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 attractive - and often profitable – for instance, Banks selling products of their insurance subsidiary exclusively, Banks selling products of an insurance affiliate on an exclusive basis and Banks offering products of several insurance companies as `super market’ as a complement to their core businesses.
By adding this system to the existing Banking services, banks can provide wider ranges of products and service in addition to the current products such as deposits, loans, and investments. Insurance companies, on the other hand, provide better products through bigger channels via the banking network of branches. In this light, the need for life insurance products to go with the banks’ growing number of product options and increased awareness among customers about the need to get adequate cover for future financial stability, would give the bank a competitive urge as well as establish a rewarding business relationship with customers.
1.2 STATEMENT OF THE RESEARCH PROBLEM
To date no commercial bank in Ghana has launched a Bancassurance product. Hence a fair majority of the Ghanaian population are not aware of this particular product. Also, SCB has embark on a lot of initiatives to improve the level services rendered to their and bancassurance is not an exception. Furthermore, the extent of the coverage of the bancassurance product depends on the effectiveness of the channels of distribution. It is against this background that this research is proposed with the following objectives.
1.3 OBJECTIVES OF THE RESEARCH
Over the last few years various dynamics of the macro economy have changed resulting in major changes in the Bank’s business. Over the period interest rates and inflation have been on a consistent downward and upward trend respectively. As a strategic shift, the bank has to create and sustain a one-stop-shop for her customers. This is where Bancassurance strategically fits. Integration of the financial service industry in terms of banking, securities...
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
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