Is Bancassurance flavour of the Season?
Bancassurance is growing in many Asian markets buoyed by deregulation of banking sector on one hand and Insurance companies intending to optimize distribution via banks on the other hand. On the local level, bancassurance business in Asia-Pacific countries has evolved in different ways. While different geographies are targeting different customer base and products, for instance countries like Malaysia, Indonesia, Thailand where Muslim population is high and growing, insurance companies are joining hands with banks to provide a wide range of Islamic finance and takaful insurance products. And in some other emerging economies with predominant agricultural countries like India banks are joining hands with co-operative societies and Regional Rural Banks to reach out to vast untapped population. Asia Pacific region is “Agent” dominated distribution in terms of both life and non life, however Bancassurance is growing quickly. Penetration of Bancassurance ranges from <10 percent in countries like Japan and Thailand to as high as 40 - 50 percent of new business in countries like South Korea and Malaysia The existing bank branches and other infrastructures like ATM, online, telephone, and mobile modes have triggered the insurance companies to come up with various innovative models in collaboration with banks to effectively use the already existing channels. Bancassurance is one of the growing models that insurance companies are targeting to reach various customer segments. Since bank customer are co-related to savings and insurance customers are co-related to retirement, pension etc, routing insurance products via bank branches will not only build long lasting relation with customers, but also act as one stop shop for all financial needs of customers.