Bancassurance – The Cash Cow Myth Devolved


मेरी तफ़्तीश के ताजूरबे से कुछ सीख ग़ालिब,

माथे की हर शिकन,

किसी क्लेम की दास्तां बयान करती है!!!

For those of us involved in the Indian insurance industry, the journey through Bancassurance has been nothing short of enlightening.

Bancassurance – The Cash Cow Myth Devolved

In the late 2000s, Bancassurance was heralded as the cash cow that would solve all of insurers’ problems. Access to an enormous customer base seemed like the golden ticket. However, the reality has been quite different. Despite 15 years of its existence, Bancassurance remains plagued by commission disputes and inadequate implementation. The lines between agent and insurer are often blurred, leaving the customer in a state of confusion.

A few months ago, I received a frantic call from the HR Head of a former client. He was trying to secure a discharge for a hospitalized VP-Ops, whose group mediclaim policy had been renewed through Bancassurance. After hours of struggle with the Third-Party Administrator, the bank’s branch manager finally gave in, requesting a reimbursement. My friend was in a dilemma, having promoted Bancassurance as a cost-saving tool to senior management. There was a nuance he had missed, but not all stories end with a happy cashless request approval.

Group health insurance is a technical product, requiring constant vigilance due to legacy coverages and new market options. Claim settlement, the ultimate measure of customer satisfaction, is paramount. Discounts offered are meaningless when customers face hardships at hospitals. Additionally, regulators prohibit banks from soliciting business exceeding Rs. 5 Crore in sum insured, a common occurrence with group mediclaim policies.

Moreover, the Bank, whatever is said and done, is an agent of the Insurer. Their incentives are aligned with the Insurer. The Insurer can prod the bank into selling more of one product or less of another.

I still remember the early days of Bancassurance – having exhausted all avenues of growth, Banks pumped everything into the sale of Insurance. There were times, when, all a Banker was doing, was mis-selling Insurance. 

Fortunately and with the appropriate intervention of our regulator, we have come a long way. 

पर वो कहते है ना,

अपने ही तजुर्बे से सीखे तोह क्या सीखे मियां,

गैरों के तजुर्बो से सीखने का फन जुटाओ

Underwriter कहलाओगे !!!

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Susheel Agarwal