A study on bancassurance

Bancassurance has been in existence for almost a decade now in India. LIC of India the largest PSU insurance giant has tied up with many public sector banks for distribution of its products through their branch network. The private sector insurance companies have big hopes on bancassurance channel as it is the least cost alternate distribution channel for them. The number of policies and the first premium income from bancassurance is growing very fast in the last five years making it an opportunity for both insurers and banks. Most of the banks have entered the business recently after witnessing the success of their counterparts. Some banks are setting up exclusive distribution centers for insurance products. At present, banks cannot sell policies of more than one insurer but IRDA proposes to change this and allow banks to sell policies of multiple insurers. This may push up business volumes and compensate for the cut in commissions.