What is bancassurance and its benefits | Know all about bancassurance
Bancassurance refers to the collaboration of bank and insurance companies to work together as a whole and make an impact on the society by expanding the outreach of the offered products and services benefiting the clients. The collaboration is a new trend in the market from around two decades but still it is illegal in some countries as many believe that it would give more control over the financial products of the bank. Bancassurance is the breakthrough in Europe as it is most successful there. It’s life saving for people having to go through the hustle of running from banks to insurance offices. Insurance products can be purchased through the bank’s outlet benefiting the companies, banks and customers.
Bancassurance is the partnership between the bank and insurance company. Insurance companies use the client network of the bank to sell its products and policies. Commission is shared between the banks and insurance companies. It is profitable for both. It causes an increase in the revenue of the bank due to the increased number of sales. Products of the insurance company include Life, property and insurance loans. Private banking and investment management services to achieve wealthy achievements are opted. Thus resulting in an increase of profits.
In India the following are the few who have opted Bancassurance
- SBI life insurance
- ICICI Lombard
- Barclays
- Axis Bank
- Etcetera
Banks act as an intermediary between the bank and the insurance company. Insurance companies offer the employees perks and benefits as well. A Bancassurance Sales Executive is someone who is tasked with offering customers financial planning. It all depends upon the number of sales and customers that have been looked up thoroughly to be contacted for the policy. The access to a bank results in the development of new products and policies.
What is bancassurance and its benefits? Read the whole article to know more.
Customers pay the premium payments yearly and are given a payment. Banks cannot pay a premium on behalf of the customers so there are also some restrictions as well.
- Commissions are shown in the annual report.
- Single bank can use two insurance companies.
- Product selling is limited.
- There is not much awareness, so training and more staff is required.
- Huge initial investment is there.
- Together integration is difficult for two business sectors.
- It becomes difficult for the companies to target the right customers without proper research
- To avoid miscommunication and reduce errors, training for bank employees is also offered.
As speaking of the restrictions the benefits are also in a great deal and in favor of the customers and the employees.
- All services are offered under one roof
- Profit is increased for all.
- Customer’s trust is built and they stay long term.
- The banking network plays a role in the outreach of insurance products.
- Complete the financial needs of a customer by studying their status and all
- No trust issues are there
- Loans and mutual funds are given to students
- Insurance and banks collaboration results all the financial matters of a customer at one place
- Staff is given certain incentives and goals and as a result of their work they get more customers and profit
- When under one roof the documentation process is also fast.
- When under one roof custom policies are also available along with experts for guidance
- Marketing of insurance companies is also beneficial as banks operate in remote areas as well so Bancassurance provides access to those remote areas through collaboration with banks.
There are two types of Bancassurance
A. Life Insurance Products
- Term Insurance Plans
- Endowment plans
- Unit linked insurance plans
B. Non-Life Insurance Products
- Health insurance
- Marine insurance
- Property insurance
- Key man insurance
Products offered in Bancassurance are mostly life insurance products of high demand. Moreover, custom offers are also made depending upon their needs. Banks with more involvement in insurance policies have more experience and improve their efficiency. Increasing great profits for banks.
Furthermore, due to the rapid change in the world due to the fourth industrial revolution in process, it is a must to get the system online in order to keep updated and deal with clients more efficiently and professionally in the line of work.
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