Bancassurance- an overview

Innovation is a baby child of three things- free thought, work pressure and necessity

World’s banking system is changing or in other words upgrading every quarter with various innovative schemes, policies. Today with financial innovations and financial liberalization has drawn the world of banking sector very close to new avenues. In these set of avenues most upcoming and growing combination is bancassurance.

In Bancassurance, i.e., banc + assurance, refers banks and insurance company tied up for selling insurance products. The concept of Bancassurance first appeared in France in 1980, to define the sale of insurance products through banks’ distribution channels. Banks are being used as an effective alternate channel to distribute insurance products either as ‘stand-alone insurance products’ or ‘add-ons to the bank products’ by way of combining the insurance with typical banking products/services. Banks deals in both type of insurance policies i.e. life term and non-life type (general).

Major success factors for bancassurance:

• Favorable legal system in country
• Strong banking infrastructure coupled with strong banking culture
• Cross selling of products
• Concept of “relationship banking”
• Fiscal factors like tax incentives

The given above are foundation stone for bancassurance in any country. In 1980’s European banking system was at the stage of maturity and diversifying their activity and optimizing the products. Bancassurance sizably contributed in banks revenue. It also helped banks to retain its customer’s loyalty by providing them right investment option at right time.

If we look at the figures given above and compare the countries in terms of ‘insurance penetration ratio’(defined as ratio of insurance premium to GDP), a key indicator of the spread of insurance coverage and insurance culture, India compares poorly by international standards. The penetration ratio was less than one per cent in 1990s and it improved to 4.8% by end-March 2006. As against this, a Survey Report of Swiss Re revealed that the penetration ratio as at end-March 2006, in respect of some of the European countries, viz., UK and Switzerland at 16.5% and 11.0%. In Asia, Taiwan and South Korea had registered their respective ratio of as high as 14.5% and 11.1%. Insurance Penetration ratio for the World was placed at 7.5% far greater than that of India.

According to survey we can say that there is huge opportunity for bancassurance in our country because India have huge banking infrastructure and satisfied other factors too which helped for success of bancassurance.

Diversity lessons from Taare Zameen Par

The moment of the year 2007 for me was the evocative scene in Aamir Khan's Taare Zameen Par where the young protagonist defies all the odds and walks up shyly to receive an art prize, thereby demonstrating that every social and intellectual shortcoming can be overcome through genuine appreciation of potential.So too, leaders in organizations can build stars if they are able to look beyond the appeal of ordinary success in pre-defined criteria such as a management degree from the right school, perfect articulation, polished dress sense etc. This may mean nurturing the stellar young woman returning after a career break to have children, offering tailor-made opportunities to those with specific handicaps such as blindness or being wheelchair bound, or identifying those who for reasons of financial difficulty, may not have benefited from the final polish of the top business schools.Indeed, modern organisations can no longer afford to overlook the capabilities of those historically run over by the rat race. Recent studies by the Organization for Economic Cooperation and Development (OECD), whose developed country members have of late suffered from declining productivity and ageing, shrinking populations, underscore this fact. Countries that have adopted women and family-friendly work practices including flexible working, such as Norway and Finland, have shown remarkable improvements in both business productivity and birth rate, as women find balancing career progression with child-rearing more manageable. On the other hand, Italy, with its traditional domestic values and macho corporate environment, has witnessed declines in both.In the knowledge sector in our country, a lot is being to done to correct the gender imbalance that normally pervades all organisations in the corporate sector.However, one identified factor that can come in the way of sustained growth is the availability of manpower of the right quality and numbers – the perennial refrain of poor quality of engineers and other technical graduates is not going to disappear and industry chieftains need to explore other avenues to find the talent they need to fuel growth of both the IT and business process outsourcing (BPO) sectors. Early experiments by progressive organisations like Satyam through their rural empowerment programme and the Thermax-Zensar-Forbes Marshall connsortium supported by Dr Reddy's Foundation have focused on creating employability for urban slum children and demonstrated that the talent that exists at the bottom of the socio-economic pyramid can be tapped for individual and business benefits.There is no doubt that a greater degree of effort is required to make worthy knowledge workers out of the weaker segments of society but the results can make this effort truly worthwhile, not just through the satisfaction that each success story can bring but also by the sheer scale of new employment that is feasible if one looks beyond the traditional talent pools for future resources. Can we overcome our very own brand of corporate dyslexia and put new meaning into the lives of millions of our countrymen?

Ganesh NatrajanDeputy Chairman & MD, Zensar Technologies

read more | digg story