- Bancassurance is a French term which means a partnership between Life Insurance Company and a banking institution.
- This partnership is not only beneficial to the bank or insurance company but also to the customer to avail utmost quality service in this sector. Wherever the Bancassurance is firmly established, it has the capacity and has taken an impressive market share of new life business. Here the example of France can be taken, wherein 55% of the market share is of Bancassurance.
- The insurance company can have access to the large base of customers and the bank has an advantage to offer a wide range of financial products to the customers. Thus, these two companies are benefitted in this partnership.
- One of the key attractions of this channel is that the Bancassurance distribution is more cost-effective than traditional distribution. Moreover the cash management relationship with corporations, customer profitability measurement systems in banks, etc are also key attractions.
- 27 public sector banks and 196 regional rural banks account for 92% of the branch network in India. With over 60,000 branches of commercial banks and an average populations served per branch of 15,000 bancassurance is expected to be a critical distribution strategy for the insurance companies. In fact, the network includes 33,000 rural branches and 14,000 semi-urban branches, about 60% of the total number of branches.