Insurance penetration in rural areas is expected to increase exponentially during the current fiscal over last year, with sector regulator Insurance Regulatory and Development Authority (IRDA) allowing banks to sell products of multiple insurers.
According to the industry, bancassurance has already started showing results by expanding footprint of companies in far flung areas, which were hitherto left unaddressed.
“Bancassurance contributes roughly 10-12 per cent to our GWP. The biggest advantage is that it gives us the distribution muscle in several untapped areas by using the wide reach of our bancassurance partners,” C R Mohan, Regional Manager, Bajaj Allianz General Insurance.
Bajaj Allianz has tied up with over 100 banks including PSUs, private sector, foreign and even rural and urban co-operative banks. “For some bank partners, we have integrated our systems to provide customized MIS and handle routine queries about our products.”
As per estimates, currently, over 20% of the general insurance business is done through bancassurance and is poised to grow in the coming quarters.
“Distribution of insurance product has been a challenge and in India insurance is still a product that is being sold unlike in mature markets where it is bought...Bancassurance channel has been making good progress in its effort to improve the penetration of the insurance market in India and providing insurance coverage to a vast section of people through its extensive network of branches,” said Ajay Bimbhet, MD, Royal Sundaram.
As per the latest IRDA (Licencing of Banks as Insurance Brokers) Regulations, 2013, banks can act as corporate agents and sell multiple insurance products contrary to trade body Life Insurance Council’s suggestion that banks should sell products of only one life and one non-life insurer.
According to Manasije Mishra, CEO, Max Bupa, its recent tie up with Deutsche Bank to offer health insurance is important as bancassurance fuels the company’s growth strategy.