|
Home / Life
/ Articles
Will bancassurance click?
Bancassurance, the much talked about channel of insurance distribution
through banks that originated in France and which has been a success
story in Europe is yet to take off here. A number of insurers
have already tied up with banks and some banks have already flagged
off bancassurance through soft launches of select risk products.
While reams have been written about the numerous benefits of bancassurance
considering the wide scale availability of risk products it will
enable, rules and regulations regarding the same are yet to fall
in place.
Fee based income:
For banks, bancassurance would mean a major gain. Since interest
rates have been falling and profit on offtake of credit has been
low all banks have been able to do is sustain themselves but not
profit much. Enter bancassurance and fee based income through
hawking of risk products would be guaranteed.
Unique strategies:
Before taking the plunge, banks as also insurers need to work
hard on chalking out strategies to sell risk products through
this channel especially in an emerging market as ours. Through
tie-ups some insurers plan to buy shelf space in banks and sell
insurance to those who volunteer to purchase them. But unless
banks set up a trained task force that will focus on hard-selling
risk products, making much headway is difficult especially with
a financial product that is not so easily bought over the counter.
Identifying Target audience:
Besides, identifying the target audience is yet another important
aspect. Banks have a large depositor base of corporate as well
as retail clients they can tap. Talking of retail clients the
lower end and middle-income group customers constitute a major
chunk who have over a period of time built a good rapport with
the bank staff and thus hold big potential for bancassurance.
Reduced costs:
While products such as retirement planning will involve an elaborately
worked out plan with the help of a financial advisor, simple products
such as an accident cover in other words pure risk products will
be sold through this channel enabling savings on solicitation
costs of these products. So will insurers pass on a part of the
gains on cost saving (saving on agent training etc) to customers?
At present insurers are non-committal on this one. Also there
are no immediate plans to redesign products to suit the bancassurance
channel but banks are gung-ho about cross-selling products.
Legal issues:
Conversely, the Insurance Regulatory Development Authority (IRDA)
has adopted a cautious approach before Bancassurance is flagged
off. While on the one hand it is an economical proposition to
sell risk products through the numerous bank branches spread across
the country the fact that claim settlement disputes take an unusually
long time in our country is one of the causes for worry. In such
a situation will banks be in a position to fight for the cause
of their clients is a major concern? Besides regulatory authorities
for both - banks and insurance companies are different. Moreover,
banks may have to part with confidential information about their
clients. Now where should banks draw a line?
More Life Articles
Other Categories
| Back
| Top | Home
|
|
