INTRODUCTION TO BANCASSURANCE

 Bancassurance is a French compound term which means bank and insurance. The term entails a relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank's customers. In this partnership, bank staff and tellers become the point of sale and point of contact for the customer. The Bank staff are advised and supported by the insurance company through wholesale product information, marketing campaigns, and sales training.

Bancassurance refers to the relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank’s customers. It is basically the distribution of the insurance products through the Banks’ already existing distribution system. It is an arrangement in which insurance companies leverage the customer base of banks to sell insurance products to banks’ customers, and by doing this both the insurance company and the bank earn a profit.

The bank and the insurance company share the commission. Insurance policies are processed and administered by the insurance company. This partnership arrangement can be profitable for both companies. Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base without having to expand their sales forces or pay commissions to insurance agents or brokers.

According to the Bancassurance Guidelines for Banks and Financial Institutions, 2019:

• Bancassurance means a mechanism by which banks or financial institutions and insurers collaborate to distribute and market insurance products.

• Bancassurance Business means the provision of insurance products or services by a bank or financial institution on behalf of an insurer.

• Bancassurance Agency Agreement means a legal contract between the bank or financial institution and the insurer, under which the former acts as the insurance agent of the latter. 

• Bancassurance Products means insurance products as specified under the second schedule of the Insurance Act that are marketed and sold by banks and financial institutions under a Bancassurance agency agreement.