Bancassurance i.e. bank + assurance refers to banks selling the insurance product. The term “Bancassurance” first appeared in France in 1980 to define the sale of insurance product via banks’ distribution channel. It is the relationship between a bank and an insurance company. The insurance company uses the bank sales channel with a view to selling insurance products. It symbolizes the convergence of banking and insurance. Bancassurance in India is a new concept and that is gaining popularity amongst the customers. It originated in India in the year 2000 when the government issued notification under Banking Regulation Act that allowed Indian banks to do insurance distribution. According to the Insurance Regulatory & Development Authority (IRDA), “Bancassurance” refers to banks acting as corporate agents for insurers to distribute insurance products (life or non-life). In our country, RBI regulates banking sector and Insurance sector is governed by IRDA. As bancassurance is the combination of two sectors, so these sectors come under the ambit of both the regulators. The RBI has given certain guidelines for banks entering into the insurance sector. Different banks of our country have entered into Bancassurance Business with the object of offering a variety of services and products to its customers. The insurance company LIC of India has tied up with many banks like Indian Overseas Bank, Vijaya Bank, Oriental Bank of Commerce and many more. SBI Life Insurance Company is a predominant player in bancassurance. The products under bancassurance are – bank loan linked products (e.g. educational loan, micro finance) and deposit-linked products (viz., personal accident cover, health care). Various models like referral, corporate agency, fully integrated financial service are used by bank for bancassurance. Bancassurance provides various advantages to banks and insurers. It also offers benefits to the end-user customers in terms of simplicity and cost. It has many other benefits also. On the flip side, bancassurance business faces some challenges too. There is possibility of conflict of interest between the other products of bank and insurance policies. In this backdrop, an attempt has been made in this paper to discuss about challenges and opportunities of “Bancassurance” in India.
Conflict, Convergence, Corporate Agents, Distribution Channel, End-user customers, Insurance Product, Micro Finance
