Bancassurance

Bancassurance

Bancassurance symbolises the convergence of banking and insurance. The term has its origins in France and involves distribution of insurance products through a bank's branch network. While bancassurance has developed into a tremendous success story in Europe, it is a relatively new concept in Australia and Asia.

Most new insurers have entered into memoranda of understanding with banks to use their branches as outlets for marketing standard products. State Bank of India, Vysya Bank and J&K Bank already have joint ventures in life insurance. Vijaya Bank and Punjab National Bank are in the midst of finalising life and non-life ventures.

The Insurance Act allows only those companies registered under the Companies Act to become corporate agents. This gives the new generation and old private sector banks a head start over Public sector banks , which are technically not eligible to sell risk products.

IRDA, IBA & RBI are in discussions to iron out the various issues, as public sector banks will play a key role in the distribution of products.