What is Bancassurance? Benefits and Disadvantage

What is Bancassurance: Bancassurance is an agreement between a bank and an insurance company that allows the insurance company to sell its products to the bank's customer base. This partnership arrangement can be beneficial for both companies. Banks earn additional income from the sale of insurance products, and insurance companies expand their customer base without increasing sales.

What is Bancassurance?

Bancassurance in India

Benefits of Bancassurance

For Banks

• Bancassurance is the best way to provide banks with a source of income with little or no investment. A small capital investment, on the other hand, leads to a high return on equity.
• Addition to product range
• Easy source of additional fee income
• Better work efficiency - because existing bank employees are easy to train
• Ability to align advanced product sales in a customized way and support services
• Sell widely. range of financial services to customers and increase customer retention
• Optimize manpower to improve productivity

For Insurance Companies

• Revenue growth
• Increased penetration in both rural and urban markets using the bank's existing customer database
• Very cost effective because the banks have already defined the route and network
• Insurance companies can take advantage of the current existing rural and/or urban branches and offices of the banks.

For customers

• The goal is to provide uniform service to all customers. Nowadays, ease of use is one of the most important concerns in managing the daily activities of the customer. Thus, a bank that markets insurance products offers them a competitive advantage over others. Clients have the opportunity to receive a complete financial planning service under one roof.
• Increases trust at a high level
• Claiming is very easy
• Easy premium payment because it can be linked directly to the bank account
• Easy access to countless products in the bank
• Secure services and advice from the bank as customers get professional experts and trained employees who guide them in the economy.

Disadvantage of Bancassurance

• Banks and/or insurance companies may further compromise the customer's security
• Customers may be confused about where to invest if there is a conflict of interest between the bank and the insurance company's other
• products, such as cash-back policies.
• It is desirable that banks provide better approaches and services to customers. This is because many banks in India do not provide good customer service. The opposite can also happen because banks are also responsible for the sale of insurance products.

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