Bonding with Banks 

There is tremendous scope for innovation given the large number of banking customers. With banks selling insurance products of more than one insurance company, options are also in abundance with the scope for customised product offerings. For instance, loan secure products which give the customer the protection to from paying financial liabilitiesin case something unfortunate happens 

Vishal Sharma, Executive Vice President, Bancassurance – Retail Business, HDFC ERGO General Insurance Company

 

The privatisation of the insurance industry in the 2000s gave an overall boost to the insurance sector. However, till late 2012, banks were allowed to sell insurance products of just one insurancecompany, in each category. Thereafter, with the new regulation, banks were allowed to adopt the open architecture model wherein they could sell insurance products of more than one insurance company as a corporate agent.

 

This gave boost to the Bancassurance channel and today consumers are increasingly purchasing insurance products from banks. With this, banks and similar corporate agents now hold a market share of 12% as per the IRDAI data as of FY18 in non-life industry. 

 

An Advantage for the Customer:
Bancassurance is essentially a partnership between a bank and an insurance company, whereby the insurance products are sold to the banking customers.It benefitsthecustomers in multiple ways making it an easy and trust-worthy channel.From the point of view of a customer, banks offer several advantages, like:

 

One-Stop-Shop for all financial needs: An individual gets the advantage of getting all their financial needs addressed under a single roof with the bank. In addition to its own savings products, banks also offer a bouquet of insurance covers to fulfil the financial requirements of an individual. Moreover, it becomes convenient for customers to transact, given that their premium payments as well as claims settlements will be linked to their existing bank account.

 

Customisation of products:

There is tremendous scope for innovation given the large number of banking customers. With banks selling insurance products of more than one insurance company, options are also in abundance with the scope for customised product offerings. For instance, loan secure products which give the customer the protection to from paying financial liabilitiesin case something unfortunate happens. 

Technology to easing transactions: Buying insurance through a bank has become a breeze, thanks to the advent of technology. By linking your internet banking account to your existing policy, you will be promptly reminded of renewal payments across platforms, like net banking, renewal on SMS. Moreover, for those who prefer the brick-and-mortar way, there is always an option to step into the nearest ATM to renew policies. 

 

Easy accessibility: Bancassurance has repeatedly proved to be cost-effective and more productive than a traditional distribution channel for insurers, more so because insurers do not have the scale and reach in lowly populated areas. This is where banks step in, reaching out to these consumers offering insurance products and information through their staff.

 

Road to a Financially Secure India:
The Indian banking system is adopting an integrated approach, with this, there is a need to train banking employees so that insurance policies are not miss-sold. In addition, under the open architecture model of Bancassurance where they can sell products of up to three insurers – each in life and non-life, bank employees must be well-versed with the nuances of product offerings of different insurers. 

 

The reach of insurance is still low and stood at 3.69 per cent in 2017.With all that said, going by the word of the experts in the industry, in the long term almost 70% of insurance business would come in from banks alone. Therefore, banks need to tread with caution and ensure the customers trust grows stronger, which will lead to a financial safe and secure India.

 


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