Bancassurance is defined as ‘Selling Insurance products through banks’. The word is a combination of two words ‘Banc’ and ‘assurance’ signifying that both banking and insurance products and service are provided by one common corporate entity or by banking company with collaboration with any particular Insurance company. In concrete terms bancassurance, which is also known as Allfinanz describes a package of financial services that can fulfill both banking and insurance needs at the same time.
The usage of the word picked up as banking and insurance companies merged together and banks sought to provide insurance, in the market which has been liberalized recently. But it is a controversial issue as many experts feels that this ides gives banking sector too great a control over financial market in that country. Therefore it has also been restricted in many countries too. But, still which countries have permitted Bancassurance in their market has seen a tremendous boom in that sector. The share of premium collected by them has increased in constant and decent manner. This success coincided with a favorable taxation for life insurance products, as well as with the consumers' growing needs, in terms of middle and long term savings, which is due to an inadequacy of the pension schemes in India.
The links between bank and insurance takes place through various ways (distribution agreements, joint ventures, creation of a company new company) which gives rise to a complete upheaval concerning marketing strategies and the setting up of insurance products' distribution. More and better insurance starts coming in market. This stream of market has just been opened very recently for the Indian market and there is lot of development left to be done by the government and regulatory authority. But this has proven to be a boom for the Insurance and Banking companies together and both the different sector of the industry has shown better result and improvement in their own field due coming of the whole new concept of BANCASSURANCE....