower is

available.


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Guidelines by IRDA:Guidelines by IRDA:--

y Chief Insurance Executive- Each bank thatsells insurance must have a chief InsuranceExecutive to handle all the insurance matters

and activities.y Mandatory training

y Corporate agents- Commercial banksincluding co-operative banks and RRBs may

become corporate agents for one insurancecompany.

y Bank cannot become insurance Brokers.


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Growth potential of this channels:Growth potential of this channels:--

y From an unknown channel when the insurancesector opened up in INDIA about 10 years ago,Bancassurance has now secured its position asa key distribution platform, and is widelyattracting the attention of banks, insurers,regulators and policy planners.

y INDIA is known for its large variety of banksand extensive branch networks , and over thelast few years these branches are increasinglybeing utilized to serve the insurance needs ofover 400 million bank customers.


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Bancassurance TodayBancassurance Today

Source IRDA


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Important Bancassurance tieImportant Bancassurance tie--up inup in

INDIAINDIA1. LIC It has tie up with following banks. They area) Corporation bank

b) Indian overseas bank

c) Centurion bank

d) Sahara District Central Co-operative banke) Janta Urban Co-operative bank

f) Vijaya bank

g) OBC

2. SBI- Life Insurance co. The SBI life insurance coltd is starting & running its Insurance business withthe help of S.B.I.


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Remuneration paid by companies:Remuneration paid by companies:--

y To raise productivity and lower cost in todaycompetitive economic environment ,organization are increasingly settingcompensation objectives based on a pay-for-

performance standard.y Banks works like Corporate Agents, thus the

commission is similar to that of a corporateagent.

y The designer of the remuneration packageshould seek to develop a package , which helpseach one in the distribution channels to feel thatthey get fair reward for there contribution.


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The Way aheadThe Way ahead

y Indian market is in its youthful stage forBancassurance immense scope

y Innovation in product development and sales

techniques.y Creative tie-ups based on commitment to

the cause; not purely on commissionstructure.

y Move towards risk taking.y Reverse architecture- insurance companies

acquiring banks.


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Bancassurance(2)