Bancassurance involves banks selling insurance products through their existing distribution networks. It is a popular model worldwide, especially in Europe, with the global market estimated at $1.66 billion in 2018 and growing over 6% annually. There are four main models of bancassurance - distribution agreements, strategic alliances, joint ventures, and financial service groups. While bancassurance provides benefits like one-stop shopping and leveraging bank trust, it also poses challenges like different business models for banks and insurers, legal responsibilities, and adapting to digital banking trends. Critical success factors include senior management commitment, strong distribution strategies, treating insurance as core rather than add-on, and ensuring customers receive full product information.

1. Bancassurance
By:-
eFinanceManagement.com
https://efinancemanagement.com/financial-management/bancassurance

2. Content
1. Bancassurance Market
2. Models of Bancassurance
3. Advantages & Disadvantages
4. Challenges
5. Critical Success Factor

3. Bancassurance Market
 Bancassurance comprises of two words: bank and insurance. It is an agreement between bank and insurance
companies where banks operate as intermediary between insurance company and its customers and sell insurance
through their existing distribution network.
 This type of arrangement is very popular worldwide, especially in Europe. Companies such as BNP Paribas, ABN
AMRO, etc. are big players in bancassurance markets
 As per an estimate, the size of industry was $1.66 billion in 2018. And it is estimated to grow at rate of over 6% from
2019 – 2024 .

4. Models of Bancassurance
There are four different models of bancassurance. Models are selected on the basis of the rules and regulations of the
countries.
1. Distribution Agreements:
Here, banks sell insurance of only one insurer. This model is also known as ‘tied agent’.
2. Strategic Alliance:
Here, bank plays a major role in product development, channel management, etc. but bank doesn’t have any contingent
liability.
3. Joint Venture:
Here, big banks and big insurer come together to create bigger distribution model.
4. Financial Service Group:
Here, banks may acquire or create a separate division for insurance or vice versa.

5. Advantages & Disadvantages
Advantages:
 Banking services & insurances are available at one place which save time and energy.
 Trust earned by banks make selling insurance easy.
 Helps people in rural areas.
 Helps in increasing productivity of their employees.
 Helps bank to diversify their revenue streams.
Disadvantages:
 It requires more initial investment & more number of employees.
 Time-consuming process.
 Training to be provided to bank employees.

6. Challenges
It may seem easy to execute bancassurance projects but banks and insurance companies have to face several challenges
 Work of bank and insurance industries is very different from each other and hence it requires cooperation.
 It is hard to manage marketing strategies for insurance companies.
 It increases the workload of bank employees.
 Difficult to identify legal responsibilities in case of dispute.
 Rising trend of mobile banking and internet banking is threatening to its existence.

7. Critical Success Factors
Points to be considered for success of bancassurance:
 Commitment of bank`s senior management.
 Development of core strategies to sell insurance.
 Insurance should not be considered as additional product rather it is a crucial part if business.
 Changes should be made for making bank`s culture more insurance friendly.
 All information regarding insurance should be provided to customers.
REFERENCE:
To know more about it, click on the link given below:
https://efinancemanagement.com/financial-management/bancassurance