Bancassurance in India
- To improve the channels through which insurance policies are sold/marketed 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 the services of insurance by creating a competitive atmosphere among private insurance companies in the market
The IRDA has very recently drafted guidelines to promote open architecture in bancassurance. Currently a bank has a tie-up with only one life insurer and one non-life insurer. But in the new model the banks necessarily have to have multiple tie-ups. The country is divided into zones and every bank has to choose multiple insurers within the zones. With this the customer will have a wider range of insurance products offered by different insurers. It will also lead to a deeper penetration in the selling of insurance products.
- It encourages customers of banks to purchase insurance policies and further helps in building better relationship with the bank.
- The people who are unaware of and/or are not in reach of insurance policies can be benefitted through widely distributed banking networks and better marketing channels of banks.
- Increase in number of providers means increase in competition and hence people can expect better premium rates and better services from bancassurance as compared to traditional insurance companies.
- Data management of an individual customer’s identity and contact details may result in the insurance company utilizing the details to market their products, thus compromising on data security.
- There is a possibility of conflict of interest between the other products of bank and insurance policies (like money back policy). This could confuse the customer regarding where he has to invest.
- Better approach and services provided by banks to customer is a hope rather than a fact. This is because many banks in India are known for their bad customer service and this fact turns worse when they are responsible to sell insurance products. Work nature to market insurance products require submissive attitude, which is a point that has to be worked on by many banks in India.
- SBI life insurance Company
- LIC is tied up with Vijaya bank, Oriental bank of commerce, Corporation bank
- ICICI Lombard
- Barclays – MetLife India
- Axis bank – MetLife India