What is bancassurance and its benefits?

What is bancassurance and its benefits?

Bancassurance is a term used for selling insurance policies through banking institutions. It is a relationship between a bank and an Insurance company, aimed at offering insurance products and its benefits to the customers of the bank. in order to reach out to the bank’s customers for the sale of insurance.

What is the concept of bancassurance?

Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank’s client base. This partnership arrangement can be profitable for both companies.

Is bancassurance good or bad?

However, banks should only sell simple products. One needs to leverage a bank’s customer relationship and technology, as opposed to advice, which the banks may not be equipped with. Bancassurance is considered a more cost-effective distribution channel than an agency. Losing it would have put pressure on costs.

What are the objectives of IRDA?

Objective of IRDA: To protect the interest and fair treatment of the policyholder. To regulate the insurance industry in fairness and ensure the financial soundness of the industry. To regularly frame regulations to ensure the industry operates without any ambiguity.

How bancassurance affect the profitability of the banks?

Our results reveal that banks with greater involvement in bancassurance business generally tend to experience improvements in their efficiency, and thus also accrue greater profits. Finally, our results also reveal that the adoption of a diversification strategy in bancassurance can impact bank performance.

What are the challenges of bancassurance?

Bancassurance requires both banks and insurance companies to work together; however, it is not an easy task to integrate the business operations of two sectors. In bancassurance, insurance companies lack direct control over the selling of their products. It can be harder to manage marketing strategies.

What are the three main provisions of the IRDA Act?

The powers and functions of the IRDA include: (a) registration/modification/cancellation of registration of insurers; (b) to cause compliance of the requirement of capital structure of the companies as also solvency margin, insurance business in rural and social sector, submission of their returns/reports, approval and …

How did bancassurance develop?

Historical Development of Bancassurance The first recorded settlement of bancassurance was in 1860, when the CGER savings bank from Belgium started to sell mortgage-linked insurances. Bancassurance as a term first appeared in France in 1980, to define the sale of insurance products through banks “distribution channels.

What is the main objective of IRDA?

The main objective of the Insurance Regulatory and Development Authority of India is to enforce the provisions under the Insurance Act. The mission statement of the IRDA is: To protect the interest and fair treatment of the policyholder.

What are the important duties of the IRDA?

Functions and Duties of IRDAI

• Registering and regulating insurance companies.
• Protecting policyholders’ interests.
• Licensing and establishing norms for insurance intermediaries.
• Promoting professional organisations in insurance.
• Regulating and overseeing premium rates and terms of non-life insurance covers.

What is the power of IRDA?

The IRDA Authority has the duty to promote, regulate and ensure orderly growth of the insurance and re-insurance businesses across India, subject to the provisions of this Act and any other additional law that is being enforced.

What is the role of IRDA in insurance sector?

Insurance Regulatory and Development Authority (IRDA) is an autonomous regulatory body that protects the interests of the policyholder. They oversee the growth of the insurance sector in India and also maintain a speedy development.

What is the importance of bancassurance?

The importance of Bancassurance are listed as follows: Cost-effectiveness: Insurance companies look to Bancassurance as a cost-effective mode of distribution.

What is the conducive environment for bancassurance?

Conducive environment: Progressive dismantling of laws relating to undertaking of insurance businesses by banks, increasing use of electronic channels and automation, growing needs for private retirement plans to complement public pensions, the concern for providing total financial services to customers, etc. have paved the way for Bancassurance.

Why are banks entering bancassurance partnerships?

Let’s discuss the reasons why banks are entering bancassurance partnerships, and if they aren’t, why they should be. Banks enter the bancassurance alliances because in most cases, that’s the only way they’ll be allowed to sell insurance.

How does bancassurance affect bank profitability in India?

Multiple studies have been done in Indian bancassurance context to prove its positive impact on the bank’s profitability. Following are a few specific stats from different bancassurance case studies: Axis Bank’s fee-based income increased by 30% in 2010-11 after taking a stake in Max Life Insurance Company.