Chapter 1

Introduction of Banking in India.

1. Definition
2. History
Introduction of Insurance in India
1. Definition
2. History

Introduction to Banking
Banking as per the Banking Regulation Act, Banking is defined as: -
Accepting for the purpose of lending of deposits of money from the public for
the purpose of lending or investment, repayable on demand through cheques,
drafts or order.
A sound and effective banking system is necessary for a healthy economy. The
banking system of India should not only be hassle free but it should be able to
meet new challenges posed by the technology and any other external and
internal factors. Many new things have come up in the banking sector in the
recent years. Banks have adopted the new technology because banking has not
remained up to accepting and lending but now it is all about satisfying the needs
of the customers. The development of the Indian banking sector has been
accompanied by the introduction of new norms. New services are the order of the
day, in order to stay ahead in the rat race. Banks are now foraying into net
banking, securities, and consumer finance, housing finance, treasury market,
merchant banking etc. They are trying to provide every kind of service which can
satisfy or rather we should say that it can delight the customers. Entry of private
and foreign banks in the segment has provided healthy competition and is likely
to bring more operational efficiency into the sector. Banks are also coping and
adapting with time and are trying to become one-stop financial supermarkets.
The market focus is shifting from mass banking products to class banking with the
introduction of value added and customized products.
Introduction to Insurance Sector
Insurance may be defined as: -
It is a contract between two parties where by one party undertakes to
compensate the party for the loss arising due to an uncertain events for which
another party agrees to pay a certain amount regularly.
In India, insurance has a deep-rooted history. Insurance in India has evolved over
time heavily drawing from other countries, England in particular.
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again. The
business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in Calcutta.
The Insurance Act, 1938 was the first legislation governing all forms of insurance
to provide strict state control over insurance business. Today there are 14 general
insurance companies and 14 life insurance companies operating in the country.
But today also the insurance companies are trying to capture Indian markets as
not many people are aware of it. The insurance sector is a colossal one and is
growing at a speedy rate of 15-20%. Together with banking services, insurance
services add about 7% to the countrys GDP. A well-developed and evolved
insurance sector is a boon for economic development as it provides long- term
funds for infrastructure development at the same time strengthening the risk
taking ability of the country.





Chapter 2
About Bancassurance
1. Meaning
2. Origin
3. Models of Bancassurance
a. Structural classification
b. Product based classification
c. Bank Referrals


What is BANCASSURANCE?
With the opening up of the insurance sector and with so many players entering
the Indian insurance industry, it is required by the insurance companies to come
up with innovative products, create more consumer awareness about their
products and offer them at a competitive price. Since the banking services,
insurance and fund management are all interrelated activities and have inherent
synergies, selling of insurance by banks would be mutually beneficial for banks
and insurance companies. With these developments and increased pressures in
combating competition, companies are forced to come up with innovative
techniques to market their products and services. At this juncture, banking sector
with it's far and wide reach, was thought of as a potential distribution channel,
useful for the insurance companies. This union of the two sectors is what is
known as Bancassurance. Meaning Bancassurance is the distribution of insurance
products through the bank's distribution channel. It is a phenomenon wherein
insurance products are offered through the distribution channels of the banking
services along with a complete range of banking and investment products and
services. To put it simply, Bancassurance, tries to exploit synergies between both
the insurance companies and banks. Bancassurance can be important source of
revenue. With the increased competition and squeezing of interest rates spread,
profits are likely to be under pressure. Fee based income can be increased
through hawking of risk products like insurance.
Bancassurance if taken in right spirit and implemented properly can be win-win
situation for the all the participants' viz., banks, insurers and the customer.
Origin
The banks taking over insurance is particularly well-documented with reference to
the experience in Europe. Across Europe in countries like Spain and UK, banks
started the process of selling life insurance decade sago and customers found the
concept appealing for various reasons. Germany took the lead and it was called
ALLFINANZ. The system of bancassurance was well received in Europe. France
taking the lead, followed by Germany, UK, Spain etc. In USA the practice was late
to start (in 90s). It is also developing in Canada, Mexico, and Australia.In India, the
concept of Bancassurance is very new. With the liberalization and deregulation of
the insurance industry, bancassurance evolved in India around 2002.
Models of Bancassurance
a) Structural Classification
i. Referral Model
Banks intending not to take risk could adopt referral model wherein they
merely part with their client data base for business lead of commission. The
actual transaction with the prospective client in referral model is done by the staff
of the insurance company either at the premises of the ban0k or elsewhere.
Referral model is nothing but a simple arrangement, wherein the bank, while
controlling access to the clients data base, parts with only the business leads to
the agents/ sales staff of insurance company for a referral fee or commission for
every business lead that was passed on. In fact a number of banks in India have
already resorted to this strategy to begin with. This model would be suitable for
almost all types of banks including the RRBs /cooperative banks and even
cooperative societies both in rural and urban. There is greater scope in the
medium term for this model. For, banks to begin with can resort to this model
and then move on to the other models.
ii. Corporate Agency
The other form of non-sick participatory distribution channel is that of
Corporate Agency, wherein the bank staff as an institution acts as corporate
agent for the insurance product for a fee/commission. There are also practical
difficulties in the form of professional knowledge about the insurance products.
This could, however, be overcome by intensive training to chosen staff, and
packaged with proper incentives in the banks coupled with selling of simple
insurance products in the initial stage. This model is best suited for majority of
banks including some major urban cooperative banks because neither there is
sharing of risk nor does it require huge investment in the form of infrastructure
and yet could be a good source of income. This model of bancassurance worked
well in the US, because consumers generally prefer to purchase policies through
broker banks that offer a wide range of products from competing insurers.
iii. Insurance as Fully Integrated Financial Service/ Joint ventures
Apart from the above two, the fully integrated financial service involves much
more comprehensive and intricate relationship between insurer and bank, where
the bank functions as fully universal in its operation and selling of insurance
products is just one more function within. This includes banks having wholly
owned insurance subsidiaries with or without foreign participation. The great
advantage of this strategy being that the bank could make use of its full potential
to reap the benefit of synergy and therefore the economies of scope. This may be
suitable to relatively larger banks with sound financials and has better
infrastructure.
There is great scope for further growth both in life and non-life insurance
segments as GOI is reported have been actively considering to increase the FDIs
participation up to 49 per cent.
b) Product based classification
i. Stand-alone Insurance Products
In this case bancassurance involves marketing of the insurance products
through either referral arrangement or corporate agency without mixing the
insurance products with any of the banks own products/ services. Insurance is
sold as one more item in the menu of products offered to the banks customer,
however, the products of banks and insurance will have their respective brands
too.
ii. Blend of Insurance with Bank Products
This method aims at blending of insurance products as a value addition while
promoting the banks own products. Thus, banks could sell the insurance products
without any additional efforts. In most times, giving insurance cover at a nominal
premium/ fee or sometimes without explicit premium does act as an added
attraction to sell the banks own products,
e.g., credit card, housing loans, education loans, etc.
Many banks in India, in recent years, has been aggressively marketing credit and
debit card business, whereas the cardholders get the insurance cover for a
nominal fee or (implicitly included in the annual fee) free from explicit charges/
premium. Similarly the home loans / vehicle loans,
etc., have also been packaged with the insurance cover as an additional incentive.
c) Bank Referrals
There is also another method called 'Bank 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. In this method also there is a win-win situation every where as the
banks get commission, the insurance companies get databases of the customers
and the customers get the benefits.




Chapter 3
Utilities of Bancassurance
1. For Banks:
a. As a source of fee based in come
b. Product diversification
c. Building close relations with the customers
2. For Insurance Companies
a. Stiff competition
b. High cost of agents
c. Rural penetration
d. Multi-channel distribution
e. Targeting middle income customers


For Banks
a) As a source of fee income
Banks traditional sources of fee income have been the fixed charges levied on
loans and advances, credit cards, merchant fee on point of sale transactions for
debit and credit cards, letter of credits and other operations. This kind of revenue
stream has been more or less steady over a period of time and growth has been
fairly predictable. However shrinking interest rate, growing competition and
increased horizontal mobility of customers have forced bankers to look else
whereto compensate for the declining profit margins and Bancassurance has
come in handy for them. Fee income from the distribution of insurance products
has opened new horizons for the banks and they seem to love it. From the banks
point of view, opportunities and possibilities to earn fee income via
Bancassurance route are endless. Atypical commercial bank has the potential of
maximizing fee income from Bancassurance up to 50% of their total fee income
from all sources combined. Fee Income from Bancassurance also reduces the
overall customer acquisition cost from the banks point of view. At the end of the
day, it is easy money for the banks as there are no risks and only gains.
b) Product Diversification
In terms of products, there are endless opportunities for the banks. Simple
term life insurance, endowment policies, annuities, education plans, depositors
insurance and credit shield are the policies conventionally sold through the
Bancassurance channels. Medical insurance, car insurance, home and contents
insurance and travel insurance are also the products which are being distributed
by the banks. However, quite a lot of innovations have taken place in the
insurance market recently to provide more and more Bancassurance-centric
products to satisfy the increasing appetite of the banks for such products. Insurers
who are generally accused of being inflexible in the pricing and structuring of the
products have been responding too well to the challenges (say opportunities)
thrown open by the spread of Bancassurance. They are ready to innovate and
experiment and have setup specialized Bancassurance units within their fold.
Examples of some new and innovative Bancassurance products are income
builder plan, critical illness cover, return of premium and Takaful products which
are doing well in the market.
c) Building close relations with the customers
Increased competition also makes it difficult for banks to retain their
customers. Banassurance comes as a help in this direction also. Providing multiple
services at one place to the customers means enhanced customer satisfaction.
For example, through bancassurance a customer gets home loans along with
insurance at one single place as a combined product. Another important
advantage that bancassurance brings about in banks is development of sales
culture in their employees. Also, banking in India is mainly done in the 'brick and
mortar' model, which means that most of the customers still walk into the bank
branches. This enables the bank staff to have a personal contact with their
customers. In a typical Bancassurance model, the consumer will have access to a
wider product mix - a rather comprehensive financial services package,
encompassing banking and insurance products.
For Insurance Companies
a) Stiff Competition
At present there are 15 life insurance companies and 14general insurance
companies in India. Because of the Liberalization of the economy it became easy
for the private insurance companies to enter into the battle field which resulted
in an urgent need to outwit one another. Even the oldest public insurance
companies started facing the tough competition. Hence in order to compete with
each other and to stay a step ahead there was a need for a new strategy in the
form of Bancassurance. It would also benefit the customers in terms of wide
product diversification.
b) High cost of agents
Insurers have been tuning into different modes of distribution because of the
high cost of the agencies services provided by the insurance companies. These
costs became too much of a burden for many insurers compared to the returns
they generate from the business. Hence there was a need felt for a Cost-Effective
Distribution channel. This gave rise to Bancassurance as a channel for distribution
of the insurance products.
c) Rural Penetration
Insurance industry has not been much successful in rural penetration of
insurance so far. People there are still unaware about the insurance as a tool to
insure their life. However this gap can be bridged with the help of Bancassurance.
The branch network of banks can help make the rural people aware about
insurance and there is also a wide scope of business for the insurers. In order to
fulfill all the needs bancassurance is needed.
d) Multi channel Distribution
Now a day the insurance companies are trying to exploit each and every way
to sell the insurance products. For this they are using various distribution
channels. The insurance is sold through agents, brokers through subsidiaries etc.
In order to make the most out of Indias large population base and reach out to a
worthwhile number of customers there was a need for Bancassurance as a
distribution model.
e) Targeting Middle income Customers
In previous there was lack of awareness about insurance. The agents sold
insurance policies to a more upscale client base. The middle income group people
got very less attention from the agents. So through the venture with banks, the
insurance companies can recapture much of the under served market. So in order
to utilize the database of the banks middle income customers, there was a need
felt for Bancassurance.




Chapter 4
Regulations for Bancassurance in India
1. RBI Norms for banks entering into Insurance sector
2. IRDA Norms for Insurance companies tying up with Banks

RBI Norms for banks
1. RBI Guidelines for the Banks to enter into Insurance Business
Following the issuance of Government of India Notification dated August 3,
2000, specifying Insurance as a permissible form of business that could be
undertaken by banks under Section 6(1) (o) of The Banking Regulation Act, 1949,
RBI issued the guidelines on Insurance business for banks.
1 Any scheduled commercial bank would be permitted to under take insurance
business as agent of insurance companies on fee basis. Without any risk
participation.
2. Banks which satisfy the eligibility criteria given below will be permitted to
set up a joint venture company for undertaking insurance business with risk
participation, subject to safeguards. The maximum equity contribution such a
bank can hold in the Joint Venture Company will normally be 50% of the paid up
capital of the insurance company. The eligibility criteria for joint venture
participant are as under:
i. The net worth of the bank should not be less than Rs.500 crore;
ii. The CRAR of the bank should not be less than 10 per cent;
iii. The level of non-performing assets should be reasonable;
iv. The bank should have net profit for the last three consecutive years;
v. The track record of the performance of the subsidiaries, if any, of the
concerned bank should be satisfactory.
3. In cases where a foreign partner contributes 26% of the equity with the
approval of Insurance Regulatory and Development Authority/Foreign Investment
Promotion Board, more than one public sector bank or private sector bank may
be allowed to participate in the equity of the insurance joint venture. As such
participants will also assume insurance risk, only those banks which satisfy the
criteria given in paragraph 2 above, would be eligible.
4. A subsidiary of a bank or of another bank will not normally be allowed to
join the insurance company on risk participation basis.
5. Banks which are not eligible for joint venture participant as above, can
make investments up to 10% of the net worth of the bank or Rs.50crore,
whichever is lower, in the insurance company for providing infrastructure and
services support. Such participation shall be treated as an investment and should
be without any contingent liability for the bank. The eligibility criteria for these
banks will be as under:
i. The CRAR of the bank should not be less than 10%;
ii. The level of NPAs should be reasonable;
iii. The bank should have net profit for the last three consecutive years.
6. All banks entering into insurance business will be required to obtain prior
approval of the Reserve Bank. The Reserve Bank will give permission to banks on
case to case basis keeping in view all relevant factors including the position in
regard to the level of non-performing assets of the applicant bank so as to ensure
that non-performing assets do not pose any future threat to the bank in its
present or the proposed line of activity, viz., insurance business. It should be
ensured that risks in revolved in insurance business do not get transferred to the
bank. There should be arms length relationship between the bank and the
insurance outfit.
7. Holding of equity by a promoter bank in an insurance company or
participation in any form in insurance business will be subject to compliance with
any rules and regulations laid down by the IRDA/Central Government. This will
include compliance with Section 6AA of the Insurance Act as amended by the
IRDA Act, 1999, for divestment of equity in excess of 26 per cent of the paid up
capital within a prescribed period of time.8. Latest audited balance sheet will be
considered for reckoning the eligibility criteria.
IRDA Norms for Insurance Companies
The Insurance regulatory development & Authority has given certain guidelines
for the Bancassurance they are as follows: -
1) Chief Insurance Executive: Each bank that sells insurance must have a chief
Insurance Executive to handle all the insurance matters &activities.
2) Mandatory Training: All the people involved in selling the insurance should
under-go mandatory training at an institute determined (authorized) by IRDA &
pass the examination conducted by the authority.
3) Corporate agents: Commercial banks, including co-operative banks and RRBs
may become corporate agents for one insurance company.
4) Banks cannot become insurance brokers. Issues for regulation: Certain
regulatory barriers have slowed the development of Bancassurance in India down.
Which have only recently been cleared with the passage of the insurance
(amendment) Act 2002.Prior it was clearly an impractical necessity and had held
up the implementation of Bancassurance in the country . As the current
legislation places the following:-
1) Training and examination requirements: upon the corporate insurance
executive within the corporate agency, this barrier has effectively been removed.
Another regulatory change is published in recent publication of IRDA regulation
relating to the (2) Licensing of Corporate agents
(2) Specified person to satisfy the training & examination: According to new
regulation of IRDA only the specific persons have to satisfy the training &
examination requirement as insurance agent.







Chapter 5
Benefits of Bancassurance
1. To Banks
2. To Insurance companies
3. To Customers


To Banks
From the banks point of view:
(A) By selling the insurance product by their own channel the banker can increase
their income.
(B) Banks have face-to-face contract with their customers. They can directly ask
them to take a policy. And the banks need not to go anywhere for customers.
(C) The Bankers have extensive experience in marketing. They can easily attract
customers & non-customers because the customer &non-customers also bank on
banks.
(D) Banks are using different value added services life-E. Banking tele-banking,
direct mail & so on they can also use all the above-mentioned facility for
Bankassurance purpose with customers & non-customers.
(E) Productivity of the employees increases.
(F) By providing customers with both the services under one roof, they can
improve overall customer satisfaction resulting in higher customer retention
levels.
(G) Increase in return on assets by building fee income through the sale of
insurance products.
(H) Can leverage on face-to-face contacts and awareness about the financial
conditions of customers to sell insurance products.
(I) Banks can cross sell insurance products E.g.: Term insurance products with
loans.
To Insurers
From the Insurer Point of view:
(A) The Insurance Company can increase their business through the banking
distribution channels because the banks have so many customers.
(B) By cutting cost Insurers can serve better to customers in terms lower premium
rate and better risk coverage through product diversification.
(C)Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be utilized
to sell products in those areas.
(D)Customer database like customers' financial standing, spending habits,
investment and purchase capability can be used to customize products and sell
accordingly.
(E)Since banks have already established relationship with customers, conversion
ratio of leads to sales is likely to be high. Further service aspect can also be
tackled easily.
(F)The insurance companies can also get access to ATMs and other technology
being used by the banks.
(G)The selling can be structured properly by selling insurance products through
banks.
(H) The product can be customized as per the needs of the customers.
To Customers
From the customers' point of view:
(A)Product innovation and distribution activities are directed towards the
satisfaction of needs of the customer.
(B) Bancassurance model assists customers in terms of reduction price, diversified
product quality in time and at their doorstep service by banks.
(C)Comprehensive financial advisory services under one roof. i.e., insurance
services along with other financial services such as banking, mutual funds,
personal loans etc.
(D) Easy access for claims, as banks is a regular visiting place for customers.
(E) Innovative and better product ranges and products designed as per the needs
of customers.
(F) Any new insurance product routed through the bancassurance Channel would
be well received by customers.
(G) Customers could also get a share in the cost savings in the form of reduced
premium rate because of economies of scope, besides getting better financial
counseling at single point.












Chapter 6
Distribution Channels:
1. Career agents
2. Special advisers
3. Salaried agents
4. Bank employees
5. Corporate agency & Brokerage firm
6. Direct response
7. Internet
8. E- Brokerage
9. Outside lead generating techniques Distribution Channels

Traditionally, insurance products were promoted and sold principally through
agency systems only. The reliance of insurance industry was totally on the agents.
Moreover with the monopoly of public sector insurance companies there was
very slow growth in the insurance sector because of lack of competition. The need
for innovative distribution channels was not felt because all the companies relied
only upon the agents and aggressive marketing of the products was also not
done. But with new developments in consumers behaviors, evolution of
technology and deregulation, new distribution channels have been developed
successfully and rapidly in recent years. Recently Bancassurers have been making
use of various distribution channels, they are:
1. Career Agents: Career Agents are full-time commissioned sales personnel
holding an agency contract. They are generally considered to be independent
contractors. Consequently an insurance company can exercise control only over
the activities of the agent which are specified in the contract. Many bancassurers,
however avoid this channel, believing that agents might oversell out of their
interest in quantity and not quality. Such problems with career agents usually
arise, not due to the nature of this channel, but rather due to the use of
improperly designed remuneration and incentive packages.
2. Special Advisers: Special Advisers are highly trained employees usually
belonging to the insurance partner, who distribute insurance products to the
bank's corporate clients. The Clients mostly include affluent population who
require personalized and high quality service. Usually Special advisors are paid on
a salary basis and they receive incentive compensation based on their sales.
3. Salaried Agents: Salaried Agents are an advantage for the bancassurers
because they are under the control and supervision of bancassurers. These agents
share the mission and objectives of the bancassurers. These are similar to career
agents, the only difference is in terms of their remuneration is that they are paid
on a salary basis and career agents receive incentive compensation based on their
sales.
4. Bank Employees / Platform Banking: Platform Bankers are bank employees
who spot the leads in the banks and gently suggest the customer to walk over and
speak with appropriate representative within the bank. The platform banker may
be a teller or a personal loan assistant. A restriction on the effectiveness of bank
employees in generating insurance business is that they have a limited target
market, i.e. those customers who actually visit the branch during the opening
hours.
5. Corporate Agencies and Brokerage Firms: There are a number of banks who
cooperate with independent agencies or brokerage firms while some other banks
have found corporate agencies. The advantage of such arrangements is the
availability of specialists needed for complex insurance matters and through these
arrangements the customers get good quality of services.
6. Direct Response: In this channel no salesperson visits the customer to induce a
sale and no face-to-face contact between consumer and seller occurs. The
consumer purchases products directly from the bancassurer by responding to the
company's advertisement, mailing or telephone offers. This channel can be used
for simple packaged products which can be easily understood by the consumer
without explanation.
7. Internet: Internet banking is already securely established as an effective and
profitable basis for conducting banking operations. Bancassurers can feel
confident that Internet banking will also prove an efficient vehicle for cross selling
of insurance savings and protection products. Functions requiring user input
(check ordering, what-if calculations, and credit and account applications) should
be immediately added with links to the insurer. Such an arrangement can also
provide a vehicle for insurance sales, service and leads.
8. E-Brokerage: Banks can open or acquire an e-Brokerage arm and sell
insurance products from multiple insurers. The changed legislative climate across
the world should help migration of bancassurance in this direction. The advantage
of this medium is scale of operation, strong brands, easy distribution and
excellent synergy with the internet capabilities.
9. Outside Lead Generating Techniques: One last method for developing
bancassurance eyes involves "outside" lead generating techniques, such as
seminars, direct mail and statement inserts. Great opportunities await
bancassurance partners today and, in most cases, success or failure depends on
precisely how the process is developed and managed inside each financial
institution.











Chapter 7
SBI Life Insurance (profile)
1. Products offered
2. SBI Life Insurance (perspective)


SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA
of France. SBI Life Insurance is registered with an authorized capital of Rs 1000
crore and a paid up capital of Rs 500crores. SBI owns 74% of the total capital and
Cardif the remaining 26%.State Bank of India enjoys the largest banking franchise
in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of
over 14,500 branches across the country, arguably the largest in the world. Cardif
is a wholly owned subsidiary of BNP Paribas, which is the Euro Zones leading
Bank. BNP Paribas is one of the oldest foreign banks with a presence in India
dating back to 1860. Cardif is ranked 2ndworldwide in creditors insurance
offering protection to over 35 million policyholders and net income in excess of
Euro 1 billion. Cardif has also been a pioneer in the art of selling insurance
products through commercial banks in France and in 35 more countries.SBI Life
Insurances mission is to emerge as the leading company offering a
comprehensive range of Life Insurance and pension products at competitive
prices, ensuring high standards of customer service and world class operating
efficiency.SBI Life has a unique multi-distribution model encompassing
Bancassurance, Agency and Group Corporate.SBI Life extensively leverages the
SBI Group as a platform for cross-selling insurance products along with its
numerous banking product packages such as housing loans and personal loans.
SBIs access to over 100 million accounts across the country provides a vibrant
base for insurance penetration across every region and economic strata in the
country ensuring true financial inclusion. Agency Channel, comprising of the most
productive force of more than 25,000 Insurance Advisors, offers door to door
insurance solutions to customers.
Products Offered by SBI
Individual Products
A. Unit Linked products:
1) SBI Life - Horizon II:
SBI Life-Horizon II is a unique, non participating Unit Linked Insurance Plan in
Indian Insurance Industry, where you need to be a financial market expert. This
plan offers the flexibility of Unit Linked Plan along with Automatic Asset Allocation
which provides relatively higher returns on your money where as increasing death
benefits provide higher security to your family
2) SBI Life - Unit Plus II:
This is a non participating individual unit linked product. It provides unmatched
flexibility to match the changing requirements. It provides choice of 5 investments
funds in a single policy
3) SBI life- unit plus child plan:
SBI LIFE understand you better and hence have developed SBI Life - Unit Plus
Child Plan to suit you and your needs best. This Plan is meant for parents in the
age group of 18-57 having a child between the age group of 0-15 years.
4) SBI Life Unit Plus Elite:
In this policy the customer can choose the type of cover, type of fund to be
invested in and the term the customer wants to pay premium for.
B. Pension Products
SBI Life - Horizon II Pension:
A unique Unit Linked Pension Plan that will enable the customers to build a kitty
good enough to enable them to spend a peaceful and financially sound retired
life. SBI Life - Horizon II Pension is a safe and hassle free way to get high returns. It
comes with the unique feature of Automatic Asset Allocation by means of which
you truly, dont need to be an expert to grow your money.
1) SBI Life - Unit Plus II Pension:
SBI Life understands the basic needs for pension plan and give the customers
financial strength to maintain the life style even after the retirement. This is a unit
linked pension plan wherein the policyholder chooses an investment period from
5 to 52 years for a vesting age between 50 to 70 years. They can choose to pay
either single premium or pay regular premium for the entire policy term. Their
contributions are invested into 4 fund options as per their choice.
2) SBI Life - Lifelong Pensions:
It is a pension plan wherein the policyholder gets the flexibility to meet the post
retirement financial needs. It also provides tax benefits. The policyholder also has
the option of withdrawing a lump sum amount up to particular limit.
3) SBI Life - Immediate Annuity:
SBI Life - Immediate Annuity Plan is introduced for Pension Policyholders. This
product provides annuity payments immediately from payment of purchase price.
It has been specially designed to cater to the annuity needs of existing
policyholders (SBILife - Lifelong Pensions, SBI Life - Horizon II Pension, SBI Life -
Unit Plus II Pension) at the vesting age.
C. Pure Protection Products
1) SBI Life - Swadhan:
This is a Traditional Term Assurance Policy with guaranteed refund of basic
premium .Life cover is provided at no cost. Tax benefits also provided. There is
also a rebate on high sum assured. There is also flexible benefit premium paying
mode.
2) SBI Life Shield : It offers the customers with the life insurance cover at the
lowest cost for a selected term. Tax benefit is also provided. There is also rebate
on modes of premium payment.
3) SBI Life Shield as a Keyman Insurance Policy:
A Keyman insurance policy is taken to protect the organization against the
reduction in profit resulting from the death of the Keyman. As per IRDA circular
only Pure Term Assurance Products may be used as a Keyman Insurance. The SBI
Life Insurance provides SBI Life Shield as a Keyman Insurance Policy.
D. Protection cum Savings Products
1) SBI Life Sudarshan:
SBI Life - Sudarshan is an Endowment Policy designed to provide savings and
protection to the policyholder and their family.They can save regularly for the
future. Thus at the end of the plan, he will receive a substantial amount of savings
along with the accumulated bonuses declared. At the same time, his family will be
protected for death risk for the full Sum Assured.
2) SBI Life - Scholar II :
Twin benefit of saving for the child's education and securing a bright future
despite the uncertainties of life. Option to receive the installments in lump sum at
the due date of first installment of Survival benefit.
E Money back scheme products
1) SBI Life - Money Back :
It is a Traditional Saving Plan with added advantage of life cover and guaranteed
cash inflow at regular intervals. The plan has a number of money back options
specially suited to the customers needs. The cover is available at competitive
premium rates.
2) SBI Life - Sanjeevan Supreme:
It is a Traditional Saving Plan which offers a life cover for the term of the
customers choice at the same time does not burden him with liability to pay
premiums for the entire term and also provides cash flows at regular intervals.
F. For Brokers:
1) SBI Life - SARAL ULIP:
It is a simple Unit Linked Non-Participating Insurance Plan. The sum assured is
based on Term and Premium amount. There is also flexibility to increase or
decrease regular premium and it also provides tax benefits.
Group Products
I. Retirement Solutions:
1) SBI Life - CapAssure Gratuity Scheme:
It is a Non-Participating yearly renewable traditional Group Gratuity Scheme.
Under this scheme, the contributions paid continue to accumulate on traditional
platform of investments and at the end of the financial year; an investment
income earned on your contributions is credited to your gratuity fund account.
2) SBI Life - CapAssure Superannuation Scheme:
It is a Non-Participating yearly renewable traditional group superannuation
scheme. The object of this scheme is to ensure that the underlying fund is
accumulated in such a manner so that the fund will be sufficient to purchase an
expected amount of annuity to an employee upon his retirement / to the legal
heir in the event of an unfortunate death during service. The scheme would also
entitle the employee for some benefit, defined as per the scheme rules, on his
resignation, retirement, permanent total disability whilst in service, death whilst
in service.
3) SBI Life - CapAssure Leave Encashment Scheme:
It is a Non-Participating yearly renewable traditional group leave encashment
scheme. Under this scheme, the contributions paid continue to accumulate on
traditional platform of investments and at the end of the financial year; an
investment income earned on your contributions is credited to your CA-LE fund
account.
4) SBI Life - Group Immediate Annuity:
It is a scheme wherein life annuity is payable at a constant rate through out the
life time. Employees can choose the periodicity of the annuity depending upon
the needs.
5) SBI Life - Golden Gratuity:
It is a yearly renewable unit linked group gratuity plan. Along with managing the
gratuity fund a life cover on the employees life protect their family financially in
case of unfortunate event.
6) SBI Life - Dhanrashi:
It is a traditional non participating Group Savings Linked Insurance scheme. This
scheme is applicable for both employer-employee and non-employer employee
groups. It has attractive returns on savings with twin benefits. It also provides
protection at low cost with no medical examination and also hassle free joining
process with no entry charges.
7) SBI Life - Swarna Jeevan:
It is a Group Immediate Annuity Plan for Corporate Clients (ie. Employer-
Employee groups) and other Group Administrators. It provides Attractive Annuity
rates due to group effect. It also gives customized annuity options to customers. It
gives the option to choose the periodicity of annuity payment.
8) SBI Life - Group Gratuity cum Life Cover Scheme:
It is a Participating yearly renewable traditional Group Gratuity Scheme. Under
this scheme, the contributions paid continue to accumulate on traditional
platform of investments. It also provides tax benefits.
9) SBI Life - Group Superannuation Scheme:
SBI Life provides two types of Superannuation schemes:
1. Defined Benefit Scheme: It defines the amount of benefit that an employee
receives at retirement.
2. Defined Contribution Scheme: It defines the annual contribution that the
employer will deposit into the scheme for each employee.
10) SBI Life provides SBI Life - Group Leave Encashment cum Life Cover Scheme:
It is a Non-Participating yearly renewable traditional group leave encashment
scheme. Under this scheme, the contributions paid continue to accumulate on
traditional platform of investments.
11) SBI Life - SWARNA GANGA:
It is a unique product that offers life cover, with an advantage of accumulating
savings at attractive rates, to group of persons who share a common identity or
affinity.
SBI Life Insurance Company (perspective)
SBI Life insurance, a joint venture between State Bank of India, the largest bank in
the country and bancassurance major Cardiff of France. SBIs stake in the venture
is 74% whereas Cardiff has 26% share. They have launched many products so far
incorporating certain features that are introduced for the first time in the country.
SBI -Life is banking on the bancassurance model on the strength of the SBI Groups
10000 plus bank branches and its vast customer base. In addition it is also tapping
other. Banks corporate agents and the traditional agency route to penetrate the
insurance market SBI Life is planning to introduce more novel and user friendly
products to cater to the requirements of the consumers in different segments.
SBI has the largest banking network in the county. The bank is looking for
business from every customer segment of the bank rural and urban segments,
upper, middle and lower income segments /groups and corporate segment.
Besides their own channels they are planning to distribute products through other
interested banking channels also. It is expected that 2/3 rd of the premium
income in expected to come by way of bancassurance and the rest from the
traditional agency channel as well as ties up with corporate agents (Sundaram
Finance). SBI has also introduced group insurance to some well managed
corporate staffs.
Technology is an integral part of this operation. Cardiff provided the technology
required. The project was initiated in April 2004, and the initial roll-out was
completed by August 2004.
SBI Life has implemented an Internet-centric IT system with browser-based front-
office and back-office systems, channel management, policy product details,
online premium calculator and facility for group insurance customers to view their
individual savings status on the Web. The organization has the facility to pay
premiums through credit cards, Net banking, standing instructions, etc. This is
fully integrated with the core systems through industry standards such as XML,
EDI, etc. Even as it plans to scale up operations shortly, SBI Life Insurance
Company Ltd is looking at tripling its gross premium income in the new financial
year. In 2007-08, SBI Life earned a total premium income of Rs 5,622 crore, of
which income from new policy sales was Rs4,800 crore. For the current financial
year, their target is to achieve a total premium income of Rs 10,500 crore and a
first year premium income of Rs 8,500 crore. The SBI Life ranks second in terms
of market share among private life insurers in the country. SBI Life Insurance
Company is the first among the 14 life insurance companies in the private sector
to post a net profit in 2005-06.There are life insurance players much more
aggressive than SBI and they have still not been able to break the record of SBI.
Their success is largely on the channel strategy and product strategy. Another
aspect is their superior investment performance. They have consistently, over the
last two years, generated 11-12 per cent earnings from the investments.SBI Life
Insurance is uniquely placed as a pioneer to usher bancassurance into India. The
company hopes to extensively utilize the SBI Group as a platform for cross-selling
insurance products along with its numerous banking product packages such as
housing loans, personal loans and credit cards. SBIs access to over 100 million
accounts provides a vibrant base to build insurance selling across every region
and economic strata in the country.





Chapter 8
Various Trends
Challenges


Trends
Though bancassurance has traditionally targeted the mass market, but
bancassurers have begun to finely segment the market, which has resulted in
tailor-made products for each segment. Some bancassurers are also beginning to
focus exclusively on distribution.
In some markets, face-to-face contact is preferred, which tends to favor
bancassurance development.
Nevertheless, banks are starting to embrace direct marketing and Internet
banking as tools to distribute insurance products. New and emerging
channels are becoming increasingly competitive, due to the tangible cost
benefits embedded in product pricing or through the appeal of
convenience and innovation.
Bancassurance proper is still evolving in Asia and this is still in infancy in
India and it is too early to assess the exact position. However, a quick
survey revealed that a large number of banks cutting across public and
private and including foreign banks have made use of the bancassurance
channel in one form or the other in India.
Banks by and large are resorting to either referral models or Corporate
agency model to begin with.
Banks even offer space in their own premises to accommodate the
insurance staff for selling the insurance products or giving access to their
clients database for the use of the insurance companies.
As number of banks in India have begun to act as corporate agents to one
or the other insurance company, it is a common sight that banks canvassing
and marketing the insurance products across the counters.
Challenges
Increasing sales of non-life products, to the extent those risks are retained
by the banks, require sophisticated products and risk management.
The sale of non-life products should be weighted against the higher cost of
servicing those policies.
Bank employees are traditionally low on motivation. Lack of sales culture
itself is bigger roadblock than the lack of sales skills in the employees.
Banks are generally used to only product packaged selling and hence selling
insurance products do not seem to fit naturally in their system.
Human Resource Management has experienced some difficulty due to such
alliances in financial industry. Poaching for employees, increased work-
load, additional training, maintaining the motivation level are some issues
that has cropped up quite occasionally. So, before entering into a
bancassurance alliance, just like any merger, cultural due diligence should
be done and human resource issues should be adequately prioritized.
Private sector insurance firms are finding change management in the
public sector, a major challenge. State-owned banks get a new chairman,
often from another bank, almost every two years, resulting in the
distribution strategy undergoing a complete change. So because of this
there is distinction created between public and private sector banks.
The banks also have fear that at some point of time the insurance partner
may end up cross-selling banking products to their policyholders. If the
insurer is selling the products by agents as well as banks, there is a
possibility of conflict if both the banks and the agent target the same
customers.








Chapter 9
SWOT Analysis
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats


SWOT Analysis:
Banking and Insurance are very different businesses. Banks have less risk but the
insurance has a greater risk. Even though, banks and insurance companies in India
are yet to exchange their wedding rings, Bancassurance as a means of distribution
of insurance products is already 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 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 previously was not thought of.
The sale of insurance products can earn banks very significant commissions
(particularly for regular premium products). In addition, one of the major strategic
gains from implementing bancassurance successfully is the development of a
sales culture within the bank. This can be used by the bank to promote traditional
banking products and other financial services as well. Bancassurance enables
banks and insurance companies to complement each others strengths as well.
It is therefore essential to have a SWOT analysis done in the context of
bancassurance experiment in India. A SWOT analysis of Bancassurance is given
below:
1. Strengths:
In a country like India of one billion people where sky is the limit there is a
vast untapped potential waiting for life insurance products. 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.
Banks have the credibility established with their constituents because of a
variety of services and schemes provided by them.
They also enjoy pride of place in the hearts of people because of their long
presence and sustained image.
Banks also enjoy a wide network of branches, even in the remotest areas
that can facilitate taking up the task on a large and massive scale,
simultaneously.
Banks are very well aware with the psychology of the customers because of
their interaction with the customers on regular basis. Because of this the
bankers can guess the attitude and diverse needs of the customers and
could change the face of insurance distribution to personal line insurance.
People rely more upon LIC and GIC for taking insurance. If the products of
LIC and GIC are provided through bancassurance it would be an added
advantage to the insurance companies.
With the help of banks trained staff, its brand name and the confidence and
reliability of people on the banks, the selling of insurance products can be
done in a more proper way.
Other than all these things there is a huge potential for insurance sector, as
the population of India is high and a large part of it has remained untapped
till now. So this can create an added advantage for both banks and insurers.
2. Weaknesses:
In spite of growing emphasis on total branch mechanism and full
computerization of bank branches, the rural and semi-urban banks have
still to see information technology as an enabler. The IT culture is
unfortunately missing completely in all of the future collaborations. The
internet connections are also not properly provided to the staff.
To undertake the distribution of the insurance products, the bank
employees have to undergo certain minimum period of training, followed
by a test and then get them selves licensed. Moreover the standards of the
examination have been raised in the recent past making it difficult for many
examinees to clear the same.
There is lack of personalized services because the traditional insurance
agent is considered a member of the family and hence is able to render a
personalized service during and after the sales process. However that may
not be the case in regards to a bank employee.
There are many differences in the way of thinking and business approaches
of bankers and the managers of insurance companies. Banks are
traditionally demand-driven organizations with are active selling
philosophy. Insurance organizations are usually need-driven and have an
aggressive selling philosophy.
The visit of a customer to the bank is to have a simple transaction like
deposit or withdrawal. Busy customers will have no time to have a
discussion on a long-term durable purchase like insurance across the
counter. Also, the visits in urban or metro branches are going to be fewer
because of ATMs and e-banking.
Another drawback is the inflexibility of the products i.e. it cannot 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 customers.
3. Opportunities:
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 many people in many areas that are still unaware about the
insurance and its various products and are waiting that somebody should
come and give them the information about it.
In urban and metro areas, where the customers are willing to get many
services like lockers and safe deposit systems and other products and
services from banks, there is a good opportunity to market many property
related general insurance policies like fire insurance, burglary insurance and
medi-claim insurance etc.
Banks' database is enormous even though the goodwill may not be the
same. This database has to be dissected 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.
4. Threats:
Success of a Bancassurance venture requires change in approach, thinking
and work culture on the part of everybody involved. The 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 not be easily acceptable by the
employees.
Another possible threat may come from non-response from the targeted
customers. If many joint ventures took place between banks and insurance
companies then it may happen that the customers may not respond to such
ventures as happened in U.S.
Insurance in India is perceived more as a saving option than providing risk
cover. So this may create an adverse feeling in the minds of the bankers
that such products may lessen the sales of regular bank saving products.
Also selling of investment and good return products may affect the FD
Portfolio of the banks.
There would be a problem of Reputational Contagion i.e. loss of market
confidence towards one in a venture leading to loss of confidence on the
other because of identical brand recognition, similar management and
consolidated financial reporting etc.
If no strict norms are there for such ventures then many unholy ventures
may take place which may give rise to tough competition between
bancassurers resulting in lower prices and the Bancassurance venture may
never break because of such situations.
The most common obstacles to success of Bancassurance are poor
manpower management, lack of a sales culture within the bank, no
involvement by the branch manager, insufficient product promotions,
failure to integrate marketing plans, marginal database expertise, poor
sales channel linkages, inadequate incentives, resistance to change,
negative attitudes toward insurance and unwieldy marketing strategy.













Chapter 10
Indian scenario
Global scenario
Future scope of Bancassurance
Other tie ups
Survey Analysis
Findings
Recommendations
Conclusion
Bibliography



Indian and Global Scenario
The business of banking around the globe is changing due to integration of global
financial markets, development of new technologies, universalization of banking
operations and diversification in non-banking activities. Due to all these
movements, the boundaries that have kept various financial services separate
from each other have vanished. The coming together of different financial
services has provided synergies in operations and development of new concepts.
One of these is bancassurance. Bancassurance is a new buzzword in India. It
originated in India in the year 2000 when the Government issued notification
under Banking Regulation Act which allowed Indian Banks to do insurance
distribution. It started picking up after Insurance Regulatory and Development
Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency'
regulations. As per the concept of Corporate Agency, banks can act as an agent of
one life and one non-life insurer. Currently bancassurance accounts for a share of
almost 25-30% of the premium income amongst the private players in India.
Bancassurance provides various advantages to banks, insurers and the customers.
For the banks, income from bancassurance is the only non interest based income.
Interest is market driven and fluctuating and quite narrowing these days. Banks
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. Increased
competition also makes it difficult for banks to retain their customers.
Banassurance comes as a help in this direction also. Providing multiple services at
one place to the customers means enhanced customer satisfaction. As for the
insurance company the advantage that bancassurance provides is evident. The
insurance company gets improved geographical reach without additional costs. In
India around 67,000 branches are there for PSU banks alone. If all 67,000
branches sell the insurance products one can see the reach. This is one method of
penetrating the market.
Bancassurance again comes as an answer. It helps the insurance companies to tap
the market at a much lower cost. As for the customer the competitive nature of
the Indian market ensures that the reduction in costs would result in benefits in
terms of lower premium rates being passed onto him. The penetration level of life
insurance in the Indian market is considerably low at 2.3% of GDP with only 8% of
the total population currently insured. Thus, bancassurance provide an apparently
viable model for product diversification by banks and a cost-effective distribution
channel for insurers. The success of the partnership between the two entities
depends on the right model partnership. Given these changes, bancassurance
and collaboration between banks and insurers has a long way to go in India. With
almost half of the population likely to be in the' wage earner' bracket by 2010,
there is every reason to be optimistic that bancassurance in India will play a long
inning.
Global Scenario Bancassurance has grown at different pace and taken different
shapes and forms in different countries depending on the demography, economic
and legislations in that country. During the last two decades, bancassurance has
taken deep roots in various countries, especially in Europe. Bnacassurance, so far,
has been basically European. Bancassurance has seen tremendous acceptance
and growth across nations. Although it enjoys a penetration rate in excess of 50%
in France, Spain, Italy and Belgium, other countries have opted for more
traditional networks. The Life insurance market in the UK is largely in the hands of
the brokers. With advent of bancassurance, their market share has increased
from 40% in 1992 to 54% in 1999. Sales agents also play an important role on a
market entirely regulated by the Financial Services & Markets Act (FSMA) which
imposes very strict marketing conditions. In Germany, the market continues to be
dominated by general sales agents, even if their market share has declined from
85% in 1992 to54% in 1999.Bancassurance recorded huge growth in Europe but
not in USA and Canada. In the US, there were hurdles till recently banks were not
allowed to do insurance business and vice versa. In several countries in Latin
America, banks have benefited from recent reforms financial deregulation,
among others by selling insurance products across the counter. In China, banks
are limited to playing the role of tide agents to insurance companies, which can
still provide a good platform for bancassurance to develop.
In Hong Kong, when a Swiss bank introduced bancassurance, the life insurance
sales went up by 240%. Japan has to make a remarkable headway in
bancassurance. In the Philippines, banks are permitted to own100% of the
insurance company. Bancassurance is yet to be exploited in Singapore. There is a
huge market potential out there in many countries and especially in India when
compared to the global benchmark. It is good news to bancassurers that only
about 25% of the global insurable population is insured, and even among them
most is underinsured.
Future scope for Bancassurance
By now, it has become clear that as economy grows it not only demands stronger
and vibrant financial sector but also necessitates providing with more
sophisticated and variety of financial and banking products and services.
The outlook for bancassurance remains positive. While development in individual
markets will continue to depend heavily on each countrys regulatory and
business environment, bancassurers could profit from the tendency of
governments to privatize health care and pension liabilities. India has already
more than 200 million middle class population coupled with vast banking network
with largest depositors base, there is greater scope for use of bancassurance. In
emerging markets, new entrants have successfully employed bancassurance to
compete with incumbent companies. Given the current relatively low
bancassurance penetration in emerging markets, bancassurance will likely see
further significant development in the coming years. In India the bancassurance
model is still in its nascent stages, but the tremendous growth and acceptability in
the last three years reflects green pasture in future. The deregulation of the
insurance sector in India has resulted in a phase where innovative distribution
channels are being explored. In this phase, bancassurance has simply outshined
other alternate channels of distribution with a share of almost 25-30% of the
premium income amongst the private players. To be fruitful, it is vital for
bancassurance to ensure that banks remain fully committed to promoting and
distributing insurance products. This commitment has to come from both senior
management in terms of strategic inputs and the operations staff who would
provide the front-end for these products.
In India, the signs of initial success are already there despite the fact that it is a
completely new phenomenon. There is no doubt that banks are set to become a
significant distributor of insurance related products and services in the years to
come.
Other tie-ups
Life Insurance tie-ups
Private Sector Companies:
1. Bajaj Allianz Life Insurance Co. Ltd.
2. Birla Sun Life Insurance Co. Ltd.
3. HDFC Standard Life Insurance Co. Ltd.
4. ICICI Prudential Life Insurance Co. Ltd.
5. ING Vysya Life Insurance Co. Pvt. Ltd.
6. SBI Life Insurance Company Limited
7. TATA-AIG Life Insurance Company Ltd.
8. Sahara India Life Insurance Co. Ltd.
9. Aviva Life Insurance Co India Pvt. Ltd.
10. Kotak Mahindra OU Mutual Life Insurance Co. Ltd.
11. Max New York Life Insurance Co. Ltd.
12. MetLife India Insurance Co. Pvt. Ltd.
13. Reliance Life Insurance Co. Ltd.
14. Shriram Life Insurance Co. Ltd.
15. Bharti Axa Life Insurance Co. Ltd.
Public Sector Company:
16. Life Insurance Corporation of India
Non-Life Insurance tie-ups:
Private Sector Companies:
1. Royal Sundaram Allianz Insurance Co. Ltd.
2. TATA-AIG General Insurance Co. Ltd.
3. Reliance General Insurance Co. Ltd.
4. IFFCO-TOKIO General Insurance Co. Ltd.
5. ICICI Lombard General Insurance Co. Ltd.
6. Bajaj Allianz General Insurance Co. Ltd.
7. HDFC Chubb General Insurance Co. Ltd.
8. Cholamandalam MS General Insurance Co. Ltd.
9. Star Health and Alhed Insurance Co. Ltd.
Public Sector Companies:
10. The New India Assurance Co. Ltd.
11. National Insurance Co. Ltd.
12. United India Insurance Co. Ltd.
13. The Oriental Insurance Co. Ltd.
14. Export Credit Guarantee Corporation Ltd.
15. Agriculture Insurance Company Ltd.
Survey analysis (Questionnaire)
A survey was conducted of about 50 people who did regular banking transactions
and also had an insurance policy. These included several housewives,
businessmen, professionals, students, etc. The following analysis was done on the
basis of the survey conducted:
Are you aware of Bancassurance?

Interpretation:
Among those who surveyed, 80% of respondents were aware that their bank
provided bancaasurance. They knew with which Insurance Company their bank
has tie up with; also they were aware about various policies provided by their
banks. However, 20% of the respondents were amused with the term
bancassurance and didnt know anything about it and the services provided by
their banks.
Have You Taken An Insurance Policy From Your Bank?

Interpretation:
Among the people who were surveyed, there were only 34% people who had
taken insurance policy from their respective banks. Remaining 66% respondents
didnt opt to take a policy from their banks.
The Kind Of Insurance Policy Taken From The Bank?

Interpretation:
Maximum number of insurance taken was related to loan. It was either car
insurance or a home insurance. Out of the people surveyed 63% said that they
have taken a loan based insurance. There were 23% who have taken insurance
which are deposit based because it is a part of the deposit scheme. Only 18%
have taken life insurance cover from the bank and 42% belong to others category.
Reasons For Taking An Insurance Policy:

Interpretation:
There was a mixed response from the customers. 80%said that they took the
insurance policy because of security benefits. 65%said that since, they trusted
their bank, they took the policy. There were4o% who said that the brand image of
23 % Deposit Based
63% Loan Based
18% Life Insurance
42 % Others
the company also mattered. Only28% said that savings was a reason that
encouraged them to buy insurance policy.
On Your Choice Which Mode Of Insurance Distribution Channel Would You
Prefer To Buy The Policy From?

Interpretation:
50% people preferred agents because they provide personalized services. 20%
took insurance from companies because of their trust on the company. 23% said
they would buy insurance from banks because of the brand name and their trust
on banks. Only 7% said that they would buy insurance from brokers.
Which Bank Do You Feel Would Excel In Bancaasurance? Rate Them Accordingly

Interpretation:
90% people said that private sector banks would excel in this because of their
aggressive selling policies and they provide quality services to the customers. 70%
votes were given to foreign banks. Because foreign banks have proper
management and aggressive selling strategies. The public sector banks were given
the least votes because of their lazy approach to work.
Do You Think Bancassurance Has A Good Future?

Interpretation:
95% people said that they believe that Bancassurance has a very bright future
because there is an immense potential for the insurance industry in India. But 7%
believe that because of the emergence of the new technology such as ATMs,
Internet banking etc the banks will soon go virtual so there is not much scope for
it.

Findings
Although the concept is simple enough in theory, but in practice it has been
found to be far from straightforward.
Almost many people have a fair idea about Bancassurance and that their
banks sell various insurance products. But still few people dont know
about Bancassurance as a concept.
It has been also found out that the banks have various opportunities to
cross sell insurance products. The insurance companies also have the
opportunity to take advantage of the banks network and other avenues.
It is also seen that customers have a lot of trust on the banks, and because
of that trust the customers will take the insurance products from banks.
As the brand name of the banks is important so is the brand image of the
insurance companies. So the banks and the insurance companies must tie-
up with the right partners. This will help them to create a better image in
the minds of the customers.
It has also clear from the study that the private sector and the foreign
banks have better future in Bancassurance. But the public sector banks are
also trying to give them a tough competition e.g. SBI Life Insurance Co.
The insurance business can go a long way because there is a large
population who is still unaware about insurance. So the insurance
companies have a huge potential market in the years to come.
The banks fail to provide personalized services as are provided by the
agents. So banks will have to improve in that area. They should provide
after sales services to the customers.
Banks now-a-days are trying to provide each and every service to its
customers. So by providing insurance, banks can add one more service to
their list.


Recommendations
The Insurance companies need to design products specifically for
distributing through banks. Trying to sell traditional products may not work
so effectively.
The employees of the banks who are selling insurance products must be
given proper training so that they can answer to any queries of the
customers and can provide them products according to their needs.
Banks should also provide after sales services and they should be more
aggressive in selling the insurance products.
Banks should also do the settlement of claims which will increase the trust
and reliability of the customers on the banks.
In India, since the majority of the banking sector is in public sector which
has been widely responsible for the lethargic attitude and poor quality of
customer service, it needs to rebuild the blemished image. Else, the
bancassurance would be difficult to succeed in these banks.
A formal and standard agreement between these banks and the insurance
companies should be taken up and drafted by a national regulatory body.
These agreements must have necessary clauses of revenue sharing. In case
of possible conflicts, the bank management and the management of the
insurance company should be able to resolve conflicts arising in future.
For bancassurance to succeed, products and processes will need to be
tailored to bank markets, rather than adjusted to insurers specifications.
Banks and Insurance companies should apply all the skills and potential in
this area and take advantage of the same and they should improve the
products from time to time according to the needs of the customers.


Conclusion
The life Insurance Industry in India has been progressing at a rapid growth since
opening up of the sector. The size of country, a diverse set of people combined
with problems of connectivity in rural areas, makes insurance selling in India a
very difficult task. Life Insurance Companies require good distribution strength
and tremendous man power to reach out such a huge customer base. The
concept of Bancassurance in India is still in its nascent stage, but the tremendous
growth and the potential reflects a very bright future for bancassurance in India.
With the coming up of various products and services tailored as per the
customers needs there is every reason to be optimistic that bancassurance in
India will play a long inning. But the proper implementation of bancassurance is
still facing so many hurdles because of poor manpower management, lack of call
centers, and no personal contact with customers; inadequate incentives to agents
and unfullfilment of other essential requirements. I have experienced a lot during
the preparation of the project. I had just a simple idea about Bancassurance. But
after a detailed research in this topic I have found how important bancassurance
can be for bankers, insurers as well as the customers. I am contented that all my
objectives have been met to its fullest. I have also experienced that though
Bancassurance is not being utilized to its fullest but it surely has a bright future
ahead. India is at the threshold of a significant change in the way insurance is
perceived in the country. Bancassurance will definitely play a defining role as an
alternative distribution channel and will change the way insurance is sold in India.
The bridge has been reached and many are beginning to walk those cautious
steps across it. Bancassurance in India has just taken a flying start. It has a long
way to go .. After all The SKY IS THE LIMIT!


Bibliography
Insurance watch.
Business world.
Business today.
Theories and Practices in Insurance.
Webliography
www.insuremagic.com
www.google.com
www.sbilife.com
www.indiainfoline.com