Bancassurance Business Opportunities, Problems and Challenges in India

The Insurance Companies in developed countries are using the banking channels for selling their insurance products effectively and making Bancassurance a viable source of additional fee based income for Commercial Banks. The emergence of this concept has also been one of the best developments in the financial sector of India. It provides the insurance companies a well established broad distribution network with a huge client base of commercial banks for selling their insurance products. The concept of providing all financial services under one roof by commercial banks can also be achieved through this channel in India. This paper makes a modest attempt to find out the scope and viable strategy for bancassurance models in India to make it a feasible source of income for Commercial Banks and a reliable channel for selling insurance products for insurance companies. India has one of the largest banking networks on the one hand and the lower insurance penetration and density on the other hand, which provides the best opportunity for additional source of income for commercial banks. But it has not been fully utilized to extract the insurance business and fee based income there from by the banking sector in India. While analyzing the present trend on banks handling insurance products, it highlights some of the likely issues in general as well as specific problems faced by commercial banks in India, as a result of which bancassurance business has not been able to perform as per it's potential. The aim of this study is to understand the concern and perception of bank customers in India. The paper concludes by suggesting strategies and policies to make bancassurance a win-win situation for all the parties involved viz. the customers, the insurance companies and the commercial banks in India