w


r The S


 
 (S
), also sometimes
known as S
 
 , is the term used to describe
the partnership or relationship between a bank and an
insurance company whereby the insurance company
uses the bank sales channel in order to sell insurance
products.
r S
allows the insurance company to maintain
smaller direct sales teams as their products are
sold through the bank to bank customers by
bank staff.

r Sank staff and tellers, rather than an insurance

salesperson, become the point of sale/point of
contact for the customer. Sank staff are advised
and supported by the insurance company
through product information, marketing
campaigns and sales training.
r n Other words,
The Sancassurance is the distribution of
insurance products through the bank's
distribution channels. t is a phenomenon
where in insurance products are offered
through the distribution channels of the
banking services along with a complete range
of banking & investment products & services.
n simple term we can say Sancassurance tries
to exploit synergies between both the
insurance companies & banks.
S


 



© Sancassurance in ndia is a very new concept,

but if past gaining ground. n our country the
banking & insurance sectors are regulated by
two different entries. They are: -

* Sanking is fully governed by RS &

* nsurance sector is by RDA
’      S

r J. Any commercial bank will be allowed to undertake

insurance business as the agent of insurance companies
& this will be on fee basis with no-risk participation

2. The second guideline given by the RS is that the joint

ventures will be allowed for financial strong banks
wishing to undertake insurance business with risk
participation.

3. The third guideline is for banks which are not eligible

for this joint venture option, an investment option of
(J) up to J
of the net worth of the bank or
(2) Rs. 5 crores. Whichever is lower is available.
’     

r J) Chief nsurance Executive: Each bank that sells
insurance must have a chief nsurance Executive to
handle all the insurance matters & activities.

2)
andatory Training: All the people involved in selling

the insurance should under-go mandatory training at an
institute determined (authorized) by RDA & pass the
examination conducted by the authority.

3) Corporate agents: Commercial banks, including co-

operative banks and RRSs may become corporate agents
for one insurance company.
4) Sanks cannot become insurance brokers
 w
r u C: The insurance company u C of ndia have tie up with
the following bank for Sancassurance. They are: -

(A) Corporation Sank

(S) ndian Overseas Sank
(C) Centurion Sank
(D) Sahara District Central Co-operative bank
(E) Janta Urban Co-operative bank
(F) Yeotmal
ahilaSahakari Sank
(G) Vijaya Sank &
(H) Oriental Sank of Commerce

        
 
r (J) Do not depend upon traditional
ethod:

For example: - a complex unit-linked life insurance

product is better sold through brokers & agents, while
a standard term product or simple products like auto
nsurance, home loan and accident nsurance cover
can be handled by bank branches.
(2) Clarity on operational activities :

There is need to be clarify on the operational activities of

Sancassurance that :-

(a) Who will do branding?

(b) Will the nsurance Company prefer to place a person
at the branch of the bank? Or
(c) Will the bank branch train and keep its own people?
(d) Who will pay remuneration of above-mentioned
people bank or nsurance Company or both in some
ratio?
(3) Required Good Training:

Even though the banks are in personal contact with its

client, a high degree of active marketing skill is
required to sell the insurance products. These can be
possible through proper training only.


   S


 
Sancassurance is a tool, which is beneficial to

r bank,
r customer &
r nsurer
è  
    
(A) Sy selling the insurance product by their own channel
the banker can increase their income.
(S) Sanks have face-to-face contract with their customers.
They can directly ask them to take a policy. And the
banks need not to go any where for customers.
(C) The Sankers have extensive experience in marketing.
They can easily attract customers & non-customers
because the customer & non-customers also bank on
banks.
(D) Sanks are using different value added services life-E.
Sanking tele banking, direct mail & so on they can also
use all the above-mentioned facility for Sankassurance
purpose with customers & non-customers.
(E) For the banks, income from bancassurance is the
only non interest based income. nterest is market
driven and fluctuating and quite narrowing these
days. Sanks do not get great margins because of the
competition This is why more and more banks are
getting into bancassurance so as to improve their
incomes.
(F) ncreased competition also makes it difficult for
banks to retain their customers. Sanassurance comes
as a help in this direction also.
(G) Providing multiple services at one place to the
customers means enhanced customer satisfaction
è 
     

r The nsurance Company can increase their business

through the banking distribution channels because
the banks have so many customers.

r Sy cutting cost nsurers can serve better to customers

in terms lower premium rate and better risk coverage
through product diversification.
r The insurance company gets improved geographical
reach without additional costs. n ndia around 67,
branches are there for PSU banks alone. f all 67,
branches sell the insurance products one can see the
reach. This is one method of penetrating the market.

r There is also another method called 'Sank Referral'.

Here the banks do not issue the policies, they only give
the database to the insurance companies. The
companies issue the policies and pay the commission
to them. That is called referral basis.
è       

r Product innovation and distribution activities are

directed towards the satisfaction of needs of the
customer.

r Sancassurance model assists customers in terms of

reduction price, diversified product quality in time and
at their doorstep service by banks.
Conclusion
r Over the past three years, around 4 companies have expressed
interest in entering the sector and many foreign and ndian
companies have arranged anticipatory alliances. The threat of
new players taking over the market has been overplayed. As is
witnessed in other countries where liberalization took place in
recent years we can safely conclude that nationalized players will
continue to hold strong market share positions, but there will be
enough business for new entrants to be profitable.
r Opening up the sector will certainly mean new products, better
packaging and improved customer service. Soth new and
existing players will have to explore new distribution and
marketing channels. Potential buyers for most of this insurance
lie in the middle class. New insurers must segment the market
carefully to arrive at appropriate products and pricing.
Recognizing the potential, in the past three years, the
nationalized insurers have already begun to target niches like
pensions, women or children.