Bancassurance success breeds tie-ups

Customers' increased preference to buy insurance from banks is encouraging greater number of bancassurance tie ups with public sector banks.

Aviva today tied up with its fifth banking partner "" Punjab & Sind Bank "" which will give it massive reach in the north. Bajaj Allianz Life tied up with Centurion Bank a couple of weeks back.

Most insurance companies are now jumping to sign up with private sector and public sector banks as they look at the huge potential customer based, which can be tapped.

"The potential is far greater in public sector banks, looking at the customer base. With our latest tie up with Punjab & Sind Bank and our former one with Canara Bank, this takes the total potential client base between the two public sector banks to 4 crore," said Stuart Purdy, CEO, Aviva.

Bajaj Allianz Life which tied up with Centurion Bank expects to garner a monthly premium income of Rs 4-5 crore from this bank alone in the next six months.

This was its third bancassurance tie up to date "" after Standard Chartered Bank and Syndicate Bank "" and sale of life policies through bank branches contribute about 22 per cent of its total premium income. The maximum monthly premium comes from Standard Chartered Bank of over Rs 10.5 crore and Rs 1.5 crore from Syndicate Bank.

Aviva's bancassurance success story has been better, with premium collection through bank branches accounting for over 68 per cent. "After having gained significant presence in the south through our tie up with Canara Bank, Punjab & Sind Bank will give us massive reach in the north. The bank has 393 branches located in Punjab alone," said Purdy.

Commercial banks can use their network of 66,700 branches to cross-sell various types of insurance products, which at the same is beneficial for banks, as it adds to their fee-based income.

Indian Banks' Association (IBA) anticipates fee income from sale of insurance products of scheduled commercial banks to be anywhere in the region of Rs 5,000-7,500 crore during the initial five years. This is taking average sales through the bancassurance route at about 20 per cent.

Aviva is also hawking its risk products through ABN Amro, which is its top-most selling bank.

"ABN Amro sells about Rs 6-9 crore worth of policies a month, while Canara Bank sells less at about Rs 2.7 crore worth. We expect Punjab & Sind Bank to fare well as we see immense untapped opportunity in the north," pointed out Purdy.