Europe has the highest bancassurance penetration rate.
Bancassurance is also on the rise, in the emerging markets. Worldwide, insurers
have been successfully leveraging bancassurance to gain a foothold in
markets with low insurance penetration and a limited variety of
distribution channels. In India, the main channel for insurance distribution is
the agent/advisor. But things are slowly changing as insurers look
for diversification of distribution channels. When banks and insurers
come together, it helps as they take advantage of the cross-selling potential
of the financial institutions.
According to Charles Anderson, Managing Director, Financial Services, Asia Aviva, the answer is
simple. On the one hand, insurance companies are faced with pressure to develop multiple channels of distribution
to get themselves derisked from single distribution system as too much of reliance on one single
distribution platform may be risky if any of the rival innovates a new distribution channel. On the other hand, banks
are keen to increase their non-fund-based income.
When Aviva India entered the Indian market, bancassurance helped it to make a smooth entry into
the insurance business. It is to be noted that in 2002, as much as 70% of the company's business came
from bancassurance. For HDFC Standard Life Insurance, bancassurance and other alternative channels
contribute around 42% of the business. According to Surya Roy, Executive Director and Head of Bancassurance
division of LIC, the sales through this channel has registered 60% growth in 2007-08. |
