HELP ON BANASSURANCE

U

uchitshah

New member
HELLO FRNDS,

I HAVE PROJECT ON BANASSURANCE AND I AM FINDING IT VERY HARD TO FIND INFORMATION ON NET.

PLZ HELP ME OUT !!!!

THNAKS,

UCHIT SHAH
 
http://www.etinvest.com/microsite/icicilombard/new_what_bancassu.jsp
http://www.fma.org/Chicago/Papers/bancassurancepaperupdate111704.pdf
http://www.indiainfoline.com/pefi/insr/rep4.html
http://www.thanejanata.co.in/services.htm

Bancassurance

A French term referring to the selling of insurance through a bank's established distribution channels.

bancassurance

Bancassurance is the term used to describe the sale of insurance products in a bank. The word is a combination of "banc" and "assurance" signifying that both banking and insurance is provided by the same corporate entity. The usage of the word picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalised recently. It is a controversial idea, and many feel it gives banks too great a control over the financial industry.
 
Its a New Topic nobody has made anything related to Bancassurance which is avaiable in the forums...
 
aarre buudy..it is god that it is a new topc and hence twhat yu can do is youu can actually find out whether there is any scope of improvement in the implementation..and you can also say that what are the defects in offering it with the banks....etc...
 
I am sending half of the information about bancassurance which i have. i am also having the same project if you get any further information on this topic please reply to me.
 
RESEARCH DESIGN

‘Bancassurance’ was a concept which first time came to be noticed in a newspaper article a few years back. When the topic was opened for discussion with couple of people associated with banking industry and the insurance industry the canvass and importance of the subject was immediately noticed. This was the ignition point, which prompted to undertake the study of Bancassurance as a project.

The hypothesis of the study of bancassurance is that, the banking industry to run insurance business in their premises. Banking and Insurance industry would witness a revolution in handling this activity as a bundled product across the centers where this activity is operational and the banking industry would overall push Insurance not only as a booming sector but will also help in profit maximization of the banks.

The nature of study was decided to be of exploratory nature. The objective of the study was to document detailed information on Bancassurance so that the project report could serve as the multi dimensional but one-source information on Insurance on one hand and also look into the issues of banks on the other hand and possible measures relating to the successful operations on undertaking insurance business in the banking industry. The geographical limit for the study was ‘Mumbai’ only as the maiden operation of Bancassurance began here. The information was sourced from various articles on Bancassurance which appeared in banking and journals published by Indian Banks Association and Indian Institute of Banking and Finance, both being the premiere institutes in India in the field of banking. The information was sourced from various articles on bancassurance, which appeared in the insurance journals published by Insurance Regulatory and Development Authority of India being a premiere institute in the field of insurance.
Besides having collected the data from various journals and Internet sites, an interview with bank officials from two nationalized banks, Canara Bank and Oriental Bank of Commerce have added the practical flair mainly to know the implications and procedural structure.

There are plenty of limitations to the project. Some of them could be effectiveness of Bancassurance. It could not be ascertained for want of statistical information on insurance business done by banks, visits to industry experts were limited to only two banks and one insurance company, the discussion is limited only to theoretical understanding of the concept but the banks that are the participants of Bancassurance are keen to share all the information about the value and volume of transactions and therefore this data obtained could be very useful for the study of bancassurance. The other benefit of this project is that the interview of three officials added a practical flair to this project, the practical knowledge proves to be more helpful to understand the concept of Bancassurance.










INTRODUCTION TO BANCASSURANCE

Bancassurance symbolises the convergence of banking and insurance. The term has its origins in France and involves distribution of insurance products through a bank's branch network. While bancassurance has developed into a tremendous success story in Europe, it is a relatively new concept in Australia and Asia.

Most new insurers have entered into memorandum of understanding with banks to use their branches as outlets for marketing standard products. State Bank of India, Vysya Bank and J&K Bank already have joint ventures in life insurance. Vijaya Bank and Punjab National Bank are in the midst of finalising life and non-life venture.

The Insurance Act allows only those companies registered under the Companies Act to become corporate agents. This gives the new generation and the old private sector banks a head start over Public sector banks, which are technically not eligible to IRDA; IBA & RBI are in discussions to iron out the various issues, as public sector banks will play a key role in the distribution of products.

In terms of Regulations issued by the Insurance Regulatory and Development Authority (IRDA) agent for insurance companies have to obtain licenses. Such licenses may be issued to individuals or to corporate bodies, like banks, firms, co- operative societies, etc. In case of corporate agents the license will be issued to person who are designated by the corporate bodies as ‘Corporate Insurance Executives’. In addition to corporate agent may avail the services of the ‘specified persons’, who will have to obtain certificates. This supplement is written for the benefit of those who are working in banks and seek to qualify for the licences and certificates.

The supplement is to be studied along with the main course, which is the basis of the training and examination for the individual agents. So far, there is no such supplement for other corporate agents in uniform manner. In the case of banks however there is likely to be such common issues. That is justified for special supplement.

Meaning & Definition

There are many definitions of bancassurance and, in essence it does depend upon the model used, and the stage of development. However, the definition of a fully developed model that is most commonly used is:

'Manufacturing and distributing cost effectively banking and insurance products to a common customer base’

In it’s full holistic form it realises the full potential of the customer database of the bank to develop an excellent customer focused service for consumers, and the highest value on returns for the bank and insurer. It is not just about selling insurance products to bank customers but exploits the true synergies between, and respective strengths of the bank and insurer.

Bancassurance is the term used to describe the sale of investment products in a bank. The word is a combination of "banc" and "assurance" signifying that both banking and insurance is provided by the same corporate entity. The usage of the word picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalised recently. It is a controversial idea, and many feely that it gives the banks too great control over the financial industry. It is no longer prohibited in USA after passage of Glass Stegalle Act in USA. Gramm-Leach-Bliley (GLB) Act further codified this.

Bancassurance is a word coined in western world, when banks began to get involved in marketing of insurance business. The involvement took different forms in different countries. In some countries, the same institution would offer both banking and insurance products, seperately or together as customers may need, managing both in businesses themselves. This was possible when the institution is allowed to transact both insurance and banking businesses. This was permitted to certain countries. The product or services offered to the customer was the product of the bank and had in it, some elements of insurance. This was strictly banned in insurance.

In practice, however, there are variations. One variation was that banks may offer both services combined, but having done the business, pass on the insurance part of funds to an insurance company, with whom it had an alliance or a business arrangement. Both of them may be under the same industrial group.
For example when Unit Trust Of India offered Unit Linked Life Insurance Policies, it had an arrangement with Life Insurance Corporation to the extent of the term insurance component. The Peerless used to offer its account holder insurance cover on accidental death. This was done by the arrangement with general insurance company. Although marketed as one product, it was done under different business entities. The funds were accounted for and managed seperately by separate institution.
The pattern of developing in India is that the bank markets the insurance product for fee. None of the banks services are modified or enhanced by the insurance service. Also the benefits offered are not in any manner modified or enhanced with the association of the bank. The product in no way is different from what any other agent of insurer may offer. The bank is also an agent of the insurer.
The provision of insurance and banking products and services through a common distribution channel or to a common client base.

Relevance of Bancassurance in the Indian financial sector

i) •Integration of the financial service industry in terms of banking, securities business and insurance is a growing worldwide phenomenon. The Universal Banking concept is evolving on these lines in India.

ii) •Banks are the key pillars of India’s financial system. Public have immense faith in banks.
iii) Share of bank deposits in the total financial assets of households has been steadily rising (presently at about 40%).

iv) Indian Banks have immense reach to households. Total of 65700 branches of commercial banks, each branch serving an average of 15,000 people.

v) • Banks enjoy considerable goodwill and access in the rural regions.
– There are 32600 branches in rural India (about 50% of total), and 14400 semi-urban branches, where insurance growth has been most buoyant.
– 196 exclusive Regional Rural Banks in deep hinterland.

vi) • Banks have enormous retail customer base.
– Total of 406 million accounts with aggregate deposits of Rs.700, 000 crore as at Sept 2000.
– Share of `individuals’ as a category in bank accounts is steadily increasing.
– Rural and semi-urban bank accounts constitute close to 60% in terms of number of accounts, indicating the number of potential lives that could be covered by insurance with the upfront involvement of banks.

vii) • Banks world over have realized that offering value-added services such as insurance, helps to meet client expectations.
– Competition in the Personal Financial Services area is getting `hot’ in India.
– Banks seek to retain customer loyalty by offering them a vastly expanded and more sophisticated range of products.

Insurance distribution helps to increase the fee-based earnings of banks to a considerable extent.
Internationally, insurance activities contribute significantly to banks’ total domestic retail revenues.

viii) • Fee-based selling helps to enhance the levels of staff productivity in banks.
– This is vitally important to bring higher motivation levels in banks in India.

ix) • Banks can put their energies into the ‘small-commission customers’ that insurance agents would tend to avoid.
– Banks’ entry in distribution helps to enlarge the insurance customer base rapidly. This helps to popularize insurance as an important financial protection product.

x) • Bancassurance helps to lower the distribution costs of insurers.
– Acquisition cost of insurance customer through banks is low. Selling insurance to existing mass market banking customers is far less expensive than selling to a group of unknown customers.
– Experience in Europe has shown that bancassurance firms have a lower expense ratio. This benefit could go to the insured public by way of lower premiums.

xi) • Banks have an important role to play in the pension sector when deregulated.
– Low cost of collecting pension contributions is the key element in the success of developing the pension sector. Money transfer costs in Indian banking is low by international standards.
– Portability of pension accounts is a vital requirement, which banks can fulfill, in a credible framework.

xii) •Banks can play a major role in developing a viable healthcare programme in India.
– Only 2.5 million people have access to healthcare facilities. There is a growing demand for healthcare products, which banks can distribute (and facilitate administration).
Bancassurance: Patterns of Distribution alliances
•Banks selling products of their insurance subsidiary exclusively.
•Banks selling products of an insurance affiliate on an exclusive basis.
•Banks offering products of several insurance companies as `super market’.
Distribution alliances in bancassurance: Key Regulatory issues
xiii) •Corporate Agency model
–Issues and responsibilities.
xiv) •Corporate Broker model
–Banks as brokers.
–Regulatory and operational issues.

Implementing Bancassurance:
Key Challenges in the Indian context.
Creating an environment of top-level involvement of bank management.
•Bringing relevance, motivation and skill development at the operating level at bank branches.
•Resolving possible conflicts of interest between the bank and the insurer.
•Setting up distribution procedures consistent with the manual systems in most banks.
•Establishing credible service level agreements between the bank and the insurer.




Bancassurance Development – Global
For years together world over, insurance and banking businesses were considered to be separate and regulated as such. The principles of managing the funds were different in the two businesses, investment decisions. Even within the banking business development banking was different from merchant banking, which was again different from commercial retail banking.
The 1970’s &1980’s saw these barriers crumbling. The financial sector was becoming one. There was need for a one-stop delivery for all financial services. Financial institutions transacting different businesses began to work together in strategic alliances or emerged into one entity. Banks could offer insurance policies and insurers could offer banking services.
In 1997, the credit Suisse bought over the Winterthur, the second largest insure in Switzerland. Such merges happened in the Netherlands. Belgium, Germany, France and Spain. This was not permitted in the U.S.A because of the Glass Steagall Act (passed in 1933) this act was recently repealed and some insurance companies and banks have merged.

In Europe, Bancassurance seems to have made the greatest impact in France. It is claimed that the 55% to 60% of the life insurance business in France had come through banks. In the U.K the figure is about 15%. In Portugal and Spain it was over 70%. In Argentina, Brazil, Chile, Colombia and Mexico, bancassurance is popular. Big international banks have got into online banking systems are used. Everywhere the contribution for non life insurance is low, less than 10%.

•A primarily European phenomenon, slowly developing over the past 30 years or so
Ø •Last 10-15 years have seen particular growth
Ø •Different models for different situations, relationships and environments
•All models proven to work successfully – selection of the most appropriate model, critical success factors and execution/implementation found to be the key factors.
•Established now as a major distribution channel
•Taken a long time to develop, several development phases, lots of mistakes made along the way – iterative process
•Now multi channel distribution being consolidated – entire range of different products for different channels and customer buying preferences
•Increasing use of technology in CRM, data mining, sales process, integrating distribution channels, communications and admin processes.
The potential impact of bancassurance is much more than what these figures of shares represent. If the Royal Bank of Canada and the London Insurance Co. were to merge with AIG (the Manhattan Bank in the US), the impact would be as huge as the State Bank of India and Life Insurance Companies merging in India. These are not hypothetical, but real possibilities in Canada and in US. These also raise issues relevant to anti trust laws. In Canada, the Competition Bureau as well s the superintendent of Financial Institutions have expressed concerns about mega mergers between banks having reduced competition. They also see possibilities of conflict of interest.

Bancassurance Development in Asia

Ø •Primarily grown slowly over the past 10 years – past 5 years has seen particular development
Ø •Regulation gradually loosened, but still a barrier to full development in some markets, e.g. Korea, Taiwan
Ø •Most relationships characterised by simple distribution agreements – direct mail and packaged products.
Ø •Even those banks that were allowed to take over insurance companies have not made sweeping successes, still having multiple agreements
Ø •Some stunning success stories – Mabank in Malaysia developed a primarily European style model, adapted to local circumstances and conditions – 0.1% to 8.5% market share in less than 5 years
Ø •Some regulators have used it and are using it as a ‘catalyst’ to develop better practices in the sale of insurance products
Ø •Barriers have included size of companies/capital outlay, channel conflict, lack of strategic drive – these are changing
Ø •Consumers are developing and becoming more demanding/choosy
Ø •Markets opening up further/increasing regulation/b/a gaining ground.
Some Critical Success Factors (Asia)
Ø •A customer focused approach that fits in with bank culture
Ø •A bank focused sales process, radically different than agency
Ø •Sales Management activity management programs that work in a bank culture
Ø •Sales and Sales Management training programs to reinforce and enable the bancassurance sales and sales
Ø •Right products for right channel and customer preference
Ø •CRM, database mining and effective use of technology as a sales aid, where and when appropriate
Ø •Effectively bringing together two different business cultures
Ø •Using the respective strengths of both partners
Ø •Practical approach to implementation.

THE INDIAN CONTEXT
In India, no company is allowed to trandact both isurance and banking business. They are kept separate. In fact, even a company registered as an insurer has to choose between a life and non-life business. It cannot do both. Therefore the banks in India Cannot have the advantages which are available in the European Context.

There are joint ventures in India between banks and foreign insurers. State Bank Of India, HDFC, ICICI, and Vysya Bank are examples. But apart from a greater willingness to help each other, the joint venture will not give either party a greater advantage in oher;s business. The joint venture is an entirely independent unit operation, with separate personnel and funds and subject to different regulations.

The only way in which the bank can be associated with insurance business in india by becoming a corporate agent, for a remuneration. The bank can do so for a paricular lifr insurer. The bank cannot develop any insurance products. It can ofcourse make suggestions on the basis of its intimate contacts with the customers. Since 2000 many banks and isures have to agreed to arrangements for mutual benefit. The LIC has tied with more than one bank, so also have other Insurers.
For more than a hundered years insurance business had been sold through insurance agents and their supervisors. This sytem had not been very satisfactory. The LIC inherited this system. The efforts to make the agents more professional had not yield very satisfactory results, despite incentives and training programmes. Manyof them continued to treat the agency busiess casually, as just source of additional income. The turn over had been high and the effort of replenishing the strength, costly. The banks have skilled staff, to whom procurement of insurance can be assigned as a duty. This was an opportunity made available after the regulations of IRDA.
Particular Issues in India -
Ø •Level of development of the financial services industry – early stages
Ø •Opening of the market – new players, new ideas
Ø •Lack of sales culture or sales awareness in banks
Ø •Lack of knowledge and expertise – no role models and trailblazing
Ø •Unproven – interest and enthusiasm but confusion
Ø •Mindset change – biggest success is bank driven
Ø •Potential channel conflict
Ø •Newly developing insurance industry - start up companies with a concentration on key primary distribution channel
Ø •Related capital/cost benefit considerations
Ø •Internal resource restrictions
Ø •Business case related to model and approach
Ø •HR issues – remuneration, incentives, recruitment, retrenchment
Ø •Potential pitfalls – starting off on the wrong foot with the wrong model or approach
Ø •Full potential comes with full commitment – therefore long-term relationship requirement, unless perhaps ‘one off’ direct mail
Ø •Rural reach and areas – sheer size and scope
Ø •Start up costs – IT can assist, but at what cost/benefit/timing
Ø •Are all ‘eyes open’ to pros – and cons
Ø •Type of relationship – eg agreement, shareholder, partner
Ø •Nature of bank – state bank, rural bank, foreign bank
Ø •Nature of customer base, and customer information/relationship
Ø •Level of experience of insurance company
Ø •External cost/benefit
Ø •Underestimate the potential effort/commitment
Ø •Greed Fee Income Commission Short-term gain. Some simple practical implementation issues in developing markets
Ø •Lead Generation/Sales potential
Ø –Does the decision maker actually visit the bank branch
Ø –Does the bank currently cross sell it’s own products?
Ø What will motivate people
Ø –How strong are the unions or traditions of the bank
Ø –Current state of bank lead generation, training, sales management etc















Bancassurance In India
It’s Pros & Cons

The reforms in the insurance sector leading finally to the opening of the insurance sector for private participation has brought in its wake major changes not only in the design of the products available in the market but also the manner in which they are marketed. We have today a host of products coupled with a large number of intermediaries who market them.
The emergence and spread of bancassurance has been one of the most significant developments in the retail financial services sector in India. Many banking institutions and insurance companies have found bancassurance to be an attractive - and often profitable - complement to their core businesses. While less than two per cent of total premiums are generated through this channel, there are expectations that bancassurance will grow to register a dominant share in the widening insurance market during this decade. World over, while both life and non-life companies seek to engage bank branches, non-life products have featured less prominently in bancassurance distribution. The major reason is the complementary nature of life insurance and banking products. Both are in the nature of savings accumulation, one short-term and the other long-term. The enormous trust that the banks command in the minds of public is an important reason why insurance companies seek to enter into wide ranging banking partnerships. The banks, in turn, find that the customers appreciate the provision of integrated financial services at the bank’s branches, which in turn builds better customer loyalty and retention levels. The insurance companies and the banks together find that their collaboration at providing a package of financial services not only benefits customers but also maximizes their profits.

The early bancassurance distribution arrangements in India are taking off under two categories:
distribution alliances by way corporate agency and insurance broking relationships, and
referral arrangements. Pure distribution arrangements provide both banks and insurance companies with additional sales potential with minimum of investment.
The referral form of distribution is an arrangement, whereby the bank passes on business leads to career agents of the insurance company with which it has a tie-up. Unlike the referral arrangement, an agency relationship has the merit of grooming the bank staff to sell insurance products after receiving proper training in accordance with the syllabus prescribed for the purpose. The regulations restrict banks to enter into corporate agency arrangement with only one life insurer and one non-life insurer. Banks becoming a corporate agent need to designate a senior executive to be the nodal point with responsibility to account for adherence to the terms of the insurance regulation. From a regulatory perspective, we would prefer that insurance companies go in for a more formal corporate agency model rather than the referral model.
In India, there are 75 branches per million inhabitants and banks have expertise on the financial needs, saving patterns and life stages of the customers they serve. Clearly, that's something insurance companies -- both private and state-owned -- would find nearly impossible to achieve on their own. Banks also have much lower distribution costs than insurance companies and thus are emerging as the ideal distribution channel. Tying up with banks is the logical route for insurers to take for achieving extensive geographical spread and countrywide customer access at minimum cost.
Until the entry of private insurers, state-owned insurance entities relied solely on the tied agency force and their own employees. But agents and employees have their limitations. After a while, the less aggressive ones see their sources and contacts dry up, and growth in the sale of new policies decreases. Distances handicap even those with a sales drive. Here banks excel. They have a captive and growing customer base they can exploit to cross-sell products. The concept of universal banking-- one stop financial services supermarket -- which originated in Europe is slowly beginning to evolve in the Indian scenario by offering the prospect of low-cost one-stop shopping for all of a business's financial services. To sellers there's the prospect of scale economies and cross marketing.
Bancassurance will help cut overlapping costs and try to gain economies of scale and scope and, thereby, driving down unit costs in the fashion of the vertically integrated 20th century corporation. With a low-cost structure, the banks can leverage on a cost-effective bundle of business financial services, including cash management, lending, capital markets, risk management, retirement savings, and all types of commercial and personal lines of insurance.
Bancassurance has the potential to be an effective distribution channel in India, especially because of extensive network, built over the years. Insurance companies have to take advantage of the customers’ long-term trust and relationships with banks. The association is a mutually profitable one, where the bank can widen its range of products on offer to customers and earn more, while the insurance company gains by getting constant visibility at the bank branches, and also the security of receiving premium payments on time.
The advent of the e-economy has also radically challenged traditional principles of corporate strategy, including how value is created and the basis of competition. Today, creating value is about scale in the formation and management of strategic alliances. A bundled package of commercial financial services from a financial conglomerate, for example, is likely to benefit small and middle-market businesses most. Large corporations already enjoy enormous buying power and can afford at least some internal staff that is experts in each of the intricate areas of financial services.
The products that are likely to sell through bancassurance are simple vanilla products. There is an element of complementarily in banking and insurance products. The various schemes for disbursing credit are likely to generate a demand for insurance cover, and availability of insurance cover in turn will facilitate disbursement of credit in risk prone activities. The insurance companies need to introduce simple products that can be sold over-the-counter at the banks. Both Banks and insurance companies have rural and social obligations to meet as prescribed by their respective regulators. The Banks and insurance companies can work together in this area and it is possible that the banks while meeting their obligations in terms of lending requirements to the rural and social sectors can complement the efforts of the insurers in meeting the latter’s obligations too. Such relationships will also help in synergizing the strengths and capabilities of every insurer and the banks, which with their network in the rural areas offer a perfect opportunity.
The bancassurance model also addresses the problems of individuals and small and medium sized establishments by providing a variety of financial services under one roof. The convergence of financial services reduces the operational costs of the banks and insurers, which can be passed on to the customer without materially affecting their own margins.
However large customers continue to value diverse and objective advice, and use different banks, payroll companies, insurance companies, and tax and legal firms. This enables gaining fresh perspectives from all of them because they fear that with a bundled package their interests would be subordinated to those of the provider. This category of customers is bound to be outside the scope of bancassurance.
Financial services and information technology have undergone rapid and massive changes in all aspects of their business: product and services, sectoral structure, market segmentation, competitive environment. Today Information Technology has changed the nature of financial markets and financial transactions. The pace and reach of change are unlikely to slowdown in the foreseeable future.
While the Banks and capital markets have adapted to these changes, can insurance companies cope with this change? By and large, insurance companies have been conservative users, putting heavy emphasis on proven reliability and toughness of IT applications. Major applications decisions and development processes are often ponderous and time-consuming. While insurance companies accept the significance of information technology in their business, they remain undecided in their attitude towards it: is at a tactical tool or strategic lever? Is it a core business? Does technology offer sustainable competitive advantage? Is it a means of differentiation among between banks and insurance companies?

On the other hand, bancassurance is a network business, whose value increases with the number of users and wider reach, which implies at least some degree of inter-operability. Hence the need for co-operative systems and networks: financial institutions have been remarkably successful in developing and managing such systems and networks. There is no denying that there are significant issues relating to software and systems integration for bancassurers. The transition from closed legacy systems to open new technology is not complete, and integration of parallel legacy systems is complex. The existing institutions are adapting to the new environment while the new entrants are coming up with the state of art technology and hence will have no difficulty in adopting the bancassurance model.

The emergence of banks as promoters of insurance companies and the distribution of insurance products through corporate agency model by the promoter banks also raises concerns about the potential concentration of economic power and the ability of the regulators to manage risk. A more ubiquitous concern in future is the potential for "systemic risk" in the economy. This is an area that requires constant monitoring by the regulators.
Social, environmental and ethical concerns are increasingly recognised as a source of both risk and opportunity. Clear procedures need to be established to include such concerns as part of the review process of the insurers while examining bancassurance partnerships. Banks also need to have clear and detailed procedures to protect the integrity of their customer’s data and to give customers the choice as to the level of privacy they wish to enjoy.
As intermediaries, insurers are taking on new financial risks. Insurers investing in credit derivatives effectively take on bank credit risks. Insurers, who underwrite professional indemnity policies for bank directors and officers, effectively assume banks' operational risks. Insurance company managers must keep abreast of these developments. They must understand how their companies' risk profiles have changed, and how new activities can have opposing effects on both sides of the balance sheet. All insurance industry professionals need to become more astute a assessing risks, and competency needs to be upgraded at all levels in the company.

Regulators must also keep pace. In supervising individual insurers, regulators need to look beyond insurance risks and protecting policyholders. From a broader systemic perspective, greater engagement of insurers in financial markets raises important questions concerning their impact on financial stability. How well are insurers managing this new portfolio of risks? These are issues that will continue to engage the attention of the regulator.

In addition to the larger issues raised about the conglomerates, there are also a number of operational issues that have to be addressed for a successful experiment in bancassurance. While banking is a short-term business, life insurance is a long-term relationship with the client. The insurers and bankers have to understand and appreciate each other’s prospective and work together to make a success of the business of selling insurance. Unless the operational details are worked out and the Bank staff trained adequately, it would be difficult to ensure a coordinated action at the field level. It is not enough that there is commitment to the model at the higher management level. It should percolate to the lower levels.

The large untapped potential for insurance exists in the rural areas and the branch network in those areas is primarily under public sector management. The success of the model would, therefore, largely depend on the attitude of the employees of the public sector undertakings. Are they likely to look at it as an opportunity or as an imposition? What should be done to motivate them to sell insurance products? How do we devise a system of incentives for those who participate in this programme? The effectiveness of the programme will depend upon how successfully this issue is addressed.

The credibility of the model comes into question if there is mis-selling. A cordial banker-customer relationship that has developed over the years would turn hostile if due to ignorance or oversight the full implications of an insurance policy are not fully explained by the banker or understood by the customer. There is, therefore, need for great caution in selecting the products for sale through this medium. In addition, those in charge of sales should be trained adequately to avoid any miscommunication.
As indicated earlier, the number of policies sold through bancassurance model is modest as of now. I have no doubt that it has the potential to be an effective distribution channel because of the extensive network, vast customer base and the desire to maximize revenues from other sources to make up for soft interest regime. I am equally confident that bankers and insurers would together address and overcome the difficulties that arise in this partnership and serve the interests of their institutions while extending the benefits of insurance to the large sections of population which need this facility and but are presently outside its pale.













Benefits, Tribulations and Value Propositions in Bancassurance

Benefits to the insurer: -
The main benefits to the insurer are as follows:
The market of the insurance is very heterogeneous, with customers of widely varying profiles and needs. Therefore they have to use multiple channels for the distribution, to match the different segments. As an additional channel, the banks have a good match with certain segments of the market.

It gets the advantage of the existing infrastructure of the bank. In India, the public banks have 66000 branches, of which more than 33000 are in the rural areas and 14000 in the semi- urban areas. The LIC the biggest life insurer in the country including the metro cities. The four General Insurance
Companies also had a similar number of branches.

Access is easily available to a huge client base. The customers of banks are similar to the customers of the insurance, whether life or general. Banks have 18crore accounts, a large reservoir of potential customers for insurers.

There is a relationship of loyalty and trust between the bank and its customers, which can become a valuable base for selling insurance. Banks have much more intimate contacts with their customer than insurers, because (i) the frequency of contact is more
(ii) They meet under more pleasant circumstances.
Customers tend to have more trust in banks than in insurers, with whom their contacts are comparatively much less.
There is a complimentarity between insurance and banking. Banks on security and credit of persons and of assets give loans. Insurance ensures that the security is not lost.
Banks constitute a readily available, competent, trusted educated distribution channel for the insurer.
Particularly for new insures, the association with the banks helps them penetrate the markets much faster and also give to themselves some credibility. They can get some leverage from the bank’s brand image.
Bank can leverage their customers with commercial clients for developing personal lines of insurance, which is relatively neglected, particularly in non-life business.
Premium can be paid by debit to the account with the bank.
Employees bound to by the discipline of the banks are easier to monitor and to control than independent agents.

Benefits to the bank: -
Banks are under pressure because of falling interest rates and increasing costs of administration. Competition from global players is not making t easy. All banks are looking for fee-based incomes. Insurance commissions provide an excellent avenue for such income. It is expected that the banks would be looking for fee based (non-interest) incomes of the order of Rs. 15000 to Rs. 20000 crores over the next five years. In India, the fee is only through the commission received on the business placed with the insurer.
Banks can help to develop insurance products, which are relevant to its business, particularly in the areas of International trade, with risks on account of political upheavals, exchange fluctuations, etc.
There is no risk in the business. The bank cannot lose. The only risk is if the chosen insurer gets into trouble or poor in service. The customer is likely to blame the bank for the problem. This is however, a remote risk.
The other benefits include
· Better customer retention and stronger relationships.
· Clear competitive advantage in the rural areas.
· Possibility that the insurer’s account as well as the accounts from the claimants will remain with the bank.
· Insurance products can augment the value of the banking products and services.
· Banks are in better position to offer complete integrated financial solutions.

The Legal Requirements
Any scheduled commercial bank or its subsidiary can become a corporate agent.
To float a joint venture the bank must have according to Reserve Bank of India regulations.
Ø Net Worth at least of Rs 500 crores.
Ø Reasonably low non- performing assets. Net profit for the last three years
Ø Record of satisfactory performance by its subsidiaries, if any, should be.
Ø Capital to Risk Weighted Ratio of not less than 10%.
Ø A share in the insurance company’s capital not exceeding 50%. The Reserve Bank Of India may consider exceptions.
Ø Limited the share of capital of foreign partner, if any, to 26%

Unlike in foreign countries, the banks in India are required to maintain a separate staff for doing insurance business. These persons will be exclusively dealing with insurance business. The overhead expenses will therefore remain high until the business increases adequately.
The banks will be entitled to receive commission on the insurance business only if it is licenced to act as an agent and the specified person who procured the business is an employee of the bank will not be entitled to record any commission, if the business is procured by a person who is employed by the insurer, but s allowed to occupy space or other facilities of the bank.

The Problems in Bancassurance
Any bank getting into business of selling insurance cannot afford to have casual approach to it. The staff, if deputed from within the existing bank staff, will have to be specially trained in the intricacies of insurance and the art of salesmanship. These skills will be required at levels different from the requirements in banking operations. They will have to be persons who have an external orientation.

The amount of business acquired through the banks depends entirely on the personal skills of specified persons and the corporate insurance executives. An effective and successful specified person might perhaps find it more remunerative to branch off as an insurance agent on his own, instead of being tied to the bank. The options available to the bank to prevent this may lie in developing attractive compensations packages. The relevant issues will be the restrictions imposed by insurance Act as well as relative pressures within the unions of banks of employees.

The commitment of senior management is crucial to the success of the persons deputed for the insurance work. The priorities for the managers may depend on the criteria by which they will be appraised at the end of the year. If the progress in insurance is not important criterion, the support to the insurance activities may be reduced. They would see mainstream banking activities as more important for their own future growth. The appraisal and reward systems of the bank have to be appropriately aligned.


Value Propositions

The services offered by the banks as well as the insurance companies, are related to assets and risks. They have to be managed. These institutions manage risks and assets for the customers, reducing and taking over the risks and transforming the assets. The cores of the businesses are similar, though not same. The basic values offered by banks, Insurance companies and other financial institutions are indicated below.

Banks offer to its customers liquidity (while at the same time making long term loans), safety, trust (managing estates on behalf of beneficiaries), collection of interest or dividends payments of commitments (rentals and insurance premiums for example) and annuities. Insurers primarily protect clients from risks (political, financial, commercial, business, and human). In life insurance, there is major component of management of an asset, which is created by the policy. The benefits of the insurer’s expertise in asset management, passes on the clients by way of premiums levels and bonuses. The liquidity concerns of insurers are different from liquidity concerns of banks.

Securities firm primarily provide information and advice. They also act as brokers or agents for the customers, but not take responsibility for risks and assets. Pension funds manage the saving made directly or through employers and help the pensioners manage the risks of loss of income in old age. Mutual funds are asset transformers, providing small savers easy access to complex portfolios of capital market, without sacrificing the needs of liquidity.

Most customers, big and small, individual and companies are all interested in all these services. That is the justification for concept of a single window for all financial services. Bancassurance is a step in this evolution.

Opportunities and Challenges
An endeavor is made to identify and deliberate upon some key opportunities and challenges relevant to the emergence of bancassurance in India. It is proposed to consider each of the opportunities and associated challenges together to give a perspective to the subject under discussion.
The biggest opportunity perceived by all players in the field is vast untapped an undeserved population. It is the fact that the penetration of the insurance sector in the rural and the semi-urban areas is low. The challenge of tapping this vast market is in inculcating savings habit as a provision for the future. Looking at the level of poverty, the availability of surplus funds for investing for future economic security and the propensity to save are very nominal. Success lies in evolving novel products and schemes and linking them to the existing relationship of the customers with the banks.

Wide coverage of geographical areas and availability of banking services through branch network, especially of the PSBs, is another potential source of great opportunity to sell insurance products through banks. However it is observed that there is a faster growing awareness and demand among bank customers for prompt and cost effective service and also remote access to their accounts. In spite of the hype created total branch mechanization (TBM) and full computerization of branches, this is mostly in metro and urban centres.
The rural and semi- urban branches still functioning using manual operation systems. Complete integration of branch network and operations using the communication infrastructure and maintaining it through appropriate software, the difficulty of hiring of professionals from both the sectors with a high comfort level in hi-tech environment and establishing call centers. In the mean time the challenge lies in setting up distribution procedures consistent with the manual systems in most banks.

The opportunity to augment fee-based income is another alluring factor, which has impetus to the concept of bancassurance in India, especially in a regime of falling interest rates and low levels of credit off-take. Banks need to take a careful assessment of all costs involved, including hidden and creeping costs to arrive at the net benefit. Initial infrastructure set up cost training and orientation costs, communication and lead conversion costs, employee productivity and breakeven level of business and such other issues need to be gone into thoroughly. In short, an in-depth analysis of the value chain should be done in order to draw valid inferences and assure oneself of the real income through fee/ commission in selling insurance products.
The insurers see leverage of existing assets of banks, mainly vast and valuable customer database as a great opportunity. While this is true to some extent, the existing database is not available to the insurers in a ready to use form. There was never a conscious effort made by the bankers towards effective client segmentation, evolving of neither proactive customer acquisition policy nor creation of an institutionalized information pool. Most of information on customers and cultivation of relationship with clients has been at a personal level. Thus immediate challenge posed is to recast the available database and create customer-centric access records for efficient exploitation of this opportunity. Another area that could be of interest for bankers to sell insurance is exploiting the corporate customers and tying up for insurance of the employees of corporate clients, which could be an avenue with the easy access.

In most cases of corporate accounts bank take up an activity of salary disbursement of employees, offering of personal loan facilities. Where employee base of the corporate client is quite sizeable, the economics work out favorably to open extension counters at the factories and work place and these would be better equipped to sell insurance because of the exclusivity of its operations, good relationship with the employees and close the liaison with the top management.
Leveraging the availability of large pool of professional in banks presents itself as an opportunity to insurers in selling their products through banks. However it has been the experience elsewhere in the world that there is need felt for adequate training of the employees in view of vast differences in work culture. Reluctance to learn on one hand and inability to sell complex insurance products on the other two are important aspects of challenge from the human resource angle. Bringing relevance, motivation and skill development at a operational level at a bank branches is a key challenge that needs considerable attention to ensure the success of bancassurance. One irritant in respect of utilizing the existing bank staff is remuneration and compensation schemes. A rational, transparent, well defined and productivity linked package has to be agreed upon and put it in place with quantitative distribution of amount payable to all persons involved in the chain.
While the above points are from the macro level view, there are some micro aspects that need to be focused upon. Many banks have seized the opportunity to partner with insurers seeing the apparent benefits, but to translate into reality the challenge is creating an environment of top- level involvement of bank managements. There is a lot of fanfare and media coverage while entering into partnerships, but the same enthusiasm and direction from top to sustain the tempo may be lacking.
Resolving possible conflicts of interest, establishing credible service level agreements between the banks and the insurer, parking of funds and their management, and other similar kinks need to be straightened to ensure mutually enriching relationships.

Regulatory Issues In India
In Indian context of joining forces by banking and insurance sectors emerging changes in the financial sector leading to more and more integration, there is an ongoing debate on the need for multiple regulators and the rationale for separation. The blurring of the boundary lines between each of sectors each entering into the domain of others to create synergy and optimize businesses and more importantly sectoral directives are cited as reasons for having an integrated single regulator. However these do not appear as sufficient reasons for single regulator to the protagonists of separate agencies, who see the three regulators banking, insurance and securities- as three pillars supporting the structure of finance.
With the opening up of the Insurance sector to private players and the emergence of bancassurance as a major force to propel growth of insurance business, the roles of various regulators, the evolutionary aspects of the framework and guidelines and establishment of new regulatory bodies such as Pension Regulatory and Development Authority (PRDA), are all attracting much attention and comment from all concerned. It is therefore contextual to examine this issue carefully.

Considering the evolutionary history of all commendable role played by RBI in bringing the banking sector to a mature phase, the buoyancy bought into the stock market after the dismantling of the bureaucratic structure of CCI and the establishment of SEBI, and the flutter of activity after the setting p of IRDA in 2000 and the praise showered on it, it can be said that these three pillars are rested in firm foundation.

Experts at various forums have aired opinions for and against the integrating of these three regulators into one body – Financial Services Authority – in- line with the UK model. There seems to be a valid point in the argument that the three entities continue as independent authorities. The first two regulators took birth, have grown and matured over time, learning important lessons on their evolutionary path through a difficult and painful process. They have acquired experienced expertise and exposure in their respective spheres of operation. It is therefore desirable and necessary that their independence is preserved. Further, that the idea of integrating them would be counter- productive because of conflicts of interest, loss of focus and becoming heavy.

The IRDA during its short span so far has done a good job and has built a credible image of being proactive and being fare in its dealings. Insurers have long been involved in operating pension schemes and managing these funds. In the light if this, the rationale for setting up PRDA does not appear to be well founded as observed as the chairman of IRDA. There is certainly a case for vesting in IRDA the role and responsibilities of pension fund regulation.

While it is desirable to maintain the independence of the above mentioned three regulators, there is a strong case for ensuring the following: -
ü Close coordination between them as the operations of one directly or indirectly impinge on the other and the financial sector as a whole, and to see that they do not act at cross-purposes.
ü Sharing of information on a regular basis without resorting to ego clashes and without closed domain approach.
ü Establishing appellate authorities for each regulator and an apex body for expeditious dispute resolution mechanism with the ultimate aim of ensuring minimal interference of the government.



CONCLUSIONS
Considering the broad picture emerging in respect of bancassurance in India the oxymoronic statement ‘make haste slowly’ seems to be very appropriate. While it cannot be afford to go slow in grabbing the opportunities presented, we cannot also be hasty in trying to bite more than we can chew. Variegated experiences globally should teach us enough lessons and point the path to tread, with caution but not trepidation. Banking and Insurance sectors have grown and reached the present level through an evolutionary process and the same applies to the product of their coming together- bancassurance, which may novel and with vast potential, but revolutionary.

The goal of all the players- bankers, insurer and regulators- should be to add value to the services offered to the customers in terms of quality, speed and cost. Opening up of the insurance sector and competition among the operator is expected to deliver true value to clientele. In this equation the regulators have a vital role to play, especially at the initial stage, by casting themselves in dual role of controller and promoters. Simultaneous enforcing of strict supervision and enable enough flexibility of operations is indeed a great balancing act and unenviable task. Without intent to end on a sour note but to offer a word of caution, it has been our experience that whenever a sector has been opened up, free enterprise and dishonesty have become undistinguishable, if not synonymous, and we wake up to series of small and big scams, where the trusting customer is only the looser in the whole deal. We can only hope that it doesn’t happen the next time.






HDFC STANDARD LIFE INSURANCE COMPANY LTD
HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), India’s leading housing finance institution and The Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are well known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry


















Group Companies

















PRODUCTS




























At HDFC Standard Life, they offer a bouquet of insurance solutions to meet every need. We cater to both, individuals as well as to companies looking to provide benefits to their employees. This section gives you details of all the products. They have incorporated various downloadable forms and product details so that you can make an informed choice about buying a policy.

Individual Products
HDFC Standard Life realises that not everyone has the same kind of needs. Keeping this in mind, they have a varied range of Products that we can choose to suit all your needs. These will help secure our future as well as the future of our family.
Protection Plans
We can protect your family against the loss of our income or the burden of a loan in the event of our unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price.


Term Assurance Plan
If we have a family that we care for, we should consider what would happen in case of our unfortunate death. The emotional void cannot be filled, but financial insecurity can be avoided. By taking this affordable life insurance plan, we can provide for the well being of our family in case of our unfortunate death. This plan comes to us at a minimal cost and is well-suited for the value-conscious customer.
Under this plan, a sum assured is payable in case of death of the life assured during the term of the contract. One can choose the lumpsum that would replace the income lost to one's family in the unfortunate event of one's death. Since this non-participating (without profits) plan is a pure risk cover plan, no benefits are payable on survival to the end of the term of the policy.
Term Assurance Plan
ü A protection plan to secure higher protection needed for your family at economical rates
ü Optional riders for enhanced protection
ü Unique joint life option to cover your spouse under the same plan
ü Single / regular premium payment options

Investment Plan
Single Premium Whole of Life Plan
ü Single Premium Whole Of Life Insurance Plan is well suited to meet your long-term investment needs. This participating (with profits) plan offers you the following benefits:
ü Whole of life plan aims at providing long-term real growth of your money
ü Single premium investment plan
ü Predetermined exit options occurring throughout your lifetime
ü In case of unfortunate demise during the policy term, this participating (‘With Profits’) insurance plan will pay your family the Sum Assured and compound Reversionary Bonuses, which are usually added annually. An additional Terminal Bonus may be paid depending on the performance of the underlying investments
ü On exercising exit option we will pay the Sum Assured and compound Reversionary Bonuses, which are usually added annually. An additional Terminal Bonus may be paid depending on the performance of the underlying investments
PERSONAL PENSION PLAN
Hold your head high. Even after retirement.
Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms even after you retire?

HDFC PERSONAL PENSION PLAN
They understand our need to build a secure future for ourselves. Hence, the HDFC Personal Pension Plan is an insurance policy that is designed to provide a post - retirement income for life with the freedom to choose our retirement date.
We can choose our premium, the Sum Assured and our retirement date. At the end of the policy term, we will receive the Sum Assured plus any attaching bonus, which will provide your post - retirement income
The HDFC Personal Pension Plan is an insurance policy, which can benefit you in the following ways:
ü Provides a post retirement income in your golden years
ü Gives you the flexibility to plan your retirement date
ü Gives you tax benefits on your premiums
The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment.
ü The only difference between the Pension plan and unit linked pension plan is: -
ü Offers us potentially higher market linked returns
ü Premium we wish to invest, based on our retirement needs
ü Choose the investment fund or funds we desire

Saving Plan
Endowment Assurance Plan
Secure our Family’s Financial Independence
We have given our family the very best. And there is no reason why they should not get the very best in the future too. As a judicious family man, our priority is to secure the well-being of those who depend on us. Not just for today, but also in the long term. More importantly, we have to guard your loved ones against any contingency. How will they sustain their way of life, so lovingly built by us, in our absence?
With The HDFC Endowment Assurance Plan, we can ensure that our family remains financially independent, even if we are not around. We can ensure that they live a life of respect and dignity always.
The HDFC SL Endowment Assurance Plan gives you:
An ideal way to secure our long-term financial goals
Valuable protection to our family by way of lumpsum payment in case of our unfortunate death within policy term
Provides lumpsum payment (basic Sum Assured plus any bonus additions) on survival up to maturity date.
Very flexible benefit options and payment options
In case of our unfortunate demise during the policy term, this participating (‘With Profits’) insurance plan will pay our family the Sum Assured (together with the attached bonuses) we had chosen.
The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment.
3 EASY STEPS TO YOUR OWN PLAN
ü Choose the amount of targeted savings and policy term using our Financial Planning Tool.
ü Choose from any one of the 4 additional benefit options as per your requirement
ü Work out the premium payable and Sum Assured with our Financial Consultant.
HDFC Unit Linked Endowment Plan
The HDFC Unit Linked Endowment Plan gives you:
An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments
Valuable protection in case of the insured life’s unfortunate death
Flexible benefit combinations and payment options
Flexible additional benefit options such as critical illness cover
Access to your accumulated fund before maturity
We can choose our premium and the investment fund or funds. We will then invest our premium, net of charges in your chosen funds in the proportion you specify. At the end of the policy term, you will receive the accumulated value of your funds.
In case of an unfortunate demise during the policy term, they will pay the greater of our Sum Assured (less any withdrawals you have made) and our total fund value to your family.
Use HDFC Standard Life’s excellent investment options to maximise your savings & secure your and your family’s future. We will provide financial security for your family in your absence.
4 EASY STEPS TO OUR OWN PLAN.
Choose the premium we wish to invest
Choose the amount of protection (Sum Assured) we desire.
Choose the additional benefit options we desire.
Choose the investment fund or funds we desire.
The above plan helps us to differentiate between the Endowment plan & The Unit Linked Endowment Plan
Money Back Plan
Secure the financial independence. Live life on your own terms.
You have always believed in living life on your own terms. So why let the changing realities of everyday life overwhelm you and make your aspirations take a back seat? We can plan now to ensure that you have the necessary funds to meet the future financial needs.
The table below will help you identify and classify some of your financial goals. You can prioritise these goals and set your objectives accordingly (see indicative table given below).
LONG-TERM GOALS SHORT TERM GOALS
Provide adequate cover for Life, Critical Illness or disability. Buying a car
Saving for big-ticket assets like your house Saving for your marriage
Saving for your children’s education Vacation abroad
Having a regular system for savings


HDFC MONEY BACK PLAN
The HDFC Money Back Plan is a ‘With Profit’ Plan that gives you:
A proportion of the basic Sum Assured as cash lumpsum at regular 5-year intervals within the policy term (see the table given below) – an ideal way to secure your long- term as well as short-term financial goals
A lumpsum payment on survival up to maturity date
Valuable protection to your family by way of lump sum payment in case of your unfortunate death within the policy term. This is over and above any earlier payouts.
Making the right kind of investment will enable us to achieve the objectives, be it your immediate expenses or else securing your future financial needs. Our Money Back Plan gives us a wide range of terms and cash benefit schedule to choose.
Maturity Value
On maturity we receive survival benefit due at that point of time along with attaching bonuses for the full Sum Assured calculated for the full term.
You can ensure your financial independence. And be able to live life on your own terms always.
3 EASY STEPS TO OUR OWN PLAN
ü Choose the amount of targeted savings and policy term using their Financial Planning Tool.
ü Choose from any one of the 4 additional optional benefits as per their requirement
ü Work out the premium payable and Sum Assured with their Financial Consultant

Group Products
One-stop shop for employee-benefit solutions
HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. They offer different products for different needs
They now offer the following group products to their esteemed corporate clients
Whatever the business - it’s the people who make it a success. Everybody requires some type of life insurance, especially when others depend on them financially.
The Group Term Insurance plan meets precisely this need and serves as an ideal way for companies to reinforce their bond with their employees. The sort of needs we, as an employer might have could be:
ü An employee benefit
ü A cover for housing loan or vehicle loan given by employer to employee.
ü A cover for future service gratuity liability to be taken along with the HDFC SL Group Unit Linked Plan
ü The Group Term Insurance plan will have the following structure
ü One year renewable term insurance plan
ü One master policy issued covering all members of the group
ü Sum assured is payable on death (either due to natural causes or accidents)
Key features of the plan
ü Their product has been designed to offer innovative features and a high degree of customisation. These are:
ü Convenient medical procedures
The members do not need to undergo any medical examination up to the “Free Cover Limit”. This limit is dependant upon the sum assured and the size of the group.
ü Premium options
Premium can be borne by employer or employee or both in some agreed proportion
ü High benefit at low cost
The Group Term Insurance is a cost-effective method of offering a very high value cover at very low premiums per head.
ü Total flexibility
The sum assured could be constant for all eligible employees or could vary according to grade or salary
ü Total adaptability
There is no restriction on new eligible employees joining the group or outgoing employees leaving the group during the policy term

ü Amount of sum assured
The minimum sum assured is Rs.10,000 per person and there is no pre-defined cap on the maximum cover extended for each member
ü Limited exclusion
Only exclusion on the basic plan is suicide in the first year of joining the scheme
ü Globally valid
Resident Indians are covered for the risk whilst traveling anywhere in the world.
GROUP UNIT LINKED PLAN – GRATUITY
Most employers have a statutory obligation to pay a Gratuity to its employees on termination of employment. This Gratuity is in the form of a one-off payment and it depends on the salary and number of years of service, so will therefore increase with time.The Group Unit Linked Plan for Gratuity is a new and innovative unit-linked plan, which offers employers and gratuity scheme trustees a flexible and cost effective way to fund this gratuity liability. The plan helps an employer by:
Building up a fund systematically, which will be used for the purposes of meeting the future gratuity liability
Providing the opportunity to maximise investment returns and thus provide the benefit in a cost-effective manner. One factor that helps us to maximise the investment returns is low charges. Their fund management charges are the lowest in the industry today and therefore can improve our long-term returns
Key features of the plan
The Group Unit Linked Plan brings us a host of features that can assist us in meeting our gratuity obligations in a systematic and cost effective manner, while providing us with the following benefits:
Absolute Transparency
ü The unit prices are declared on a daily basis and all charges to the scheme are of an explicit nature. So we are aware of the exact value of the fund at any point of time
Wider and flexible investment options
ü It give us the key advantage of spreading our funds across a range of investment options, including funds that are Equity oriented. We can choose funds according to our attitude to risk and liabilities
Flexibility in payment of premium
ü We get the flexibility of paying in our premiums at any time during the year.
Rural Products
According to their research findings, there is keenness among rural customers to invest in savings cum protection plan with a term of five years. Especially, if the premium amount is low and affordable. Keeping this in view, They have designed a special product called Bima Bachat Yojana

Super Bachat Yojana
Super Bachat Yojana combines the benefits of life protection as well as super savings. It helps you save money to meet the expected long term needs. What’s more, it lets you participate in the surplus profits of the company!
Benefits on Maturity
ü Sum Assured + Reversionary Bonus + Interim and Terminal Bonus
(Bonuses will be declared normally as on 31st March)
Benefits On Death
ü During the first year a basic benefit of 80% of premiums paid and after the first year lesser of
basic sum assured +reversionary bonuses paid and
total premiums paid to date +interest @ 6 % per annum

Social Product
Development Insurance Plan
Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to that member’s beneficiaries to help meet some of the immediate financial needs following their loss.
Eligibility
ü Members of the development agency and their spouses with: -
ü Minimum age at the start of the policy 18 years last birthday-
ü Maximum age at the start of policy 50 years last birthday
ü Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.
Premium Payments
ü The premium to be paid will be quoted per member in the group and will be the same for all members of the group.
ü The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in their specified format has been received

ü The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per member
Benefits
ü On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs.
ü Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured.
ü There are no benefits paid at the end of the year of cover and there is no surrender value available at any time.
The role of the Development Agency
ü Submission of member data in a specified computer format
ü Collection of premiums from group members
ü Recording changes in the details of group members
ü Disbursement of claim payments and the mortality rebate (if any) to group members
These tasks would be in addition to the usual duties of a policyholder such as:
ü Payment of premiums
ü Reporting of claims
ü Keeping policy holder information up to date
ü Training and support will be available to give guidance on how to complete the tasks appropriately.
Since these additional tasks will impose a burden on the Development Agency, the Development Agency may charge a Rs. 10 administration fee to their members
These are the product designed by the HDFC bank and HDFC Standard life Insurance Company






BIBLIOGRAPHY

The Bibliography contains Indian Banking Tomorrow and Role of Reserve Bank of India by Vepa Kamesam The Journal of Indian Institute of Bankers-11 February 2002
Reference book on Bancassurance from ICFAI University.
Book of General Insurance for bancassurance trainers.
Various websites such as: -
www.rbi.org.in/home where they had various journals and bulletin available.
www.canbank.com, which gave an idea about the business of bancassurance
www.obcbank .com, which helped with the guidelines.











i hope this will help u in your bancaassurance project, please send me your replay to my email [email protected]
 
Final 100 marks project

Hello friends,
Thanks to the information provided by all the user.
I have prepared my final 100 marks project on BANCASSURANCE.

I am sharing the whole project for further use.
I am only sharing file where the main project matter is there.
I am not sharing files where I have made front page, index and other unuseful material.
that all u have to make.

Rest of the main project matter is being in shared in the file below.
Hope this project will be useful.
:SugarwareZ-191:
 
hey nice documents on bancassurance guys
if some one has done some primary research or someone has some secondary data abt the tie ups of banks and insurance co's it would help me for my proj
 
hey guys
if any one of you has done any primary research or went to some insurance company and collected some primary data about the bancassurance sector then please do post that as i need some primary research to be put in my project
thanks

regards
zeenat
 
hello friends i have my project on swot analysis of banks entering into insurance field pls help i have to show a rough copy on 2 april.......
 
i think this will help u



Bancassurance in India - A SWOT Analysis
After exchanging the wedding rings, the banks and the insurance companies are distributing the insurance products in force in some form or the other. Banks are selling Personal Accident and Baggage Insurance directly to their Credit Card members as a value addition to their products. Banks also participate in the distribution of mortgage linked insurance products like fire, motor or cattle insurance to their customers. Banks can straightaway leverage their existing capabilities in terms of database and face to face contact to market insurance products to generate some income for themselves which hitherto was not thought of.
Once Bancassurance is embraced in India with full force, a lot will be at stake. Huge capital investment will be required to create infrastructure particularly in IT and telecommunications, a call center will have to be created, top professionals of both industries will have to be hired, an R & D cell will need to be created to generate new ideas and products. It is therefore essential to have a SWOT analysis done in the context of Bancassurance experiment in India.





Strengths
- In a country of 1 Billion people, sky is the limit for personal lines insurance products.
- There is a vast untapped potential waiting to be mined particularly for life insurance products.
- There are more than 900 Million lives waiting to be given a life cover (total number of individual life policies sold in 1998-99 was just 91.73 Million).
- There are about 200 Million households waiting to be approached for a householder's insurance policy.
- Millions of people travelling in and out of India can be tapped for Overseas Mediclaim and Travel Insurance policies.
- After discounting the population below poverty line the middle market segment is the second largest in the world after China.
- The insurance companies worldwide are eyeing on this, why not we preempt this move by doing it ourselves?
Our other strength lies in a huge pool of skilled professionals whether it is banks or insurance companies who may be easily relocated for any Bancassurance venture.




Weaknesses
- The IT culture is unfortunately missing completely in all of the future collaborators i.e. banks, GIC & LIC.
- A late awakening seems to have dawned upon but it is a case of too late and too little.
- Elementary IT requirement like networking (LAN) is not in place even in the headquarters of these institutions, when the need today is of Wide Area Network (WAN) and Vast Area Network (VAN). Internet connection is not available even to the managers of operating offices.
- The middle class population that we are eyeing at are today overburdened, first by inflationary pressures on their pockets and then by the tax net. Where is the money left to think of insurance ?
- Fortunately, insurance products get IT exemptions but personal line products from general insurance (mediclaim already has this benefit) like householder, travel, etc. also need to be given tax exemption to further the cause of insurance and to increase domestic revenue for the country.
Another drawback is the inflexibility of the products i.e. it can not be tailor made to the requirements of the customer. For a Bancassurance venture to succeed it is extremely essential to have in-built flexibility so as to make the product attractive to the customer.


Opportunities
- Banks' database is enormous even though the goodwill may not be the same as in case of their European counterparts.
- This database has to be dissected variously and various homogeneous groups are to be churned out in order to position the Bancassurance products. With a good IT infrastructure, this can really do wonders.
- Other developing economies like Malaysia, Thailand and Singapore have already taken a leap in this direction and they are not doing badly.
- There is already an atmosphere created in the country for liberalization and there appears to be a political consensus also on the subject.
- This can take the form of merger or acquisition or setting up a joint venture or creating a subsidiary by either party or just the working collaboration between banks and insurance companies.







Threats
- Success of a Bancassurance venture requires change in approach, thinking and work culture on the part of everybody involved.
- Our work force at every level are so well entrenched in their classical way of working that there is a definite threat of resistance to any change that Bancassurance may set in.
- Any relocation to a new company or subsidiary or change from one work to a different kind of work will be resented with vehemence.
- Another possible threat may come from non-response from the target customers.
- The investors in the capital may turn their face off in case the rate of return on capital falls short of the existing rate of return on capital.
- Since banks and insurance companies have major portion of their income coming from the investments, the return from Bancassurance must at least match those returns.
- Also if the unholy alliances are allowed to take place there will be fierce competition in the market resulting in lower prices and the Bancassurance venture may never break-even.





Obstacles and success factors
Obstacles
- Even insurers and banks that seem ideally suited for a Bancassurance partnership can run into problems during implementation.
- The most common obstacles to success are
Ø Poor manpower management,
Ø Lack of a sales culture within the bank,
Ø No involvement by the branch manager,
Ø Insufficient product promotions,
Ø Failure to integrate marketing plans,
Ø Marginal database expertise,
Ø Poor sales channel linkages,
Ø Inadequate incentives,
Ø Resistance to change,
Ø Negative attitudes toward insurance and unwieldy marketing strategy.
success factors
- Conversely, Bancassurance ventures that succeed tend to have certain things in common.
- Factors that appear to be critical to success include
Ø strategies consistent with the bank's vision,
Ø knowledge of target customers' needs,
Ø defined sales process for introducing insurance services,
Ø simple yet complete product offerings,
Ø strong service delivery mechanism, quality administration, synchronized planning across all business lines and subsidiaries,
Ø complete integration of insurance with other bank products and services,
Ø extensive and high-quality training,
Ø sales management tracking system for reporting on agents' time and results of bank referrals and relevant and flexible database systems.
Finally
The creation of Bancassurance operations has a material impact on the financial services industry at large. Banks, insurance companies and traditional fund management houses are converging towards a model of global retail financial institution offering a wide array of products. It leads to the creation of 'one-stop shop' where a customer can apply for mortgages, pensions, savings and insurance products.
Discovery comes from looking at the same thing as everyone else but seeing something different. Banks' desire to increase fee income has them looking at insurance. Insurance carriers and banks can become part of the vision through strategic partnerships. Now is the time to position your company for the new millennium of insurance product distribution.
 
uchitshah said:
HELLO FRNDS,

I HAVE PROJECT ON BANASSURANCE AND I AM FINDING IT VERY HARD TO FIND INFORMATION ON NET.

PLZ HELP ME OUT !!!!

THNAKS,

UCHIT SHAH
Click to expand...

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