Efficiency Gains of Bancassurance – Insurance Companies Perspective

Abstract

Nowadays, more than 40% of the business of the insurance companies are done through the Bancassurance channel. Insurance companies can leverage the database of banks and banking outlets to sell out their product and thereby they can increase the level of rural penetration. The penetration level of life insurance in the Indian market is considerably low at 2.3% of GDP with only 8% of the total population currently insured. Thus, Bancassurance provide an apparently viable model for product diversification by banks and a cost-effective distribution channel for insurers.

The findings of the study reveal that the efficiency gain of Bancassurance to the insurance companies are high. The insurance company can achieve almost all the advantage of Bancassurance through selling their product by using the database of bank and their branch outlets.