Bancassurance

New Marketing Product for the Banks

Dr. B.KrishnamurthySelection Grade Lecturer & Head,

Deptt. Of Commerce, R.T.E.S.College, Ranebennur.

Introduction

• Bancassurance is the convergence of Banking and Insurance

• The term has its origin in France

• Bancassurance gaining popularity in Asia, where restrictions have been eased

• The proverbial goose laying golden eggs for public sector banks

Scope

• Banks tapping new sources of income• Finding ways to differentiate themselves from other

banks and non-banks • The technology forces the banks to develop a strategy

for online delivery system to broaden the customer relationship and to retain customers’ loyalty.

• Greater competition for the banks as the technology pushes the delivery of services out of bank and

• Focus shifts from cost reduction to maintain market

position.

Customers Aspirations

• Demanding fast, accurate and reliable services

• Adoption of technology is inevitable to respond

• Need at all time and at competitive prices

• Anywhere banking facilities offer access to banking services at a place and time convenience.

Insurance sector

• Setting up their own insurance companies • 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 has joint ventures in life insurance. Vijaya Bank and Punjab National Bank are in the midst of finalizing life and non-life ventures

Electronics and Information Technology

• Banking products and services are provided to consumers with complete ease and maximum efficiency.

• Bank need not be limited by its physical establishments

• Can have on-line presence to reach out the more customers

• Compete not only with local banks but also with foreign banks

Projection

• Insurance business to be worth around $60 billion by 2010 projected by Associated Chamber of Commerce and Industry.

Bank’s Entry

• Banks entering the insurance sector on their own without partnering with insurance companies due to several reasons

• Get better dividends than the commission

• Diversify from the regular banking activity that they are involved

IRDA

• To protect the interests of the policyholders to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto

• Insurance Regulatory and Development Authority came into effect from 1-04-2000

• Today we have 22 insurers

List of Registered Life Insurers with the IRDA

• Today we have 22 Life Insurers in India• 23.10.2000 HDFC Standard Life Insurance Company Ltd. • 15.11.2000 Max New York Life Insurance Co. Ltd.

• 24.11.2000 ICICI Prudential Life Insurance Company Ltd. • 08.05.2008 Canara HSBC Oriental Bank of Commerce

Life Insurance Company Ltd. • 27.06.2008 Aegon Religare Life Insurance Company Ltd.• 27.06.2008 DLF Pramerica Life Insurance Company Ltd. Star Union Dai-ichi Life Insurance Co. Ltd.,

SBI Life Insurance Company Limited

• Joint venture between the State Bank of India and BNP Paribas Assurance registered with IRDA on 30.03.2001

• State Bank of India --- 74% BNP Paribas Assurance --- 26%.

State Bank of India

• Largest banking franchise in India along with its 7 Associate Banks, with a strength of over 14,500 branches across the country, arguably the largest in the world.

BNP Paribas Assurance is the life and property & casualty insurance unit

• Oldest foreign banks with a presence in India dating back to 1860.

Canara HSBC Oriental Bank of Commerce Life

Insurance Company Limited:

Share Holdings• 1. Canara Bank - 51%

• 2. HSBC Insurance

• (Asia Pacific) Holdings Ltd - 26%

3. Oriental Bank of Commerce - 23%

• Paid up capital of INR 325 Crores.

• Commenced its business on 6th of June, 2008

ING Vysya Life Insurance Company Limited (ING Life

• Started operations in India in September 2001

• ING Life has a pan India presence in 234 cities, with over 367 sales teams

Coporate Agents

• Corporate Agents are those companies who have the principal business other than insurance.

• Banks undertaking insurance activity to increase their income & attract the new customers with the existing human resource and the use of communication and information technology

• The share of corporate agents which was 8.42 per cent in 2006-07 has increased to 12.33 per cent in 2007-08.

Micro-insurance

• Micro-insurance, the term used to refer to insurance to the low-income people.

• It is mandatory for all formal insurance companies to extend their activities to rural and well-identified social sector in the country (IRDA 2000).

• Tata AIG Life - First insurance company to launch Micro-Insurance Scheme.

Tata AIG Life Insurance Company Limited

• Tata AIG Life is a joint venture company formed by the Tata Group and American International Group, Inc. (AIG).

• The Tata Group holds 74 per cent stake and AIG holding 26 per cent.

• Providing Insurance solutions to both Individuals and corporates

• Operation from April 1, 2001.

Impact on Human Resources

• Information technology has resulted in improved efficiency,Iinnovative products and Effective delivery systems for the banks.

• However, the employees have the fear of job insecurity due to induction of computer skilled employees and

• Reduction in jobs

Conclusion:

• Require the good aptitude of the existing workers.

• Continuously evolve newer techniques for making business transactions

• better, faster and more efficient

Challenges

• Competition, customer expectation, reduction of costs and enhancement of efficiency

• Need training and retraining of staffs and retention of highly specialized to become the vital factors for banks.

Thank You