Bancassurance
Candlefocus EditorFor the insurance company, bancassurance allows it to increase its sales and reach a broader client base without having to expand its sales force. The benefit for the bank is the additional revenue stream from the sale of insurance products. This revenue is often shared between the institution and its insurance partner.
Banks are a natural choice for the sale of insurance services as they often have a wide existing customer base and high levels of trust as compared to other financial service providers. Banks typically invest a lot of resources in customer relationships and can be used to help grow customers’ knowledge of, and interest in, the products.
These deals are often beneficial to the customers, too. Customers can benefit from lower costs, more convenience and a more personalised approach compared to dealing directly with an insurer. All of these solutions are often provided on one ‘platform’, making them easier to use for the customer.
This type of arrangement between banks and insurers can also create a pathway for banks to enter insurance markets that they have not traditionally served. This allows banks to expand the number of markets they serve, as well as gain additional revenue from the sale of insurance products.
In addition, depending on the nature of the agreement between the insurer and the bank, the relationship can extend to other areas such as asset management, retirement planning and investment advice. This is becoming increasingly popular as banks expand their product offerings and market presence.
Bancassurance can be a win-win for both the insurance company and the bank. The insurer has the advantage of increased sales and a broader customer base, while the bank increases its range of services to customers, earns additional revenue, and has the chance to expand into new markets. For these reasons, bancassurance continues to be popular among banking and insurance companies.