A PROJECT REPORT ON

BANKASSURANCE IN BANKING AND INSURANCE SECTOR

At

NEO FINANCIAL SERVICES - HYD

Submitted in Partial fulfillment for the award of the Degree of the

MASTER OF BUSINESS ADMINISTRATION

By

R.BHANU PRASAD Roll No: 09AQ1E0016

Under supervision of

SYED MOIZUDDIN M.B.A. (Ph.D)

ASSISTANT PROFESSOR

CHILKUR BALAJI INSTITUTE OF TECHNOLOGY

R.V.S Nagar, Near A.P Police Academy, Moinabad, Hyderabad.

DEPARTMENT OF BUSINESS MANAGEMENT JAWARLAL NEHRU TECHNOLOGICAL UNIVERSITY

KUKATPALLY, HYDERABAD.

A PROJECT REPORT ON

BANKASSURANCE IN BANKING AND INSURANCE SECTOR

Submitted in Partial fulfillment for the award of the Degree of the

MASTER OF BUSINESS ADMINISTRATION

By

R.BHANU PRASAD Roll No: 09AQ1E0016

Under supervision of

Mr SYED MOIZUDDIN
MBA (ph.D)

Internal Guide

External Guide

CHILKUR BALAJI INSTITUTE OF TECHNOLOGY

R.V.S Nagar, Near A.P Police Academy, Moinabad, Hyderabad.

DECLARATION

I here by declared that the project titled BANKASSURANCE IN BANKING AND INSURANCE SECTOR at NEO FINANCIAL SERVICES - HYD is submitted by me to the Department of Management studies,Chilkur Balaji Institute of Technology (CBTV),as partial fulfillment of requirement for the award of degree MASTER OF BUSINESS ADMINISTRATION Affiliated to JAWARLAL NEHRU TECHNOLOGICAL UNIVERSITY(JNTU), Hyderabad. I declare that this work is an Original endeavor from me and is not submitted to any other University or Institution for the award of any degree/diploma/certificate or published any time before.

PLACE: HYDERABAD, DATE:

R.BHANU PRASAD ROLL NO:09AQ1E0016

ACKNOWLEDGEMENT

I wish to enlist with deep sense of gratitude the invaluable guidance and help given by Mr.SYED MOIZUDDIN Assistant Professor throughout my project with constant encouragement without which the project would not have completed. I take the opportunity to thank Mr. ANUP KUMAR Manger of NEO FINANCIAL SERVICES, for supporting and having spent his precious time in obtaining the information. I express my sincere thank to K. KRISHNA REDDY, Principal, Chilkur Balaji Institute of Technology for his kind cooperation during the entire project. I am grateful to Mr.YADUL my friend who has been a great source of inspiration in making this project a reality. Last but not least, I Express my gratitude to my parents and friends, for their encouragement and support and everyone who has helped directly or indirectly in completion of this project successfully .

CHAPTER-1 DESIGN OF THE STUDY

INTRODUCTION

BANKING

Banking as per the Banking Regulation Act, Banking is defined as: Accepting for the purpose of lending of deposits of money from the public for the purpose of lending or investment, repayable on demand through cheques, drafts or order.

A sound and effective banking system is necessary for a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. Many new things have come up in the banking sector in the recent years. Banks have adopted the new technology because banking has not remained up to accepting and lending but now it is all about satisfying the needs of the customers.

The development of the Indian banking sector has been accompanied by the introduction of new norms. New services are the order of the day, in order to stay ahead in the rat race. Banks are now foraying into net banking, securities, and consumer finance, housing finance, treasury market, merchant banking etc. They are trying to provide every kind of service which can satisfy or rather we should say that it can delight the customers.

Entry of private and foreign banks in the segment has provided healthy competition and is likely to bring more operational efficiency into the sector. Banks are also coping and adapting with time and are trying to become one-stop financial supermarkets. The market focus is shifting from mass banking products to class banking with the introduction of value added and customized products.

INSURANCE
Insurance may be defined as: It is a contract between two parties where by one party undertakes to compensate the another party for the loss arising due to an uncertain events for which the another party agrees to pay a certain amount regularly.

In India, insurance has a deep-rooted history. Insurance in India has evolved over time heavily drawing from other countries, England in particular. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

The Insurance Act, 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Today there are 14 general insurance companies and 14 life insurance companies operating in the country. But today also the insurance companies are trying to capture Indian markets as not many people are aware of it.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.

BANKASSURANCE
With the opening up of the insurance sector and with so many players entering the Indian insurance industry, it is required by the insurance companies to come up with innovative products, create more consumer awareness about their products and offer them at a competitive price. Since the banking services, insurance and fund management are all interrelated activities and have inherent synergies, selling of insurance by banks would be mutually beneficial for banks and insurance companies. With these developments and increased pressures in combating competition, companies are forced to come up with innovative techniques to market their products and services. At this juncture, banking sector with it's far and wide reach, was thought of as a potential distribution channel, useful for the insurance companies. This union of the two sectors is known as Bankassurance. A rush of joint ventures took place between banks and insurance companies and all these failed due to the non-response from the target customers. Indian banks have now again (since late 1990s) turned their attention to insurance mainly life insurance. The investors in the capital may turn their faceoff in case the rate of return on capital falls short of the existingrate of return on capital. Since banks and insurance companies have major portion of their income coming from the investments, the return from bankassurance must at least match those returns. Also if the unholyalliances are allowed to take place, there will be fierce competition in the market resulting in lower prices and the bankassurance venture may never break-even.

Meaning: Bankassurance is the distribution of insurance products through the bank's distribution channel. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. To put it simply, Bankassurance, tries to exploit synergies between both the insurance companies and banks. Bankassurance can be important source of revenue. With the

increased competition and squeezing of interest rates spread, profits are likely to be under pressure. Fee based income can be increased through hawking of risk products like insurance. Bankassurance if taken in right spirit and implemented properly can be win-win situation for the all the participants' viz., banks, insurers and the customer. Bankassurance is also known as the Bank Insurance model or BIM. Bank assurance is an organisational strategy that allows a bank to offer various types of insurance. The model is created by establishing on going relationship with one or more insurance providers. Those providers are then able to utilise the banks staff and resources to sell the policies. Origin: The banks taking over insurance is particularly well-documented with reference to the experience in Europe. Across Europe in countries like Spain and UK, banks started the process of selling life insurance decades ago and customers found the concept appealing for various reasons. Germany took the lead and it was called ALLFINANZ. The system of bank assurance was well received in Europe. France taking the lead, followed by Germany, UK, Spain etc. In USA the practice was late to start (in 90s). It is also developing in Canada, Mexico, and Australia. In India, the concept of Bankassurance is very new. With the liberalization and deregulation of the insurance industry, bankassurance evolved in India around 2008 Scope

Banks tapping new sources of income Finding ways to differentiate themselves from other banks and non-banks The technology forces the banks to develop a strategy for online delivery system to broaden the customer relationship and to retain customers loyalty.

Greater competition for the banks as the technology pushes the delivery of services out of bank and

Focus shifts from cost reduction to maintain market position

Reasons for banks to enter into Bankassurance:

There are many reasons for a bank to enter Bankassurance business. Some of the important ones are: Limitations on profit margins of traditional banking products: The profit magin in the traditional products is under tremendous pressure and banks are always looking out for other sources of non interest income generation. Regulatory Changes: Earlier RBI had not permitted the banks to enter into insurance distribution business. Now that the regulator has permitted on non-risk participating basis more and more banks are looking at this activity with a view of offering more products to its customers and also to earn more non-interest income. Better use of Banks network and infrastructure:Most banks have invested heavily in creating a huge network of branches and also the infrastructure in terms of the IT base which can be very effectively used in Bankassurance business. Separate infrastructure need not be created for this activity. In fact this can be a very good activity taken by the bank for an effective improvement in the branch Cost-Income ratio. Customer Loyalty:The loyalty factor which the customer has in an institution like banking is far from any other institution. This is also one of the factors which is leveraged in Bankassurance business. It has also been proved by research that if the bank customers are offered investment products by their bankers the trust factor is very high and also the The relationship would be that of the bank being a pure distributor while that of the insurer being a pure manufacturer of the insurance products. Customers information as marketing tool: This is a very important aspect why banks must do Bankassurance. If we logically look at the scenario, a banker is the one who knows the entire financial transaction of the customer. What money comes in, where the customer issues the cheques and what is the Net Investible Surplus is all known to the banker. The banker is bound by the Secrecy Act and cannot disclose the

10

details of the transactions to outside public but the information available at his finger tips can be made use of for the benefit of the customer. On a proper analysis of the transactions, the banker can understand the Investment psychology of the customer and accordingly offer the insurance products to them. All this with the stability of the organization, brand equity, loyalty and trust factor makes the bank and the banker a perfect person/unit to suggest investment and insurance products to its customers. When all these products are offered to the customer from the same bank branch, it automatically makes the banks branch a One stop financial services provider or a Super market of financial services to its customer.

11

Reasons for growing phenomena of Bankassurance:

1.Life insurance premium represents 55% of the world insurance premium, and as the life insurance is basically a saving market. So it is one of the methods to increase deposits of banks.

2.In non-life insurance business banks are looking to provide additional flow of revenues from the same customers through the same channel of distribution and with the same people.

3.Insurers have been turning in ever-greater numbers to alternative modes of distribution because of the high costs they have paid for agent services. These costs became too much of a burden for many insurers compared to the returns they generated.

4.Insurers operate through bankassurance own and control relationships with customers. Insurers found that direct relationships with customers gave them greater control of their business at a lower cost. Insurers who operate through the agency relationship are hardly having any control on their relationship with their clients.

5.The ratio of expenses to premiums, an important efficiency factor, it is noticed very well that expenses ratio in insurance activities through bankassurance is extremely low. This is because the bank and the insurance company is benefiting from the same distribution channels and people.

6.It is believed that the prospects for increased consolidation between banking and insurance is more likely dominated and derived by the marketing innovations that are likely to follow from financial service modernization. Such innovations would include cross selling of banking, insurance, and brokerage products and services; the increased use of the Internet by consumers; and a melding of insurance and banking corporate cultures.

12

7.One of the most important reason of considering Bankassurance by Banks

is

increased return on assets (ROA). One of the best ways to increase ROA, assuming a constant asset base, is through fee income. Banks that build fee income can cover more of their operating expenses, and one way to build fee income is through the sale of insurance products. Banks that effectively cross-sell financial products can leverage their distribution and processing capabilities for profitable operating expense ratios

8.By leveraging their strengths and finding ways to overcome their weaknesses, banks could change the face of insurance distribution. Sale of personal line insurance products through banks meets an important set of consumer needs. Most large retail banks engender a great deal of trust in broad segments of consumers, which they can leverage in selling them personal line insurance products. In addition, a banks branch network allows the face-to-face contact that is so important in the sale of personal insurance.

13

Models of Bankassurance
1.Structural Classification A)Referral Model: Banks intending not to take risk could adopt referral model wherein they merely part with their client data base for business lead of commission. The actual transaction with the prospective client in referral model is done by the staff of the insurance company either at the premises of the bank or else anywhere. Referral model is nothing but a simple arrangement, wherein the bank, while controlling access to the clients data base, parts with only the business leads to the agents/ sales staff of insurance company for a referral fee or commission for every business lead that was passed on. In fact a number of banks in India have already resorted to this strategy to begin with. This model would be suitable for almost all types of banks including the RRBs /cooperative banks and even cooperative societies both in rural and urban. There is greater scope in the medium term for this model. For, banks to begin with can resort to this model and then move on to the other models. B)Corporate Agency: The other form of non-sick participatory distribution channel is that of Corporate Agency, wherein the bank staff as an institution acts as corporate agent for the insurance product for a fee/commission. This seems to be more viable and appropriate for most of the mid-sized banks in India as also the rate of commission would be relatively higher than the referral arrangement. This, however, is prone to reputational risk of the marketing bank. There are also practical difficulties in the form of professional knowledge about the insurance products. This could, however, be overcome by intensive training to chosen staff, packaged with proper incentives in the banks coupled with selling of simple insurance products in the initial stage. This model is best suited for majority of banks including some major urban cooperative banks because neither there is sharing of risk nor does it require huge investment in the form of infrastructure and yet could be a good source of income. This model of bank assurance worked well in the US, because consumers generally prefer to

14

purchase policies through broker banks that offer a wide range of products from competing insurers.

2.Product based classification A)Stand-alone Insurance Products:In this case bankassurance involves marketing of the insurance products through either referral arrangement or corporate agency without mixing the insurance products with any of the banks own products/ services. Insurance is sold as one more item in the menu of products offered to the banks customer, however, the products of banks and insurance will have their respective brands too. B)Blend of Insurance with Bank Products: This method aims at blending of insurance products as a value addition while promoting the banks own products. Thus, banks could sell the insurance products without any additional efforts. In most times, giving insurance cover at a nominal premium/ fee or sometimes without explicit premium does act as an added attraction to sell the banks own products, e.g., credit card, housing loans, education loans, etc. Many banks in India, in recent years, has been aggressively marketing credit and debit card business, whereas the cardholders get the insurance cover for a nominal fee or (implicitly included in the annual fee) free from explicit charges/ premium. Similarly the home loans / vehicle loans, etc., have also been packaged with the insurance cover as an additional incentive. 3.Bank Referrals: There is also another method called 'Bank Referral'. Here the banks do not issue the policies; they only give the database to the insurance companies. The companies issue the policies and pay the commission to them. That is called referral basis. In this method also there is a win-win situation every where as the banks get commission, the insurance companies get databases of the customers and the customers get the benefits.

15

Utilities of Bankassurance
For Banks 1.As a source of fee income: Banks traditional sources of fee income have been the fixed charges levied on loans and advances, credit cards, merchant fee on point of sale transactions for debit and credit cards, letter of credits and other operations. This kind of revenue stream has been more or less steady over a period of time and growth has been fairly predictable. However shrinking interest rate, growing competition and increased horizontal mobility of customers have forced bankers to look elsewhere to compensate for the declining profit margins and Bankassurance has come in handy for them. Fee income from the distribution of insurance products has opened new horizons for the banks and they seem to love it. From the banks point of view, opportunities and possibilities to earn fee income via Bankassurance route are endless. A typical commercial bank has the potential of maximizing fee income from Bankassurance up to 50% of their total fee income from all sources combined. Fee Income from Bankassurance also reduces the overall customer acquisition cost from the banks point of view. At the end of the day, it is easy money for the banks as there are no risks and only gains. 2.Product Diversification: In terms of products, there are endless opportunities for the banks. Simple term life insurance, endowment policies, annuities, education plans, depositors insurance and credit shield are the policies conventionally sold through the Bankassurance channels. Medical insurance, car insurance, home and contents insurance and travel insurance are also the products which are being distributed by the banks. However, quite a lot of innovations have taken place in the insurance market recently to provide more and more Bankassurance-centric products to satisfy the increasing appetite of the banks for such products.

16

Insurers who are generally accused of being inflexible in the pricing and structuring of the products have been responding too well to the challenges (say opportunities)

thrown open by the spread of Bankassurance. They are ready to innovate and experiment and have set up specialized Bankassurance units within their fold. Examples of some new and innovative Bankassurance products are income builder plan, critical illness cover, return of premium and Takaful products which are doing well in the market. The traditional products that the 3.Building close relations with the customers: Increased competition also makes it difficult for banks to retain their customers. Bankassurance comes as a help in this direction also. Providing multiple services at one place to the customers means enhanced customer satisfaction. For example, through bank assurance a customer gets home loans along with insurance at one single place as a combined product. Another important advantage that bank assurance brings about in banks is development of sales culture in their employees. Also, banking in India is mainly done in the 'brick and mortar' model, which means that most of the customers still walk into the bank branches. This enables the bank staff to have a personal contact with their customers. In a typical Bankassurance model, the consumer will have access to a wider product mix - a rather comprehensive financial services package, encompassing banking and insurance products. For Insurance Companies 1.Stiff Competition:
At present there are 15 life insurance companies and 14 general insurance companies in India. Because of the Liberalization of the economy it became easy for the private insurance companies to enter into the battle field which resulted in an urgent need to outwit one another. Even the oldest public insurance companies started facing the tough competition. Hence in order to compete with each other and to stay a step ahead there was a need for a new strategy in the form of Bank assurance. It would also benefit the customers in terms of wide product diversification.

17

2.High cost of agents: Insurers have been tuning into different modes of distribution because of the high cost of the agencies services provided by the insurance companies. These costs became too much of a burden for many insurers compared to the returns they generate from the business. Hence there was a need felt for a Cost-Effective Distribution channel. This gave rise to Bankassurance as a channel for distribution of the insurance products. 3.Rural Penetration: Insurance industry has not been much successful in rural penetration of insurance so far. People there are still unaware about the insurance as a tool to insure their life. However this gap can be bridged with the help of Bankassurance. The branch network of banks can help make the rural people aware about insurance and there is also a wide scope of business for the insurers. In order to fulfill all the needs bankassurance is needed. 4.Multi channel Distribution: Now a days the insurance companies are trying to exploit each and every way to sell the insurance products. For this they are using various distribution channels. The insurance is sold through agents, brokers through subsidiaries etc. In order to make the most out of Indias large population base and reach out to a worthwhile number of customers there was a need for Bankassurance as a distribution model. 5.Targeting Middle income Customers: In previous there was lack of awareness about insurance. The agents sold insurance policies to a more upscale client base. The middle income group people got very less attention from the agents. So through the venture with banks, the insurance companies can recapture much of the under served market. So in order to utilize the database of the banks middle income customers, there was a need felt for Bankassurance.

18

Distribution Channels
Traditionally, insurance products were promoted and sold principally through agency systems only. The reliance of insurance industry was totally on the agents. Moreover with the monopoly of public sector insurance companies there was very slow growth in the insurance sector because of lack of competition. The need for innovative distribution channels was not felt because all the companies relied only upon the agents and aggressive marketing of the products was also not done. But with new developments in consumers behaviours, evolution of technology and deregulation, new distribution channels have been developed successfully and rapidly in recent years. Recently Bank assurers have been making use of various distribution channels, they are: 1. Career agents 2. Special advisers 3. Salaried agents 4. Bank employees 5. Corporate agency & Brokerage firm 6. Internet

19

1.Career Agents: Career Agents are full-time commissioned sales personnel holding an agency contract. They are generally considered to be independent contractors. Consequently an insurance company can exercise control only over the activities of the agent which are specified in the contract. Many bank assurers, however avoid this channel, believing that agents might oversell out of their interest in quantity and not quality. Such problems with career agents usually arise, not due to the nature of this channel, but rather due to the use of improperly designed remuneration and incentive packages. 2.Special Advisers: Special Advisers are highly trained employees usually belonging to the insurance partner, who distribute insurance products to the bank's corporate clients. The Clients mostly include affluent population who require personalised and high quality service. Usually Special advisors are paid on a salary basis and they receive incentive compensation based on their sales. 3. Salaried Agents: Salaried Agents are an advantage for the bank assurers because they are under the control and supervision of bank assurers. These agents share the mission and objectives of the bank assurers. These are similar to career agents, the only difference is in terms of their remuneration is that they are paid on a salary basis and career agents receive incentive compensation based on their sales. 4.Bank Employees / Platform Banking: Platform Bankers are bank employees who spot the leads in the banks and gently suggest the customer to walk over and speak with appropriate representative within the bank. The platform banker may be a teller or a personal loan assistant. A restriction on the effectiveness of bank employees in generating insurance business is that they have a limited target market, i.e. those customers who actually visit the branch during the opening hours.

20

5.Corporate Agencies and Brokerage Firms: There are a number of banks who cooperate with independent agencies or brokerage firms while some other banks have found corporate agencies. The advantage of such arrangements is the availability of specialists needed for complex insurance matters and through these arrangements the customers get good quality of services. 6. Internet: Internet banking is already securely established as an effective and profitable basis for conducting banking operations. Bank assurers can feel confident that Internet banking will also prove an efficient vehicle for cross selling of insurance savings and protection products. Functions requiring user input (check ordering, what-if calculations, credit and account applications) should be immediately added with links to the insurer. Such an arrangement can also provide a vehicle for insurance sales, service and leads.

Benefits of Bankassurance
1.To Banks 2.To Insurance companies 3.To Customers To Banks 1.By selling the insurance product by their own channel the banker can increase their income. 2. Banks have face-to-face contract with their customers. They can directly ask them to take a policy. And the banks need not to go any where for customers. 3.The Bankers have extensive experience in marketing. They can easily attract customers & non-customers because the customer & non-customers also bank on banks.

21

4.Banks are using different value added services life-E. Banking tele- banking, direct mail & so on they can also use all the above-mentioned facility for Bankassurance purpose with customers & non-customers. 5.Productivity of the employees increases. 6.By providing customers with both the services under one roof, they can improve overall customer satisfaction resulting in higher customer retention level To Insurers 1.The Insurance Company can increase their business through the banking distribution channels because the banks have so many customers. 2.By cutting cost Insurers can serve better to customers in terms lower premium rate and better risk coverage through product diversification. 3.Insurers can exploit the banks' wide network of branches for distribution of products. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas. 4.Customer database like customers' financial standing, spending habits, investment and purchase capability can be used to customize products and sell accordingly. 5.Since banks have already established relationship with customers, conversion ratio of leads to sales is likely to be high. Further service aspect can also be tackled easily. 6.The insurance companies can also get access to ATMs and other technology being used by the banks. 7.The selling can be structured properly by selling insurance products through banks. 8.The product can be customized as per the needs of the customers.

22

To Customers 1.Product innovation and distribution activities are directed towards the satisfaction of needs of the customer. 2.Bankassurance model assists customers in terms of reduction price, diversified product quality in time and at their doorstep service by banks. 3.Comprehensive financial advisory services under one roof. i.e., insurance services along with other financial services such as banking, mutual funds, personal loans etc. 4. Easy access for claims, as banks are a regular visiting place for customers. 5.Innovative and better product ranges and products designed as per the needs of customers. 6.Any new insurance product routed through the bankassurance Channel would be well received by customers 7.Customers could also get a share in the cost saving in the form of reduced premium rate because of economies of scope, besides getting better financial counseling at single point.

Trends of Bankassurance:
Though bankassurance has traditionally targeted the mass market, but bank assurers have begun to finely segment the market, which has resulted in tailormade products for each segment. Some bank assurers are also beginning to focus exclusively on distribution. In some markets, face-to-face contact is preferred, which tends to favor bankassurance development.

23

 Nevertheless, banks are starting to embrace direct marketing and Internet banking as tools to distribute insurance products. New and emerging channels are becoming increasingly competitive, due to the tangible cost benefits embedded in product pricing or through the appeal of convenience and innovation. Bankassurance proper is still evolving in Asia and this is still in infancy in India and it is too early to assess the exact position. However, a quick survey revealed that a large number of banks cutting across public and private and including foreign banks have made use of the bankassurance channel in one form or the other in India. Banks by and large are resorting to either referral models or Corporate agency model to begin with.

Challenges of bankassurance:
Increasing sales of non-life products, to the extent those risks are retained by the banks, require sophisticated products and risk management. The sale of non-life products should be weighted against the higher cost of servicing those policies. Bank employees are traditionally low on motivation. Lack of sales culture itself is bigger roadblock than the lack of sales skills in the employees. Banks are generally used to only product packaged selling and hence selling insurance products do not seem to fit naturally in their system. Human Resource Management has experienced some difficulty due to such alliances in financial industry. Poaching for employees, increased work-load, additional training, maintaining the motivation level are some issues that has cropped up quite occasionally. So, before entering into a bankassurance alliance, just like any merger, cultural due diligence should be done and human resource issues should be adequately prioritized.

24

 Private sector insurance firms are finding change management in the public sector, a major challenge. State-owned banks get a new chairman, often from another bank, almost every two years, resulting in the distribution strategy undergoing a complete change. So because of this there is distinction created between public and private sector banks. The banks also have fear that at some point of time the insurance partner may end up cross-selling banking products to their policyholders. If the insurer is selling the products by agents as well as banks, there is a possibility of conflict if both the banks and the agent target the same customers.

OBJECTIVES:
To study the scope for bankassurance in India. To study the various reasons for Banks to enter into Bankassurance. To study the various models through which bankassurance operates. To study the various benefits that bankassurance provides to consumers, banks and insurers. To study the various marketing and distribution strategy in bankassurance. To study the various bank assurance strategy to capture and maintain new market.

25

Research Methodology
1.Data collection techniques and tools For the purpose of data collection researcher took help of both primary data and secondary data collection method. A.Primary data: Primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. This method was used by means of Personal Interview, wherein researcher had face-to-face contact with the persons. The reason behind choosing this method was to have detailed information on the subject. It also provided opportunity for selecting the sample for interview. The interview conducted were a mixture of structured and unstructured interviews. Scope was kept open for detailed discussion at the discretion of the interviewee. Where there was a time crunch a structured procedure was followed wherein Predetermined questions were put forward. The other method was adopted in primary data collection was Questionnaires. This was used to assist a more structured form of information. The information thus obtained was standard and in a more unbiased form. It assisted to collect data from a large sample size. The pattern adopted was a general form of questionnaire. Questions are in dichotomous (yes or no answers), multiple choice and open ended question. Open ended questions are restricted due to the difficulty faced in analyzing. The questioner was kept short and to the point. B.Secondary data: Secondary data means data that are already available i.e., the data which is already collected and analyzed by other. To get a better understanding and to have a larger exposure on the subject this method was used. Methods use was data available on World Wide Web, articles in newspapers, financial industry reports, Financial Planning board of India reports and article, reports published by Government of India, etc. Support was also provided by the project

26

2.Sample Design Sample design was based on principles of sample survey. Sample was decided on socio demographic factors such as income and age group. The number of respondent was restricted to 50 only. Sampling unit was geographical unit where the research was carried in Hyderabad. Source list for respondents was not predetermined it was on random basis. The various parameters on which the research was to be conducted are Awareness of Bank assurance The kind of insurance policy taken from the Bank Reasons f or taking an Insurance policy

SWOT Analysis: Banking and Insurance are very different businesses. Banks have less risk but the insurance has a greater risk. Even though, banks and insurance companies in India are yet to exchange their wedding rings, Bankassurance as a means of distribution of insurance products is already in force in some form or the other. Banks are selling Personal Accident and Baggage Insurance directly to their Credit Card members as a value addition to their products. Banks can straightaway leverage their existing capabilities in terms of database and face-to face contact to market insurance products to generate some income for themselves, which previously was not thought of The sale of insurance products can earn banks very significant commissions (particularly for regular premium products). In addition, one of the major strategic gains from implementing bankassurance successfully is the development of a sales culture within the bank It is therefore essential to have a SWOT analysis done in the context of bank assurance experiment in India. A SWOT analysis of Bankassurance is given below: 1. Strengths 2. Weaknesses 3. Opportunities 4. Threats

27

Strengths: In a country like India of one billion people where sky is the limit there is a vast untapped potential waiting for life insurance products. Our other strength lies in a huge pool of skilled professionals whether it is banks or insurance companies who may be easily relocated for any bankassurance venture. Banks have the credibility established with their constituents because of a variety of services and schemes provided by them. They also enjoy pride of place in the hearts of people because of their long presence and sustained image. Banks also enjoy a wide network of branches, even in the remotest areas that can facilitate taking up the task on a large and massive scale, simultaneously. Banks are very well aware with the psychology of the customers because of their interaction with the customers on regular basis. Because of this the bankers can guess the attitude and diverse needs of the customers and could change the face of insurance distribution to personal line insurance. People rely more upon LIC and GIC for taking insurance. If the products of LIC and GIC are provided through bankassurance it would be an added advantage to the insurance companies. With the help of banks trained staff, its brand name and the confidence and reliability of people on the banks, the selling of insurance products can be done in a more proper way. Other than all these things there is a huge potential for insurance sector, as the population of India is high and a large part of it has remained untapped till now. So this can create an added advantage for both banks and insurers.

28

Weaknesses: In spite of growing emphasis on total branch mechanism and full computerization of bank branches, the rural and semi-urban banks have still to see information technology as an enabler. The IT culture is unfortunately missing completely in all of the future collaborations. The internet connections are also not properly provided to the staff. To undertake the distribution of the insurance products, the bank employees have to undergo certain minimum period of training, followed by a test and then get themselves licensed. Moreover the standards of the examination have been raised in the recent past making it difficult for many examinees to clear the same. There is lack of personalized services because the traditional insurance agent is considered a member of the family and hence is able to render a personalized service during and after the sales process. However that may not be the case in regards to a bank employee. There are many differences in the way of thinking and business approaches of bankers and the managers of insurance companies. Banks are traditionally demand-driven organizations with a reactive selling philosophy. Insurance organizations are usually need-driven and have an aggressive selling philosophy.

The visit of a customer to the bank is to have a simple transaction like deposit or withdrawal. Busy customers will have no time to have a discussion on a long-term durable purchase like insurance across the counter. Also, the visits in urban or metro branches are going to be fewer because of ATMs and e-banking.

29

Opportunities: There is a vast untapped potential waiting to be mined particularly for life insurance products. There are more than 900 million lives waiting to be given a life cover (total number of individual life policies sold in 2009-10 was just 91.73 million).

There are many people in many areas that are still unaware about the insurance and its various products and are waiting that somebody should come and give them the information about it.

In urban and metro areas, where the customers are willing to get many services like lockers and safe deposit systems and other products and services from banks, there is a good opportunity to market many property related general insurance policies like fire insurance, burglary insurance and mediclaim insurance etc.

Banks' database is enormous even though the goodwill may not be the same. This database has to be dissected and various homogeneous groups are to be churned out in order to position the Bankassurance products. With a good IT infrastructure, this can really do wonders.

Banks in their normal course of functions lend finance in the form of loans for cars, or for buying a house to clients etc. They can take advantage of this by cross-selling the insurance products and combine it as a package.

30

Threats: Success of a Bankassurance venture requires change in approach, thinking and work culture on the part of everybody involved. The work force at every level are so well entrenched in their classical way of working that there is a definite threat of resistance to any change that Bankassurance may set in. Any relocation to a new company or subsidiary or change from one work to a different kind of work will not be easily acceptable by the employees.

Another possible threat may come from non-response from the targeted customers. If many joint ventures took place between banks and insurance companies then it may happen that the customers may not respond to such ventures as happened in U.S.

Insurance in India is perceived more as a saving option than providing risk cover. So this may create an adverse feeling in the minds of the bankers that such products may lessen the sales of regular bank saving products. Also selling of investment and good return products may affect the FD Portfolio of the banks.

There would be a problem of Reputational Contagion i.e. loss of market confidence towards one in a venture leading to loss of confidence on the other because of identical brand recognition, similar management and consolidated financial reporting etc.

If no strict norms are there for such ventures then many unholy ventures may take place which may give rise to tough competition between bank assurers resulting in lower prices and the Bankassurance venture may never break because of such situations.

31

Limitations: 1. Lack of response from sample:It is also said as access to resource of

information. As the method easily available for discussion. adopted was cold calling the respondent were not

2. Time:Due to lack of time availability of respondent and the period which can be
used to collect data was short the research could not be conducted on a large sample size.

3. Using:J.M.Financial services company name: Many a time to get access to

respondent researcher had to revel the organization identity. People thought that it was for the purpose of sales of promotional activity, which lead to negative response from many people.

4. Lack of expertise:On the side of the researcher the there was lack of in-depth
information.

32

CHAPTER-2 Industry profile

33

History of Banking in India:

Banking as per the Banking Regulation Act, Banking is defined as: Accepting for the purpose of lending of deposits of money from the public for the purpose of lending or investment, repayable on demand through cheques, drafts or order.

A sound and effective banking system is necessary for a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. Many new things have come up in the banking sector in the recent years. Banks have adopted the new technology because banking has not remained up to accepting and lending but now it is all about satisfying the needs of the customers.

The development of the Indian banking sector has been accompanied by the introduction of new norms. New services are the order of the day, in order to stay ahead in the rat race. Banks are now foraying into net banking, securities, and consumer finance, housing finance, treasury market, merchant banking etc. They are trying to provide every kind of service which can satisfy or rather we should say that it can delight the customers.

Entry of private and foreign banks in the segment has provided healthy competition and is likely to bring more operational efficiency into the sector. Banks are also coping and adapting with time and are trying to become one-stop financial supermarkets. The market focus is shifting from mass banking products to class banking with the introduction of value added and customized products.

34

History of Insurance in India:

Insurance may be defined as: It is a contract between two parties where by one party undertakes to compensate the another party for the loss arising due to an uncertain events for which the another party agrees to pay a certain amount regularly.

In India, insurance has a deep-rooted history. Insurance in India has evolved over time heavily drawing from other countries, England in particular. The insurance sector in India has come a full circle from being an open competitive market to

nationalization and back to a liberalized market again. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

The Insurance Act, 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Today there are 14 general insurance companies and 14 life insurance companies operating in the country. But today also the insurance companies are trying to capture Indian markets as not many people are aware of it.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.

35

Vision: The vision of the banking and Insurance industry is to develop the banking and insurance into a much stronger with the higher level of modernization to handle the business volume. Noble thoughts and high ideas of the team of management charged with dynamic spirit of action will take the bank to a greater height, achieving growth in strength and exhibit the bank assurance as a model bankassurance in the Banking and insurance industry. To be a progressive Bank assurers with strong brand equity, enhancing value for all the stake holders through excellence in performance and good governance

Present Scenario Of Indusrty:

India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerisation of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies The insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. At present the distribution channels that are available in the market are listed below.

36

1) Direct selling 2) Corporate agents 3) Group selling 4) Brokers and cooperative societies 5) Bankassurance

Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional moneyback policies, which is not considered very appropriate for longterm protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.

The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.

37

The business of banking around the globe is changing due to integration of global financial markets, development of new technologies, universalization of banking operations and diversification in non-banking activities. Due to all these movements, the boundaries that have kept various financial services separate from each other have vanished. The coming together of different financial services has provided synergies in operations and development of new concepts. One of these is Bankassurance.

India's rural market has huge potential that is still untapped by the insurance companies. Setting up their own networks entails such a huge cost, that no company would be interested in doing so. Bankassurance again comes as an answer. It helps the insurance companies to tap the market at a much lower cost. As for the customer the competitive nature of the Indian market ensures that the reduction in costs would result in benefits in terms of lower premium rates being passed on to him. The penetration level of life insurance in the Indian market is considerably low at 2.3% of GDP with only 8% of the total population currently insured.

Thus, bankassurance provide an apparently viable model for product diversification by banks and a cost-effective distribution channel for insurers. The success of the partnership between the two entities depends on the right model partnership. Given these changes, bankassurance and collaboration between banks and insurers has a long way to go in India. With almost half of the population likely to be in the 'wage earner' bracket by 2010, there is every reason to be optimistic that bankassurance in India will play a long inning.

38

Future scope for Bankassurance:

By now, it has become clear that as economy grows it not only demands stronger and vibrant financial sector but also necessitates to provide with more sophisticated and variety of financial and banking products and services. The outlook for bankassurance remains positive. While development in individual markets will continue to depend heavily on each countrys regulatory and business environment, bankassurers could profit from the tendency of governments to privatize health care and pension liabilities. India has already more than 200 million middle class population coupled with vast banking network with largest depositors base, there is greater scope for use of bankassurance. In emerging markets, new entrants have successfully employed bankassurance to compete with incumbent companies. Given the current relatively low bankassurance penetration in emerging markets, bankassurance will likely see further significant development in the coming years. In India the bankassurance model is still in its nascent stages, but the tremendous growth and acceptability in the last three years reflects green pasture in future. The deregulation of the insurance sector in India has resulted in a phase where innovative distribution channels are being explored. In this phase, bankassurance has simply outshined other alternate channels of distribution with a share of almost 25-30% of the premium income amongst the private players.To be fruitful, it is vital for bankassurance to ensure that banks remain fully committed to promoting and distributing insurance products. This commitment has to come from both senior management in terms of strategic inputs and the operations staff who would provide the front-end for these products. In India, the signs of initial success are already there despite the fact that it is a completely new phenomenon. There is no doubt that banks are set to become a significant distributor of insurance related products and services in the years to come.

39

CHAPTER-3 COMPANY PROFILE

40

JM FINANCIAL SERVICES
JM Financial is an integrated financial services group, offering a wide range of services to a significant clientele that includes corporations, financial institutions, high net-worth individuals and retail investors. The Group has interests in investment banking, institutional equity sales, trading, research and broking, private and corporate wealth management, equity broking, portfolio management, asset management, commodity broking, NBFC (Non Banking Finance Company) activities, private equity and asset reconstruction. While each of these businesses is independent in itself, they share the Groups belief of trust being the most important factor for the organisation. The values of integrity, teamwork, innovation, performance and partnership shape the corporate vision and drive it to its purpose. Our people bring knowledge, experience and diversity to bear in our every Endeavour. Their talent and passion has powered us to the pre-eminent position we occupy in the Indian financial services landscape.JM Financial Services Private Ltd is the dedicated financial services arm of the JM Financial Group . We are one of the largest brokerage firms in India, offering comprehensive investment advisory and investment management services to institutions, banks, corporates,ultra high networth individuals and Family offices An exclusive level of personal attention, research capabilities and in-depth capital market expertise enables us to design and execute customised investment solutions for our clients We service our investors through three distinct businesses, which draws on the full spectrum of the Groups resources; research base and expertise to generate investment ideas for our clients. These solutions incorporate a wide range of financial products to meet individual client needs, both short-term and long-term. We are among the largest distributors of third party products (Mutual funds/IPO). We have a strong network of more than 25,000 IFAs spread across india.We facilitate client transactions with a diverse group of financial institutions, investment funds, governments and individuals, trading of and investing in fixed income and equity products and derivatives on these products.

41

History: The Company was incorporated as a private limited company on 30th January 1986 in the name of J M Share & Stock Brokers Pvt. Ltd. The Company has been promoted by JMFICS to engage directly or indirectly in the business of share and stock broking, finance broking, underwriting of securities including shares, debentures, etc. The present issued, Equity Share JMFICS and, therefore, by virtue of Section 4 of the Act, the Company is a subsidiary of JMFICS. On JMFICS becoming a deemed public limited company by virtue of the Companies (Amendment) Act, 1988 read with the Companies Act,1956,on 15th June, 1988, the Company also became a deemed public limited company as of that date pursuant to the applicable provisions of the Companies Act, 1956.Subsequently,the Company became a public company by making necessary alterations in its Articles of Association.

As stated earlier, the main object of the Company is to enlarge directly or indirectly in the business of share and stock broking, and other related capital market activities such as underwriting of securities and Portfolio Management. To act as a stock broker, it is necessary for a company to be a member of a stock exchange. Under the guidelines issued by the Government of India, corporate entitles are permitted to be enrolled as members of a stock exchange, provided.

i) That the Company is formed in compliance with the provisions of Section 322 of the Companies Act, 1956.

ii) That a majority of Directors of the Company are shareholders of the Company and also members of the Stock Exchange; and iii) That the Directors of the Company who are members of the Stock Exchange have unlimited liability in the Company. Since the Company is not in a position to comply with the aforesaid conditions, it has been proposed that the Company would carry on its share and stock broking activities through a number of affiliates (Stock Broking

42

Companies/Partnership Firms/Individual Stock Brokers) who would be members of various Stock Exchanges. 2006-JM Financial launches a private equity fund 2007- JM Financial Ltd has informed that the Board of Directors of the Company has decided to the Company. Mr. Zuckerman will be an independent director of the Company.

2008-The Company has issued Bonus Shares in the Ratio of 3:2. The Company has splits its face value from Rs10/- to Rs1/-

Neo Financial Services (Sub broker of JM Financial services)

Neo Financial Services is a budding financial advisory services organization providing the entire gamut of products & services, catering to the High Net worth Individuals (HNI) and the retail segment.The organization, founded in 2009, looking forward to a pan India presence in next 18 months time. Neo Financial Services provides a breadth of financial and advisory services including wealth management, corporate advisory, brokerage & distribution of equities, mutual funds and insurance, structured products - all of which are supported by powerful research teams. Money, the pivotal point behind every major incidents / accidents off let across the globe, plays a central role in deciding a person's or a corporate's destiny in the post recessionary phase in the global economy. A brigade of young corporate professionals came together to address the woes of investors and Neo Financial Services was born. Let us tell you something about Neo Financial Services. Neo Financial Services is a budding financial advisory services organization providing the entire gamut of products & services, catering to the High Net worth Individuals (HNI) and the retail segment.The organization, founded in 2009 by Mr. M.W.Baig.Shareq and his core team, looking forward to a pan India presence in next 18 months time. Sarva Money provides a breadth of financial and advisory services including wealth management, corporate advisory, brokerage & distribution of equities, mutual funds and insurance,structured products - all of which are supported by powerful research.

43

Mission: To be the high quality provider of comprehensive financial and advisory services to foster sustainable customer relationship while creating value for all stakeholders. Vision : To be amongst the top 3 Wealth Management organizations in India in terms of Relationships handled, Assets Under Management & as a Dream Employer by year 2020. Objective JM Financial Services Sector Fund aims to invest predominantly in equity & equity related instruments in the Banking/Financial institution/NBFC and housing finance sectors in India. Products offered by NEO FINANCIAL SERVICE 1. Equity & Derivatives 2. Mutual Fund Advisory 3. Stock Lending & Borrowing Scheme (SLBM) 4. Currency Futures

5. Fixed Income Product 6. Private Equity and Real Estate

7. Equity / Debt & Mutual Fund research Group 8. Investment banking & Corporate Finance 9. Bankassurance 10. Taxation & Estate Planning 11. Commodities Trading

44

Competitors profile:
Some of the Bankassurance tie-ups are:

Insurance Company

Bank

Bank of Rajasthan, Andhra Bank, Bank of Muscat, Development Credit Bank, Deutsche Bank and Catholic Syrian Bank

Canara Bank, Lakshmi Vilas Bank, American Express Bank and ABN AMRO Bank

Union Bank of India

Lord Krishna Bank, ICICI Bank, Bank of India, Citibank, Allahabad Bank, Federal Bank, South Indian Bank, and Punjab and Maharashtra Co-operative Bank.

Corporation Bank, Indian Overseas Bank, Centurion Bank, Satara District Central Cooperative Bank, Janata Urban Co-operative Bank.

Karnataka Bank, Dhanalakshmi Bank and J&K Bank

45

State Bank of India

Karur Vysya Bank and Lord Krishna Bank

City Union Bank National Insurance Co.

Management structure of Jm financial services

Name Nimesh N Kampani E A Kshirsagar Pravin P Shah Vijay Kelkar Ashith N Kampani D E Udwadia Paul Zuckerman Designation Chairman and Managing director Vice president Director Director Director General manager CEO

46

CHAPTER-4 DATA ANALYSIS AND INTERPRETATION

47

1. Are you aware of Bankassurance ? a) Yes b) No Table no: 4.1 Awareness of Bankassurance

CATEGORY

NO.OF RESPONDENTS

PERCENTAGES

YES

40

80%

NO

10

20%

TOTAL

50

100%

Figure no: 4.1 Awareness of Bankassurance?

No 20%
Yes

Yes 80%

No

Interpretation: Among those who surveyed, 80% of respondents were aware that their bank provided bankassurance. They knew with which Insurance Company their bank has tie up with; also they were aware about various policies provided by their banks. However, 20% of the respondents were amused with the term bankassurance and didnt know anything about it and the services provided by their banks.

48

2. Have You Taken An Insurance Policy From Your Bank? a) Yes b) No Table no: 4.2 Adoption of insurance policy from bank

CATEGORY

NO.OF RESPONDENTS

PERCENTAGES

YES

17

34%

NO

33

66%

TOTAL

50

100%

Figure no: 4.2 Adoption of insurance policy from bank

Yes 34%

No
No 66%

Yes

Interpretation: Among the people who were surveyed, there were only 34% people who had taken insurance policy from their respective banks. Remaining 66% respondents didnt opt to take a policy from their banks.

49

3. The Kind of Insurance Policy Taken From The Bank? a) Deposit Based b) Loan Based c) Life Insurance d) Others

Table no: 4.3 priority of the kind of Policy Taken From The Bank?

CATEGORY Deposit based Loan based Life insurance others TOTAL

NO.OF RESPONDENTS 11 16 9 14 50

PERCENTAGES 22% 32% 18% 28% 100%

Figure no: 4.3 priority of the kind of Policy Taken From The Bank?
60 50 50 40 30 20 11 10 0 22% 32% 16 9 18% 28% others 100% TOTAL 14 NO.OF RESPONDENTS PERCENTAGES

Deposit Loan based Life based insurance

Interpretation: Maximum number of insurance taken was related to loan. It was either car insurance or a home insurance. Out of the people surveyed 32% said that they have taken a loan based insurance. There were 22% who have taken insurance which are deposit based because it is a part of the deposit scheme. Only 18% have taken life insurance cover from the bank and 28% belong to others category.

50

4. Reasons For Taking An Insurance Policy a) Security b) Savings c) Brand image of bank d) Bank image of insurance

Table no: 4.4 priority of Taking An Insurance Policy

CATEGORY Security Savings Brand image of bank Bank image of insurance TOTAL

NO.OF RESPONDENTS 22 12 9 7 50

PERCENTAGES 44% 24% 18% 14% 100%

Figure no: 4.4 priority of Taking An Insurance Policy?

60 50 50 40 30 22 20 12 10 44% 0 Security 24% Savings 9 18% 7 14% 100% TOTAL NO.OF RESPONDENTS PERCENTAGES

Brand image Bank image of bank of insurance

Interpretation: There was a mixed response from the customers. 44% said that they took the insurance policy because of security benefits. 18% said that since, they trusted their bank, they took the policy. There were 14% who said that the brand image of the company also mattered. Only 24% said that savings was a reason that encouraged them to buy insurance policy.

51

5. On Your Choice Which Mode Of Insurance Distribution Channel Would You Prefer To Buy The Policy From? a) Insurance companies b) Banks c) Brokers d) Agents

Table no: 4.5 Priority of Distribution Channel

CATEGORY Insurance companies Banks Brokers Agents TOTAL

NO.OF RESPONDENTS PERCENTAGES 10 11 4 25 50 Figure no: 4.5 Priority of Distribution Channel 20% 22% 8% 50% 100%

100% 20% 100% 99% 99% 98% 98% 97% Insurance companies Banks Brokers Agents TOTAL 10 11 4 25 50 PERCENTAGES NO.OF RESPONDENTS 22% 8% 50% 100%

Interpretation: 50% people preferred agents because they provide personalized services. 20% took insurance from companies because of their trust on the company. 22% said they would buy insurance from banks because of the brand name and their trust on banks. Only 8% said that they would buy insurance from brokers.

52

6.Which Bank Do You Feel Would Excel In Bankassurance? Rate Them Accordingly a) Public sector banks b) Private sector banks c)Foreign banks

Table no: 4.6 Opinions of raise In Bankassurance?

CATEGORY Public sector banks Private sector banks Foreign banks TOTAL

NO.OF RESPONDENTS 9 28 13 50

PERCENTAGES 18 % 56% 26% 100%

Figure no 4.6 Opinions of raise In Bankassurance?

NO.OF RESPONDENTS PERCENTAGES

50

28

13 9 18% Public sector banks 56% Private sector banks 26% Foreign banks 100% TOTAL

Interpretation: 56% people said that private sector banks would excel in this because of their aggressive selling policies and they provide quality services to the customers. 26% votes were given to foreign banks .Because foreign banks have proper management and aggressive selling strategies. The public sector banks were given the least votes because of their lazy approach to work.

53

7. Do You Think Bank assurance Has A Good Future? a) Yes b) No Table no :4.7 Opinions of future of Bankassurance

CATEGORY YES NO TOTAL

NO.OF RESPONDENTS 45 5 50

PERCENTAGES 90% 10% 100%

Figure no: 4.7 Opinions of future of Bankassurance

60 50 50 40 30 20 10 90% 0 YES NO TOTAL NO.OF RESPONDENTS PERCENTAGES 45

5 10% 100%

Interpretation: 90% people said that they believe that Bankassurance has a very bright future because there is an immense potential for the insurance industry in India. But 10% believe that because of the emergence of the new technology such as ATMs, Internet banking etc the banks will soon go virtual so there is not much scope for it.

54

CHAPTER-v FINDINGS, SUGGESTIONS & CONCLUSION

55

Findings:
Although the concept is simple enough in theory, but in practice it has been found to be far from straightforward.

Almost many people have a fair idea about Bankassurance and that their banks sell various insurance products. But still few people dont know about Bank assurance as a concept.

It has been also found out that the banks have various opportunities to cross sell insurance products. The insurance companies also have the opportunity to take advantage of the banks network and other avenues.

It is also seen that customers have a lot of trust on the banks, and because of that trust the customers will take the insurance products from banks.

As the brand name of the banks is important so is the brand image of the insurance companies. So the banks and the insurance companies must tie-up with the right partners. This will help them to create a better image in the minds of the customers.

It has also clear from the study that the private sector and the foreign banks have better future in Bankassurance. But the public sector banks are also trying to give them a tough competition.

The insurance business can go a long way because there is a large population who is still unaware about insurance. So the insurance companies have a huge potential market in the years to come.

56

Suggestions:
The Insurance companies need to design products specifically for distributing through banks. Trying to sell traditional products may not work so effectively. The employees of the banks who are selling insurance products must be given proper training so that they can answer to any queries of the customers and can provide them products according to their needs. Banks should also provide after sales services and they should be more aggressive in selling the insurance products. Banks should also do the settlement of claims which will increase the trust and reliability of the customers on the banks. In India, since the majority of the banking sector is in public sector which has been widely responsible for the lethargic attitude and poor quality of customer service, it needs to rebuild the blemished image. Else, the bankassurance would be difficult to succeed in these banks. A formal and standard agreement between these banks and the insurance companies should be taken up and drafted by a national regulatory body. These agreements must have necessary clauses of revenue sharing. In case of possible conflicts, the bank management and the management of the insurance company should be able to resolve conflicts arising in future. For bankassurance to succeed, products and processes will need to be tailored to bank markets, rather than adjusted to insurers specifications. Banks and Insurance companies should apply all the skills and potential in this area and take advantage of the same and they should improve the products from time to time according to the needs of the customers.

57

Conclusion:
The life Insurance Industry in India has been progressing at a rapid growth since opening up of the sector. The size of country, a diverse set of people combined with problems of connectivity in rural areas, makes insurance selling in India a very difficult task. Life Insurance Companies require good distribution strength and tremendous man power to reach out such a huge customer base. The concept of Bankassurance in India is still in its nascent stage, but the tremendous growth and the potential reflects a very bright future for bankassurance in India. With the coming up of various products and services tailored as per the customers needs there is every reason to be optimistic that bankassurance in India will play a long inning. But the proper implementation of bankassurance is still facing so many hurdles because of poor manpower management, lack of call centers, no personal contact with customers, inadequate incentives to agents and unfullfilment of other essential requirements. I have experienced a lot during the preparation of the project. I had just a simple idea about Bankassurance. But after a detailed research in this topic I have found how important bank assurance can be for bankers, insurers as well as the customers. I am contented that all my objectives have been met to its fullest. I have also experienced that though Bank assurance is not being utilized to its fullest but it surely has a bright future ahead. India is at the threshold of a significant change in the way insurance is perceived in the country. Bankassurance will definitely play a defining role as an alternative distribution channel and will change the way insurance is sold in India. The bridge has been reached and many are beginning to walk those cautious steps across it. Bankassurance in India has just taken a flying start. It has a long way to go .. after all The SKY IS THE LIMIT!

58

ANNEXTURE

59

QUESTIONNAIRE Name:____________________ Sex: ________ Age:______ Occupation:________________ City: ______________

Annual Income: ________________

1. Are you aware of Bankassurance? a) Yes b) No

2. Have You Taken An Insurance Policy From Your Bank? a) Yes b) No

3. The Kind of Insurance Policy Taken From The Bank? a) Deposit Based b) Loan Based c) Life Insurance d) Others

4. Reasons For Taking An Insurance Policy : a) Security b) Savings c) Brand image of bank d) Bank image of insurance

5. On Your Choice Which Mode Of Insurance Distribution Channel Would You Prefer To Buy The Policy From? a) Insurance companies b) Banks c) Brokers d) Agents

6.Which Bank Do You Feel Would Excel In Bankassurance? Rate Them Accordingly a) Public sector banks b) Private sector banks c) Foreign banks

7. Do You Think Bankassurance has A Good Future? a) Yes b) No

60

Bibliography
Insurance watch. Business world. Business today. Theories and Practices in Insurance.

Webliography
www.insuremagic.com www.google.com www.neo financial services.in www.jm financial services.in

61