Bancassurance as the term suggests is Bank + Insurance. Bancassurance means selling insurance product through banks. It is one of the para banking activity which the RBI has allowed the banks to take up. For selling the insurance product, bank and insurance company come up in a partnership where the bank sells the insurance company’s insurance products to its clients.
This arrangement benefits both the firms, the bank and the insurance company. The insurance product is of the insurance company while it is sold by the bank so it earns an amount from the insurance company. So the bank actually acts as an intermediary between the insurance company and their customers
Some examples include:
- SBI General Insurance Company Limited is a joint venture between the State Bank of India and Insurance Australia Group (IAG),
- SBI Life Insurance is a joint venture life insurance company between State Bank of India and BNP Paribas Cardiff of France,
- PNB MetLife Insurance Co. Ltd (PNB MetLife) is a joint venture life insurance company between Punjab National Bank and MetLife, Inc. of USA, etc.