Lecture 3 - Bancassurance

Question 1

What is the definition of bancassurance?

Answer 1

It is distribution of insurance products by banks.

The distribution is done through an arrangement between a bank and an insurance company.

Question 2

Explain the 2 business models in Bancassurance

Answer 2

1. Partnership
   - A bank and an insurance company collaborate to provide insurance to the bank’s customer base
   - A strong correlation between vision & culture of the two companies is the key to the sustainability of this partnership
2. Buy your own insurance
   - A bank can look to acquire an insurance company as its subsidiary.
   - Key consideration will be the synergies for both parties in the deal.

Question 3

Explain the 3 distribution channels

Answer 3

1. Integrated
   - Bank employs its own sales force to sell the insurance products
2. Hand In Glove
   - The insurance company employs the sales force & deploy them at the bank branches
3. Separate Sales Force
   - The insurance company employs the sales force to follow up on leads generated by banks

Question 4

What are the 3 benefits of bancassurance to banks?

Answer 4

1. Revenue diversification
2. Becoming a one-stop financial shop
3. Development of new product to fulfill clients’ needs

Question 5

What are the 3 benefits of bancassurance to insurers?

Answer 5

1. Revenue and channel diversification
2. Immediate access to large customer base and new market
3. Reduce client acquisition cost