The Hindu Business Line : Insurers upbeat on bancassurance channel

Coimbatore, Dec 18 A Watson Wyatt study on India’s bancassurance sector has revealed that bancassurance would generate about 35 per cent of the private insurers’ premium income by 2008.

The study entitled ‘India Bancassurance Benchmarking Study 2006-07’, which Watson Wyatt claims to the first of its kind on the Indian market and part of an Asia-wide analysis has focused on bancassurance distribution.

“It is basically to focus and understand how banks and insurers develop strategies for selling life and non-life insurance products through the bank branch network and the practical issues they face in implementing the sales process,” said Mr Graham Morris, Director, Watson Wyatt Worldwide.

A total of 25 banks covering the nationalised, private and foreign banks participated in the survey along with all private life and general insurers licensed in the country.

Nearly 90 per cent of the life insurers said that they were expecting not less than 75 per cent increase in new business premium income during the current fiscal from the bancassurance channel. This is despite the fact that they consider lack of sales culture on the part of the bank’s branch staff for selling insurance products.

The survey further found that the quality of the bank customer data was frequently poor and the absence of simple CRM tools in most banks made it difficult to launch specific initiatives to cross-sell insurance products.

“Growth in bancassurance in India will fall short of potential if the perceived lack of sales culture and vision is not addressed by banks. An understanding of these differences will facilitate the mutual goal of increasing bancassurance as the leading sales channel in insurance distribution,” said Mr R. Krishnamurthy, Managing Director, Distribution Practice, Watson Wyatt Insuarnce Consulting (India).

Both bankers and insurers seemed bullish about the future outlook of bancassurance with some respondents predicting that the overall share of bancassurance would be about 50 per cent in the life and non-life segment by 2010 and the bulk settling at around 30 per cent. Life and general insurers have also expressed overwhelming support to innovative changes in the bancassurance channel, such as banks having multiple insurer relationships.