By definition Bancassurance is a partnership between banks and insurance providers, creating a mutually beneficial relationship that allow banks to sell insurance policies.
Bancassurance emerges due to rapid growth in financial landscape. Thus, collaboration becomes necessary between business sectors.
The intergration between banks and insurance became a key strategic planning for enhancing customer experience and growth driver. Such integration risen through innovative business approach through partnership, combining the strengths of both sectors.
Examples of Bancassurance
Bancassurance can be categorized in several models, reflecting different degrees of integration and collaboration between banks and insurance companies.
- Traditional
In this model banks sell insurance products and services provided by the partner insurance company exclusively. The bank acts as a sole distributor, handling sales and customer service while underwriting and claim processes are managed by the insurance company. - Joint Venture
In this model, the bank and insurance company create a new entity that combines their resources and expertise. Depending on the business contracts and agreements, both parties share profits and risks, of which allows for a deeper integrated service. - Integrated
This model features a high degree of integration, whereby banking and insurance products are bundled together, offering customers a seamless access to both services through the same channel. This integration can enhance customer loyalty and provide a comprehensive financial solution. - Alternative Distribution
Rather than being tied to sorely to one insurance company, the bank collaborates with multiple insurance companies, whereby the bank can offer a wide range of products, allowing customers to have a range of options to choose from. This model increases competition amongst insurance companies, often resulting in better price and service offering. - Digital
This model utilizes on the rise of Fintech, leveraging on online platforms and mobile apps to sell insurance products, and focus on providing convenient, tech-driven solutions, making it easier for customers to access and purchase insurance.
How does it work?
Bank employees are trained to offer insurance products under the standard bancassurance model. Each policy sold generates a commission for the bank, and the insurance company gains from the bank’s established customers. This collaboration often involves joint marketing efforts and shared technological platforms to streamline processes.
Advantages of Bancassurance
Bancassurance enhances accessibility, trust, and efficiency in obtaining insurance coverage.
- Convenience
Customers can purchase insurance products directly through their respective banks, through simplified purchasing processes and have access to easy claims process. - Trust and Credibility
Banks often have a high degree of established relationship with their customers, of which can enhance trust in the products offered by the insurance. - One-stop Shop
Banks provides a wide range of financial products, allowing customers to manage their banking and insurance needs in one location. - Cost Effective
Lower distribution costs can result in more competitive premiums for consumers - Financial Advisory
Banks can provide integrated financial planning, helping customers to understand how insurance fits into their overall financial strategy by providing professional financial advice (Insights and guidelines). - Cross-selling Opportunities
Banks can promote insurance products to existing customers, increasing sales and customer loyalty, while customers benefit from discounts and/or bundled products offered by both the bank and insurance company. - Tailored Solutions
Banks can leverage customers data to offer personalized insurance solutions based on individual financial needs.
Leading Companies
- AXA
AXA is a global insurer with an extensive bancassurance partnerships, serving over 94 million clients. The company offers a property-casualty business which includes insurance of personal property (homes and cars) and liability (personal or professional).
AXA recently acquired Alpha Bank for an amount of 225 million euro. - Allianz
Allianz offers a wide range of insurance products worldwide through bank collaboration. A leading provider insurers and asset management with over 125 million (private and corporate) customers in over 70 countries - Prudential
Prudential offers life and investment insurance solutions via partnerships with banks in various markets, helping individuals and institutions improve their financial wellness through life & health insurance, annuities and investments, and retirement services. - Standard Chartered
An international bank that integrates insurance offerings with its banking services. - Bancolombia
A major Colombian bank that offers wide range of insurance products through bancassurance - ING
This company is well known for its banking and insurance services, ING partners with various financial institutions - Santander
A global banking group that offers insurance products through its extensive branch network. - Aviva
Provides a wide range of insurance solutions through partnership with banks, especially in Europe. - MetLife
Collaborates with banks to offer life insurance and retirement products in several markets including insurance (life, home & auto), annuities, employee benefits, and assets management. - CNP Assurances
A major player in life insurance and pensions, partnering with banks for effective distribution.
Disadvantages Bancassurance
The video below clarifies the disadvantages of Bancassurance.
CNBC tv
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