Bancassurance: A step towards financial inclusion

Bancassurance is the coming together of insurance companies and banks to sell the insurance products with the main objective of increasing insurance penetration by catering to the existing customers of the banks. The banks benefit by getting the fees in return from the insurance companies whose products it is selling. This mode of selling insurance has been quite successful in bringing household savings to the financial sector in the developed economies though its success rate has been quite low in emerging economies including India. Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the immense growth potential of the insurance sector. According to Swiss Re, India ranked 10th among 88 countries in the life insurance business, with a share of 2.24 per cent during FY15–16 and 18th among 88 countries in the non-life premium income, with a share of 0.75 per cent in FY15–16. The performance of the insurance sector can be universally assessed with reference to two parameters; insurance penetration and insurance density. The study focuses on the trends in insurance penetration and insurance density in India in comparison to the international level.