International Journal of Banking, Risk and Insurance

Sagaya Swetha N. Joseph ¹, Teena Merin Joseph ¹, R. Haresh ²

Affiliations
1 Christ University, Bangalore, Karnataka, IN
2 Christ University, Bangalore, Karanataka, IN

Abstract

The prominence of insurance industry in India with a number of modifications in entry of foreign players and regulatory structure has created an advantageous situation. The manner in which the industry connects with its customer and progresses in its business has resulted in spurge in the insurance activity leading to an increased growth rate. Government’s initiative of motivating the uninsured to take up insurance has continuously driven penetration in the nation and multiplication of insurance products. During the year 2016-17, the penetration of life Insurance and Non-life insurance was 2.72% and 0.77%, respectively. The penetration of insurance products can be increased only through effective distribution channels. As on date 70% of distribution is done through intermediaries such as agents, brokers and web aggregators. Bancassurance is one such medium to distribute insurance products through bank as an intermediary. The present paper attempts to give a picture of bancassurance in terms of various models of bancassurance, guidelines prescribed by RBI for each model and also the motivating factors for banks to enter into insurance business. Bancassurance has contributed nearly 50% of the distribution of life insurance products in the year 2016-17 and thus, it can be considered as an effective tool for distribution as it creates a win-win situation for both the sectors and can remain as a forerunner in improving the penetration of insurance industry in India with an optimistic future business outlook.

Keywords

Insurance, Bancassurance, RBI, IRDAI, Distribution Channel, Insurance Intermediaries.

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