ADVANTAGES AND DISADVANTAGES OF BANCASSURANCE PDF

Post a comment. September 19, Bancassurance simply means selling of insurance products by banks. Bancassurance is used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. By selling insurance policies bank earns a revenue stream apart from interest.

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In fact, the growth rate for Banca is four times the growth of life insurance in certain geographies. As the channel continues to grow, it would help to understand the different advantages of bancassurance for all the parties involved. This would help banks and insurance carriers help grow the channel in new markets, as well as in existing ones.

In any market, where the regulations allow for the bancassurance to grow, the acceptance of the customers is the foremost success factor. This would help the bancassurance alliances make the offering more appealing to the end users:. The most important thing in B2C buying is customer experience. Financial products are not an exception. Customers want a solution and not just a product. They buy the assurance that comes with it.

And, the assurance of the best value for money. Check this email from Amazon post-purchase. I am also recommended products based on my buying pattern, thus keeping me on the site, ensuring that I spend more. Netflix became a global success not solely based on its content. Not initially, at least. Source: Statista. Customers expect the same kind of responsiveness from their banks and financial service providers as well. The advantage of bancassurance is just that:. This improves the overall experience of the customers.

They are more likely to opt for a complete financial solution from their banks, thus making bancassurance a success. EY conducted a survey in , surveying retail bank customers in 7 Brazilian cities.

Convenience topped the list of reasons the customers chose to purchase insurance at their banks. Source: EY — Rethinking the success of bancassurance, Brazil.

One of the main advantages of bancassurance is this. A customized insurance product at a reduced price because of the operational cost cutting along with expert guidance. Customers trust their banks to sell them the right product. The trust they would place on insurance carriers and independent agents is comparatively lesser.

Therefore, the propensity to buy insurance products from their banks is higher. Bancassurance distribution model allows the customers to get an amalgamation of other financial services under one roof. Insurance used to be the missing piece of the puzzle which Bancassurance now completes.

Banks sit on mounds of customer data. Bank being the front dealing with customers, handle renewals as well, making the transaction even more hassle-free. Also with new tech and data access for the bancassurance channel, tracking the renewals is very easy.

Again, taking its root in trust is the belief of an easy claims process. This makes insurance through Banca channel a big draw for the customers. Bank already has the data and documentation of customers. This is one of the major advantages of bancassurance for customers. Hopefully, now these advantages of bancassurance for customers are clear to you. This is attractive for the banks because there is a tremendous untapped opportunity for growth globally in insurance.

Banks already have a relationship with their customers selling them an amalgamation of financial products. With Bancassurance, insurance is added to the mix, diversifying the customer portfolio.

In Bancassurance models , banks can easily generate risk-free income in the form of the commissions from insurance carriers. Following are a few specific stats from different bancassurance case studies:. With bancassurance, banks can cross-sell insurance, with no increase in their operational expenses. Banks can leverage their distribution and processing capabilities to achieve profitable operating expense ratio. Banks enjoy the benefit of being able to provide yet another product to their customers.

Providing integrated financial services strengthens customer relationships and builds better customer loyalty and retention levels. With increased loyalty and stickiness, comes higher CLV per customer which is a very important metric for banks.

Banks use their existing premises and employees tellers and branch staff for the sale of the new insurance products. Bank staff is often reluctant to take on the responsibility of selling insurance, in addition to their regular tasks. This is a major challenge in bancassurance implementation. So, banks would be able to keep their employees motivated, while helping them build on their skills. Clearly the advantages of bancassurance for the insurance carriers are huge.

On its own, it would be impossible for insurance companies to reach the market coverage comparable to that of banks. Banks have a magnanimous distribution network, especially in India, with lakhs of commercial bank branches. So, penetration is the foremost benefit that the insurance carriers gain out of a bancassurance alliance. Banks have already gained trust among their customers. Using Bancassurance as the driver, insurance companies use this confidence to increase their range, penetration, and premiums.

Bank reputation is one of the top reasons listed by the surveyed customers for buying insurance at the bank. Banks have a huge amount of data on their customers. This includes their demographic and financial info, transactional information, spending patterns, credit repayment history investment and purchase capability and more. The carriers and banks can use this information to forge intelligent engagement workflows and to customize relevant insurance covers.

In several of the Bancassurance distribution models, bank employees are on the forefront, closing the deals and taking responsibility. Therefore the channel proves to have a much wider reach with much less investment.

A similar reach through traditional channels would need them to hire several hundred agents in different parts of the country. Through bancassurance, their market penetration goals can thus be met in a much shorter timeframe than through an agency channel.

For instance: Max Life consolidated 60 branches and closed down to increase efficiency and bring down costs in This was after it entered a Bancassurance agreement with Axis Bank. The entire process of origination, application processing, underwriting, risk assessment, fund management, delivery, and claims is managed by the bank.

Bank employees are on the forefront, data access ensures that the turn-around-time is low responsiveness is high. This is important because responsiveness is rated by most customers as a very important factor in insurance buying.

In the EY bancassurance study conducted in Brazil, a timely response was rated highly in the decision to buy insurance.

So, these were the advantages of bancassurance for all the involved stakeholders — customers, banks and insurance. This encompasses the reasons why bancassurance is finding success in so many parts of the world. With these advantages leveraged well, the operational efficiencies and the profitability of the bancassurnace sales channel can be increased manifold. Just wanted to know the Banc assurance growth rate in the South Asia region for Your email address will not be published.

Get started. Sorry, something went wrong. Please try again after sometime. This would help the bancassurance alliances make the offering more appealing to the end users: Following are the above-listed advantages of bancassurance for customers, explained: 1.

Source: Statista Customers expect the same kind of responsiveness from their banks and financial service providers as well. The advantage of bancassurance is just that: a Right Product: It provides the end users a customized insurance solution. Convenience EY conducted a survey in , surveying retail bank customers in 7 Brazilian cities. Trust Customers trust their banks to sell them the right product.

One-stop-shop for All Financial Needs Bancassurance distribution model allows the customers to get an amalgamation of other financial services under one roof.

Expert Advise Banks sit on mounds of customer data. Ease of Renewals Bank being the front dealing with customers, handle renewals as well, making the transaction even more hassle-free. Easy Access to Claims Again, taking its root in trust is the belief of an easy claims process. Improved Application and Policy Processing Time Bank already has the data and documentation of customers.

Diversification of Customer Portfolio Banks already have a relationship with their customers selling them an amalgamation of financial products. Source: Academia. Customer Loyalty and Retention Banks enjoy the benefit of being able to provide yet another product to their customers.

Increased Customer Lifetime Value With increased loyalty and stickiness, comes higher CLV per customer which is a very important metric for banks. Cost-effective Use of Existing Resources Banks use their existing premises and employees tellers and branch staff for the sale of the new insurance products.

Specialized Training for Tellers and Branch Staff Bank staff is often reluctant to take on the responsibility of selling insurance, in addition to their regular tasks. Customer Trust from Existing Banking Relationships Banks have already gained trust among their customers. Relevant Offer Generation and Customer Engagement Banks have a huge amount of data on their customers. Increased Operational Efficiency and Reduced Costs In several of the Bancassurance distribution models, bank employees are on the forefront, closing the deals and taking responsibility.

Better Customer Experience Throughout the Lifecycle The entire process of origination, application processing, underwriting, risk assessment, fund management, delivery, and claims is managed by the bank.

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Advantages of Bancassurance for Customers, Banks & Insurance Carriers

July 3, Conference paper Open Access. ABSTRACT: Bancassurance is not just a sale of insurance products at bank counters, but a complex cooperation involving both partners in the project realization, with the goal of satisfying their own interests as well as clients' interests. In the Republic of Serbia, banks began to deal with insurance activities in Since then, the sale of insurance products through banks has been constantly growing. The paper will present the current bancassurance models in the Republic of Serbia: integral distribution; expert distribution and combined distribution. The paper will present the comprehensive condition of bancassurance in the Republic of Serbia, above all the legal framework of the bancassurance concept; activities necessary for the successful implementation of bancassurance; market participants; competition among banking products and insurance products; the current level of cooperation between banks and insurance companies.

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ADVANTAGES AND DISADVANTAGES OF BANCASSURANCE

Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank's client base. This partnership arrangement can be profitable for both companies. Banks earn additional revenue by selling insurance products, and insurance companies expand their customer bases without increasing their sales force or paying agent and broker commissions. The Glass-Steagall Act of prohibited US banks from entering into business with firms that provided another type of financial service.

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Bancassurance in India

In fact, the growth rate for Banca is four times the growth of life insurance in certain geographies. As the channel continues to grow, it would help to understand the different advantages of bancassurance for all the parties involved. This would help banks and insurance carriers help grow the channel in new markets, as well as in existing ones. In any market, where the regulations allow for the bancassurance to grow, the acceptance of the customers is the foremost success factor. This would help the bancassurance alliances make the offering more appealing to the end users:. The most important thing in B2C buying is customer experience.

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4 The advantages & disadvantages of the Bancassurance:

There was a time in the past when insurance policies were meant for a small part of public who were financially strong. Today the scenario has completely changed wherein insurance policies reach every person in almost every corner of our nation. This change in the financial horizon was ushered in with the birth of bancassurance in India. However to understand how this takes place one would have to continue reading this article. Need for bancassurance in India:- Researches and present day statistics speak about the need of a well equipped financial structure for a country that helps it to grow economically. The financial resources in the hands of people should be channelized in effective manner so as to increase the returns from the basic financial structure of nation and also the quality of living of people. Though the teething phase of insurance, one may say is just past, a desirable foothold is yet to be found.

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