The bank insurance model (BIM), also sometimes known as bancassurance or allfinanz, is the partnership or relationship between a bank and an insurance company, or a single integrated organisation, whereby the insurance company uses the bank sales channel in order to sell insurance products, an arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base.

2. Content:
1. Introduction
2. Bancassurance Policy and Types
3. Need of Bancassurance in India
4. Merits and Demerits of Bancassurance
5. Bancassurance regulation under RBI and IRDA
6. Different Bancassurance Companies
7. Conclusion

3. The bank insurance model (BIM), also sometimes known as Bancassurance
or allfinanz, is the partnership or relationship between a bank and an
insurance company, or a single integrated organization, whereby the
insurance company uses the bank sales channel in order to sell insurance
products, an arrangement in which a bank and an insurance company form a
partnership so that the insurance company can sell its products to the bank's
client base.
Introduction

4. Types of Bancassurance:
TYPE TARGET SELLING
PRODUCT TYPE
INSURANCE
PRODUCT TYPE
Life Insurance Body of the insured Mortality life
Insurance,
Endowment
Insurance
Insurance product
type
Indemnity
Insurance
Property of the
insured
Property, Interest,
responsibility,
guarantee.
Car, fire, vessel,
credit assurance,
travel, leisure etc.

5. Bancassurance Policy:
1. BIM allows the insurance company to maintain smaller
direct sales teams as their products are sold through the
bank to bank customers by bank staff and employees as
well.
2. Bank staff and tellers, rather than an insurance
salesperson, become the point of sale and point of contact
for the customer.
3. Bank staff are advised and supported by the insurance
company through product information, marketing
campaigns and sales training.

6. 4. The bank and the insurance company share the
commission. Insurance policies are processed and
administered by the insurance company.
5. This partnership arrangement can be profitable for both
companies. Banks can earn additional revenue by selling the
insurance products, while insurance companies are able to
expand their customer base without having to expand their
sales forces or pay commissions to insurance agents or
brokers.
Cont…

7. Need for Bancassurance in India:-
To improve the channels through which insurance policies are
sold/marketed so as to make them reach the hands of common man.
To widen the area of working of banking sector having a network that is
spread widely in every part of the nation.
To improve the services of insurance by creating a competitive atmosphere
among private insurance companies in the market

8. .
Merits Demerits
 It encourages customers of
banks to purchase insurance
policies and further helps in
building better relationship
with the bank.
 The people who are unaware
of and/or are not in reach of
insurance policies can be
benefitted through widely
distributed banking networks
and better marketing channels
of banks.
 Data management of an
individual customer’s identity and
contact details may result in the
insurance company utilizing the
details to market their products,
thus compromising on data
security.
 There is a possibility of conflict of
interest between the other
products of bank and insurance
policies (like money back policy).
This could confuse the customer
regarding where he has to invest.

9. Regulations under RBI and IRDA:-
The Reserve Bank of India and the insurance development and regulatory
authority have a set of guidelines for companies that couple to form
Bancassurance. Based on the equity a bank should hold in joint venture, the
highest allowable value of equity, the type of banks and insurance companies that
can couple together and the operation of Bancassurance are all the factors that
are regulated by RBI and IRDA.
The IRDA has very recently drafted guidelines to promote open architecture in
Bancassurance. Currently a bank has a tie-up with only one life insurer and one
non-life insurer. But in the new model the banks necessarily have to have multiple
tie-ups. The country is divided into zones and every bank has to choose multiple
insurers within the zones. With this the customer will have a wider range of
insurance products offered by different insurers. It will also lead to a deeper
penetration in the selling of insurance products.

10. Bancassurance companies:-
SBI life insurance Company
LIC is tied up with Vijaya bank,
Oriental bank of commerce,
Corporation bank
ICICI Lombard
Barclays – MetLife India
Axis bank – MetLife India

11. Conclusion:
Bancassurance is an efficient distribution channel
with higher productivity and lower costs than
traditional distribution channels. These cost
advantages are particularly significant in the more
integrated models