The Hindu Business Line : It's win-win for banks, insurers

BARELY a couple of years into experimenting the bancassurance route for distributing the insurance covers, the private sector life insurance industry is riding piggyback on the banking sector with both making big money through their tie-ups.

For some life companies, over one-third of new business is being generated through their bancassurance relationships.

"Nearly 40 per cent of our new business on a month-to-month basis is being generated through the bancassurance route," Mr Mukul Gupta, Chief Financial Officer and Head, Bancassurance, Bajaj Allianz Life Insurance, told Business Line.

Bajaj Allianz has distribution understanding with Standard Chartered Bank and Syndicate Bank.

Over the years an increasing amount of business of life companies would come through the bancassurance route, Mr Gupta said. "There is a vast scope for bancassurance in India," he added.

Bancassurance tie-ups are ones where insurance companies enter into an understanding with a bank whereby the latter distributes the life insurance products through its branch network. While the insurer gains reach, the bank earns commission on the business it helps the insurer to acquire.

Ms Shikha Sharma, Chief Executive Officer and Managing Director, ICICI Prudential Life Insurance, said that business through the bancassurance route is showing a healthy growth over the years. "Among the distribution channels used by us, bancassurance alone contributes 19 per cent of the business. Our bancassurance relationships have been highly successful in increasing consumer awareness, increasing reach and also in sourcing new business," Ms Sharma said.

She said that customers also stand to gain since they can avail themselves of life insurance through a channel that they already know and trust.

ICICI Prudential has tie-ups with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and a few co-operative banks.

Aviva Life Insurance is also increasingly banking on the bancassurance route for its new business. Though the company did not provide figures on the business acquired through the route, it said that "significant volumes" were being generated.

"In 2003, we targeted our energies into broad-basing the insurance business across banking segments, introducing tailor-made products for the channel, improving the quality of business acquired and increasing the bank's insurance focus and activation in insurance. We believe our approach has worked, with significant volumes generated through the introduction of new products and all our initiatives," a senior company official said. Aviva has bancassurance relation with ABN Amro Bank, American Express, Canara Bank, Lakshmi Vilas Bank and Punjab & Sind Bank.

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