Bancassurance refers to the partnership between a bank and an insurance firm. Here, the bank facilitates the insurance company to sell its products through its platform or clients. The bank benefits by earning a fee or referrals based on the premiums collected.
Bancassurance in India
In India, bancassurance began in 2000, allowing insurance products to be distributed through banking channels. The Indian government and IRDA laid down regulations for this practice, specifying that banks could undertake 'Insurance' as a business under the Banking Regulation Act, 1949, with specific approval from RBI. Initially, insurance was sold only by individual agents. However, since the entry of private companies in 2000, the sector has seen intense competition, with a variety of new products and marketing strategies emerging.