Bancassurance: All you need to know about
Bancassurance is a relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank’s customers. In this partnership, bank staff and tellers become the point of sale and point of contact for the customer. Bank staff are advised and supported by the insurance company through wholesale product information, marketing campaigns and sales training. The bank and the insurance company share the commission. Insurance policies are processed and administered by the insurance company.
Bancassurance एक बैंक और एक बीमा कंपनी के बीच का संबंध है जिसका उद्देश्य बैंक के ग्राहकों को बीमा उत्पाद या बीमा लाभ प्रदान करना है। इस साझेदारी में, बैंक कर्मचारी और टेलर ग्राहक की बिक्री और संपर्क के बिंदु बन जाते हैं। बैंक स्टाफ को थोक उत्पाद जानकारी, विपणन अभियान और बिक्री प्रशिक्षण के माध्यम से बीमा कंपनी द्वारा सलाह और समर्थन दिया जाता है। बैंक और बीमा कंपनी कमीशन साझा करते हैं। बीमा पॉलिसियों को बीमा कंपनी द्वारा संसाधित और प्रशासित किया जाता है।
Advantages of Bancassurance:
The following factors have mainly led to success of bancassurance
- Pressure on banks’ profit margins. Bancassurance offers another area of profitability to banks with little or no capital outlay. A small capital outlay in turn means a high return on equity.
- A desire to provide one-stop customer service. Today, convenience is a major issue in managing a person’s day to day activities. A bank, which is able to market insurance products, has a competitive edge over its competitors. It can provide complete financial planning services to its customers under one roof.
- Opportunities for sophisticated product offerings.
- Opportunities for greater customer lifecycle management.
- Diversify and grow revenue base from existing relationships.
- Diversify risks by tapping another area of profitability.
- The realisation that insurance is a necessary consumer need. Banks can use their large base of existing customers to sell insurance products.
- Bank aims to increase percentage of non-interest fee income
- Cost effective use of premises
Bancassurance in India
Reserve Bank of India (RBI) has recognized “bancassurance” wherein banks are allowed to provide physical infrastructure within their select branch premises to insurance companies for selling their insurance products to the banks’ customers with adequate disclosure and transparency, and in turn earn referral fees on the basis of premia collected. This would utilize the resources in the banking sector in a more profitable manner.
India could take leadership position in bancassurance all over the world
Government of India Notification dated August 3, 2000, specified ‘Insurance’ as a permissible form of business that could be undertaken by banks under Section 6(1)(o) of the Banking Regulation Act, 1949. Then onwards, banks are allowed to enter the insurance business as per the guidelines and after obtaining prior approval of Reserve Bank of India.
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