Introduction of Bancassurance
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND INFORMATION OF THE RESEARCH
Bancassurance is the selling of insurance and banking products through the same channel, most commonly through bank branches selling insurance. The sales synergies available have been sufficient to be used to justify mergers and acquisitions.
Some of the sales synergies come through the extensive customer base that banks have. Some come from opportunities to sell insurance together with some banking products. For example, banks generally insist on life insurance for mortgage borrowers. Although borrowers are not obliged to buy insurance from the lender, many do as it is an easy option.
Credit cards and personal loans create opportunities for banks to sell protection insurance and the knowledge a bank has of its customers' finances
Bancassurance has become significant. Banks are now major distribution channels for insurers and insurance sales constitute a significant source of profits for banks. The latter partly being because banks can often sell insurance at better prices (i.e., higher premiums) than many other channels, and they have low costs as they use the infrastructure (branches and systems) that they use for banking.
What has not happened to any great extent, at least in Britain, is the merger of banks and insurers to form integrated Bancassurance companies. Bancassurance covers a wide range of detailed arrangements between banks and insurance companies. In all cases, it includes the provision of insurance and banking products and services from the same source or to the same customer base. Also, because there is a wide diversity of strategies available, there is no standard model for Bancassurance.
The appearance and development of Bancassurance has been one of the most significant competitive developments in the retail financial services sector in Europe, USA, Japan, India, Korea etc. Many banking institutions and insurance companies have found Bancassurance to be an
INTRODUCTION
1.1 BACKGROUND INFORMATION OF THE RESEARCH
Bancassurance is the selling of insurance and banking products through the same channel, most commonly through bank branches selling insurance. The sales synergies available have been sufficient to be used to justify mergers and acquisitions.
Some of the sales synergies come through the extensive customer base that banks have. Some come from opportunities to sell insurance together with some banking products. For example, banks generally insist on life insurance for mortgage borrowers. Although borrowers are not obliged to buy insurance from the lender, many do as it is an easy option.
Credit cards and personal loans create opportunities for banks to sell protection insurance and the knowledge a bank has of its customers' finances
Bancassurance has become significant. Banks are now major distribution channels for insurers and insurance sales constitute a significant source of profits for banks. The latter partly being because banks can often sell insurance at better prices (i.e., higher premiums) than many other channels, and they have low costs as they use the infrastructure (branches and systems) that they use for banking.
What has not happened to any great extent, at least in Britain, is the merger of banks and insurers to form integrated Bancassurance companies. Bancassurance covers a wide range of detailed arrangements between banks and insurance companies. In all cases, it includes the provision of insurance and banking products and services from the same source or to the same customer base. Also, because there is a wide diversity of strategies available, there is no standard model for Bancassurance.
The appearance and development of Bancassurance has been one of the most significant competitive developments in the retail financial services sector in Europe, USA, Japan, India, Korea etc. Many banking institutions and insurance companies have found Bancassurance to be an
References: 1. Annual report and accounts (2006), financial performance of SCB 2. Annual report and accounts (2006), awards won by SCB 3. Review (2006), historical background information of SCB 4. DSR Induction Workshop (2008),products offered by SCB 5. DSR Induction Workshop (2008),services offered by SCB 6. The chronicle, Tuesday April12, 2007, “borrowing money and paying interest” by Dr. Paul Acquah. 7. Bancassurance sales report July 2008 by business intelligence unit – SCB. 8. Product knowledge, liabilities 2007 revised , a brief structure of SCB 9. Launching of bancassurance at Accra International Conference Centre, Mr. Francis Mills-Robertson – executive director consumer banking division - SCB