Bancassurance segment

The bancassurance segment has been growing consistently pace and is competing with the traditional sale of insurance by agents owing to the keenness of banks to augment other income (fee-based income). Global insurance consulting firm, Watson Wyatt Worldwide in 'India Bancassurance Benchmarking Study 2006-07', had said that both life and general insurers were bullish about prospects of insurance penetration in the rural markets. According to the study, about 30 per cent of the life insurers have indicated that by the year 2010, rural insurance business will constitute between 16-20 per cent of their total bancassurance new business premium.

Bankers and insurers are both upbeat about the future of the bancassurance segment and it is expected to contribute about 50 per cent or more in the life insurance segment by the year 2010. It has also contributed significantly to the business of major insurance companies like Life Insurance Corporation (LIC) and SBI Life.

The growth in the bancassurance for insurance companies wholly depends on the number of bank branches that actively dispense these products. According to industry sources, private and foreign banks are biggest mobilisers of insurance premium despite public sector banks having a wider reach. In August 2008, bancassurance accounted for 35 per cent of the premium collected by private players. In 2006–07, that figure was about 17 per cent.