While bancassurance is a success story in Europe and other offshore markets, it is still in its nascent stage in India. We examine the challenges and opportunities for these products in India.

In its simplest form, bancassurance is distribution of insurance products through a bank’s branch network. Hence, there is a room for bancassurance where banking and insurance congregate with each other. To be clear, a bank selling insurance products, and an insurance company, which is involved in banking activity can get into bancassurance. To symbolize this congregation bancassurance is also referred to as Allfinanz. Bancassurance assumes different forms in different countries based on the demographic factors of the country. In a way these demographic factors are the key variables that create challenges and opportunities in each country.

Why congregate? Banks over a period of time might have developed a relationship with the customers and have unique identification in the minds of people. Also, banks have a wide branch network, spreading across the nook and corner. Banks have got a huge database of customers spread across the geographic region, in which they operate. If an insurance company had to develop all these strengths it would consume a large amount of resources and time. Hence, the best option for these companies would be to get in touch with these banks. It is beneficial even for banks as it brings in a new source of income in the form of service charges.

Over the years, the regulatory glitches in the process of amalgamation of bank and insurance have reduced in number. These regulatory and other monetary benefits for the parties involved has ensured a rise in the use of bancassurance. As of 2004, bancassurance represented over 65% of the total life insurance premium in Spain, 60% in France and 50% in Italy and Belgium. Nevertheless, in comparison with life insurance products, non-life products, especially Property and Casualty (P&C) products are yet to pick up speed. In the aforementioned countries, a negligible amount of business comes from bancassurance. For instance, in Spain, just 6% of P&C business comes from bancassurance. In Belgium and France 5% and 4% is respectively contributed by bancassurance.