The Hindu Business Line : Private insurers bet big on bancassurance

New Delhi, Nov. 24 Private insurers have adopted bancassurance in a much bigger way than the state-owned Life Insurance Corporation (LIC) in the recent years.

The latest official data on commission payouts of insurers over the last three financial years confirm such a trend.

Bancassurance is distribution of insurance products through a bank’s network.

In 2008-09, private insurers forked out Rs 205.42 crore as commission for banassurance, while the payout by LIC for this distribution model was only Rs 0.12 crore.

The commission payout by private insurers for business written through bancassurance in 2007-08 was Rs 202.22 crore as against Rs 0.16 crore by LIC. The insurance sector was thrown open for private participation in 2000.

LIC continues to heavily bet on its individual agents (not corporate agency) for selling its products. The life insurance major’s commission payout to individual agents during 2008-09 stood at Rs 10,029 crore, higher than the payout level of Rs 9,552.68 crore in 2007-08, the Lok Sabha was informed.

On the other hand, private insurers’ commission payout to individual agents declined to Rs 2,649.85 crore in 2008-09 as against Rs 2,725.80 crore in the previous year. Private insurers’ commission payout for corporate agency was Rs 1,768.64 crore in 2008-09 as against Rs 1,536.94 crore in the previous year.

LIC’s commission payout under corporate agency stood at Rs 2.86 crore in 2008-09 as against Rs 12.22 crore in previous year.