Banks and Insurance Companies Tie-Up Increase as Insurance Agents Take Back Seat

Published On Sep 18, 2019 12:00 AM By Sakshi Aggarwal

With insurance agents taking a back seat in the insurance sector, more and more insurance companies and banks are tying up to offer products that fulfil the requirements of the millennials.

With new policies being sold with the help of banks, the premium has increased to 10% in the year 2018 which was 8% back in 2010. And going by the CARE Rating report, the agency channel’s contribution to the premium reduced to 32% which was earlier 54% in the same duration.

Chief Executive Officer and Managing Director of Indian Bank, Padmaja Chunduru shares, “We have seen 21% growth in the overall sales of insurance policies sale in June 2019 compared to the previous year. Health insurance policies have seen the highest growth of 25%, followed by 19% growth on fire and motor policies. And the business from the sale of life policies (tie-up with LIC) has gone up by 27% which is not unusual.”

What motivated the bankers towards getting associated with the insurance companies are the attractive features offered under the new products. Bankers also believe that the advanced technologies supporting the bank’s staff with promotional activities will keep them going.

Indian Bank is already associated with New Insurance and LIC to offer the insurers’ tailor-made products to its customers and has recently tied up with SBI Life and Aditya Birla Sun Life Insurance too.

On the other hand, fulfiing the needs of the digital-savvy millennials has been a turning point for the insurance companies. The Chief Retail Officer of Edelweiss Tokio Life Insurance shares, “The market share of bancassurance has increased to 56% from 27% between 2011 to 2019, while among agents it declined from 42% to 24%, while direct sale by insurers improved from 2-4% to 14-15%. This change in the shift from traditional channels to alternate channels was achieved with the ability of banks to connect with the new salaried class”.

As believed by Bajaj Allianz, growth in the insurance sector business via agents has been constant at 12% to 15% during the past three years.