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Bancassurance A High Potential for Growth…… The 3 rd Middle East Insurance Forum March 20-21, 2006 Ritz Carlton, Bahrain Mukul Gupta CFO & Head Bancassurance Bajaj Allianz Life Insurance, India “There is no stronger force than an idea whose time has come.” Victor Hugo

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Mukul Gupta CFO & Head Bancassurance Bajaj Allianz Life Insurance, India

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A High Potential for Growth……

The 3rd Middle East Insurance Forum

March 20-21, 2006

Ritz Carlton, Bahrain

Mukul GuptaCFO & Head BancassuranceBajaj Allianz Life Insurance, India


“There is no stronger force than an idea whose time has come.”

Victor Hugo

(19th Century French Novelist)

Banks & Insurers across the World have realized Bancassurance is the distribution channel, which would help them achieve economies of scale and boost their revenues in the 21st Century

  • Impact of Bancassurance on Increasing Insurance Penetration and Realizing Growth – India Case
  • Global Bancassurance Trends
  • Industry Evolution - India
  • The Bancassurance Opportunity
  • Case Study : BALIC & Standard Chartered Bank
  • Case Study – BALIC & Syndicate Bank

Global Bancassurance Trends…

  • The key factors impacting development of Bancassurance across the globe are:
    • Regulatory Environment in the country
    • Banking Habits – Is Visiting the Bank natural to customers?
  • Europe - Bancassurance accounts for the 35% of the sales in the European life insurance market and is the dominant distribution channel in a number of South European countries such as Belgium, France, Italy, Spain and Portugal.
  • US – Bancassurance started developing post the crumbling of barriers set by the Glass-Steagaal Act in late 1990s
  • Asia – Bancassurance is in its nascent stage in Asian Life Insurance Market but is developing very rapidly due to presence of Brick & Mortar Model of Banking in most of the Asian countries.

Banks dominate Life distribution in Southern Europe, and making progress in Northern Europe…

Success of Bancassurance vary through out Europe due to

different regulatory environment in each country


Recent Bancassurance Trends in Asia…

In India, Bancassurance accounts for 22% of the sales by Private Insurers

Due to presence of Brick & Mortar Model of Banking, Bancassurance is

increasing its Market Share very rapidly



Resource commitment

Ability to satisfy customer needs – value added

Reward opportunity

Management complexity

Convergence of interest



Choice of Bancassurance Model Depends upon Strategy & Environment…

Distribution Agreements

Strategic Alliances

Joint Ventures

Financial Services Group

LowDegree of integration High

  • Banks distribute life insurance products (stand-alone or bundled with bank products) in return for fee income
  • No or little sharing of customer DB
  • Limited investment
  • A higher degree of integration in product development, service provisions and channel management
  • Possible sharing of customer DB
  • Requires investments in IT and sales personnel
  • Clear mutual ownership of products and customers
  • Sharing of customer DBs
  • Requires strong and long-term commitments from both sides
  • Operations and systems can be fully integrated
  • A high capability to leverage on banks’ existing customer and other services provisions
  • One-stop financial services
  • Potential for fully integrated products

Bancassurance partnership and distribution agreement to clearly address:

  • Volume targets
  • Type of products to be sold
  • Sharing of margins between product and distribution
  • Sharing of CRM system
  • Management responsibility of the product factory
  • Require solid legal contract / servicing agreements

Who bring what to the Partnership…

  • Bank
  • Customer base and relationships
  • Distribution network
  • Brand
  • Insurer
  • Sales & marketing expertise for insurance products
  • Profit maximization selling insurance products
  • Strong technical expertise
  • Product know-how
  • Financial strength
  • Brand





Key Success Factors…


of Partners



Training of

Bank Staff

Selection of




of Partner



Sales &




Up to 1999

1999 till 2004

2005 onwards

13 Private Players

Pvt Insurers gain over 28% share

LIC Monopoly

No Private Players allowed

Private Players allowed

12 new insurers

No. of Players

Confidence in Bancassurance

BA takes 20% + share among Private Players

Fastest Growing Distribution Channel

Agency model replicated

Bancassurance in development stage

Agency only

800K Agents

Distribution Focus

ULIPs are the most popular products, accounts for 75% of Sales through Private Insurers

Traditional – Endowments, Money Back Plans & Wholelife

Emergence of Unit Linked Products


Bancassurance regulations become clearer

Multiple models allowed- CA, Referral, Broking

Primarily Agency driven regulations

Regulatory Environment

Primarily Agency driven regulations

Industry Evolution…


The Bancassurance Opportunity…

Real Potential Still to be Unleashed

  • Banks are major players in the Indian Financial system:
      • 66,000 branches (32,000 rural and 14,700 semi urban)
      • Enormous retail account base of 440 mn deposit accounts
      • Total deposit base of Rs. 14 trillion (USD 300 bn)
  • Large Structure governed thru’ Regulations
      • Four Categories of Banks – Foreign Banks, Nationalised Banks, Private Sector Banks and Co-operative Banks catering to distinct customer segments
      • Over 2500 Banks spread nationally and geographically
  • Banking Habits of Customers
      • Propensity to Visit Bank Branches
      • High Trust in the Banking System
      • Bank Managers looked upon as “Financial Advisors”

Only Tip of the Iceberg, in terms of penetration, has been touched

with less than 2% customers of State Owned Banks insured


Over 65% of Household financial savings are in short term instruments

The Bancassurance Opportunity…

Incremental Financial Household Savings – ‘04

Source: RBI Annual Report,

All Data for Yr 20003-04


Case Study : Standard Chartered Bank & BALIC

  • Standard Chartered Bank – Largest Foreign Bank in India
  • Catering to the High NetWorth clients and the Mass Affluents’
  • 83 Branch Offices with presence in 25 cities
  • Customer Base of 2.50 million
  • Deposit Base of over Rs. 135 billion (USD 3 bn)
  • Client Habits : Savvy Customer Base with both high branch traffic and Off-Site Banking habits.
  • Joint operations were rolled out in January 2002 with 25 FSCs covering 30 Bank Branches.

Case Study : Standard Chartered Bank & BALIC


  • A designated persons stationed in each Branch selling Insurance.
  • Selling thro 11 Channels of Distribution :- Branch Banking, Priority Banking, Outbound Sales Team, Mortgages, Credit Cards etc
  • Over 250 Sales Staff dedicated selling Insurance in these Distribution Channels
  • Dedicated Operation Staff for processing SCB Proposals
  • Fortnightly Saturday Schools for Sales Staff
  • Results
  • The Benchmark for the Indian Industry for Bancassurance
  • Bancassurance contributes 20% of total income from Retail Banking operations
  • Avg Productivity per person is over 12-15 policies per month and Avg Ticket Size stands at USD 1,100.
  • Projected GWP of USD 100 mio for FY 05-06 & earnings to Bank to be in range of USD 25-30 mio
  • Regular UnitLinked Products fit in the clients needs of the Bank.

Distributions servicing different Customer Segments

Channels of Distributions

In-Branch Sales Team

Relationship Managers

Out Bound Sales Team

Dedicated Relationship Managers

Distributions Catering to Different Customer Segments

Retail Walk-in customers

Loan Customers

New Customers

High Networth Customers



Channel Distribution : Standard Chartered Bank…

Branch Banking / Walk-ins Contribute over 70% of Insurance Sales


Case Study : Syndicate Bank & BALIC

  • Syndicate Bank – Nationalised Bank with a dominant holding by the Government
  • Catering to Middle Class and Rural Base
  • 1500 Branch Offices with presence in 500 cities and town
  • Customer Base of over 17 million
  • Deposit Base of over Rs. 462 bn (USD 10.2 bn)
  • Client Habits : Branch Walk-ins for transactions with advice from the Branch Staff / Manager for all financial decisions
  • Bancassurance tie-up with Bajaj Allianz in October 2003

Case Study : Syndicate Bank & BALIC


  • Integrated Model Implemented with the Bank Staff being regularly trained to directly sell Insurance to its customers.
  • Phase wise Roll Out started in Oct’ 03 with 11 Insurance Managers covering 40 Branches.
  • Currently over 500 branches covered, with 250 Bank employees selected as Insurance managers & over 75 employees of BALIC, to promote insurance sales
  • Projected GWP of USD 25 mio for FY 05-06 & Earnings to Bank to be in range of USD 5-8 mio
  • Traditional endowment, Pension Product and Mortgage Reducing Term Assurance are the key products sold.
  • Among the most successful Public Sector Bank Distribution tie-up in India. Over 50,000 policies sold annually

Insurance Industry in India…

  • 13 Private players in the market today:
    • 6 Bank owned insurers- HDFC Standard Life, ICICI Prudential, ING Vysya, Metlife, OM Kotak, SBI Life
    • 7 Independent Insurers- Bajaj Allianz , Birla Sun Life, Aviva, Max New York Life, Tata AIG, Reliance Life and Sahara Life
    • LIC – The state Insurer is the dominant player with over 70% of the market share
    • Total Life Market Size at Rs. 250 billion (USD 5.5. Bn)

1. Increase in Fee Based Income

6. Provide integrated financial services tailored to the life cycle of customers

2. Reduce reliance on interest spreads as the major source of income






3. Leverage extensive customer base


5. Reduce risk based capital req. for the same level of revenue

4. One stop shop for all Financial Services

Consideration for Banks…


Immediate access to New Markets

Improve sales effectiveness & after sales service

Increase in Market Penetration

Reduce reliance on traditional distribution channel

Develop new financial products more efficiently

Combine Cost Saving & Increased Profitability

Consideration for Insurers…



Bancassurance Models Worldwide…

Distribution Agreements

Strategic Alliances

Joint Ventures

Financial Services Group

European Life bancassurers progressively abandon the intermediary role to gain access to long-term profits (bank-owned model)

Germany: numerous cross share-holdings between banks & insurers make acquisitions or mergers more difficult

France: bank-owned units = 56% of total Life & pension premiums vs. 44% for the distribution agreement


Netherlands, branch networks


US: mainly distribution agreements & banks acquiring large brokers. Concentration on Life products.

Asia: mainly distribution agreements & strategic alliances, other models facing regulatory restrictions

S Korea, India, China, Japan