Page 23 - Life Insurance Today FEBRUARY 2016
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The corresponding increase was 15.62% and 6.35%
in 2013-14. In non-life business, Gross direct
premium was 5.57% in 2006-07 as against 6.61%
in 2013-14.
In FY 2015, the bancassurance business for insurers
with bank partners had increased. The sector gets
55%-65% of business from banks and those with
bank promoters get more than half of their
business from banks.
As an insurance channel, bancassurance can take different Currently, banks are allowed to tie-up as a
forms based on the banking system regulations and culture corporate agent with one life, one non-life and one
of each country. In developed countries, insurers leverage standalone health insurer, as a corporate agent.
the reach and brand image of banks to increase the IRDA has proposed an open architecture policy whereby
customer base and cross-sell insurance products. an insurer can have tie-ups with up to three insurers.
But in developing countries, insurers leverage the banking According to the RBI, majority of the household savings are
infrastructure to reach the rural population. In Europe, found to be in bank deposits. This is a reflection of the
bancassurance holds one-third of the total market share. customer trust and loyalty in banks in India. While for
There are significant growth opportunities in emerging banks, it is a means of generating additional fee income,
European countries such as Turkey and Poland. for insurance companies, it is a tool for increasing their
market penetration and premium and also cost saving as
the products are distributed through the huge branch
network of the banks.
In Asia-Pacific, bancassurance is still an emerging channel In the process, customers can benefit from the reduced
and it is expected to grow faster due to improved customer price, high quality product and delivery. Further,
service and entrance of large foreign insurance players in Bancassurance in India has lot of scope in terms of mainly
the market. The presence of large foreign insurance players favourable demographic dividend whereby, the median
has fuelled the bancassurance growth in Latin America.In age of an individual is expected to be 29 years by 2020,
contrast, bancassurance is still in a nascent phase in the with 900 million of the population falling in the age group
U.S. with only 2% market share. of 15-60 years by 2025. Further, the natural calamities
occurring in the country such as cyclone, tsunami and
This is mainly due to the separation between insurance heavy rains are likely to create the demand for taking
providers and banks. Even though the maturity varies insurance policies.
across regions, insurers are expected to invest on
bancassurance to leverage the customer reach and trust Also, RBI's initiatives towards financial inclusion to bring the
of bank network. (Bancassurance growth to be fostered by unbanked and under banked into the insurance coverage,
emerging markets, Trimetric Research, April 2013). increased FDI cap and changing regulatory norms are
expected to see more future for bancassurance in India..
Bancassurance concept originated in Europe and gained As it is, Government of India data show that the total
momentum in India only after 2000. Under channel-wise number of accounts opened under PMJDY (Prime Minister
individual and group new business performance, in terms Jan Dhan Yojana scheme, a drive towards financial
of percentage of premium, bancassurance channel alone inclusion) stood at Rs.18.96 Crore as on October 21st 2015
contributed to 5.57% and 2.33% respectively in 2006-07. with a total balance of Rs.25,899 crore.
"So many books, so little time."
Life Insurance Today February 2016 23
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