In a country where insurance is an insignificant priority bancassurance provides the people greater opportunity and choice of protection at an affordable rate.

Life Insurance industry in India has been progressing at a rapid pace since opening up in 2000. Today, a host of private and international companies are offering a variety of products, which cater to every need of the customers. Companies are making a concerted effort towards increasing the insurance penetration in India. Only 2.5 % of India's total insurable population is currently insured. Life premiums are under 1% of GDP and less than USD 10 per capita compared to about USD 50 per person in Thailand and more than USD 1000 in Korea.

The size of the country, a diverse set of people combined with problems of connectivity in rural areas, make insurance selling in India a very difficult proposition. Life Insurance companies require immense distribution strength and tremendous manpower to reach out to such a huge customer base. In many parts of our country, people have no access to insurance agents and therefore are not able to integrate insurance with their financial planning.

This will undergo a sea change as various private and new generation public sector insurance companies propose to bring insurance products into the lives of the common man by making them available at the most basic financial retail point - the local bank branch, by stepping up bancassurance services.

Simply put, bancassurance is the process through which insurance products are sold to customers at their local banks. Trained employees of the bank are equipped to pay special attention to the financial and security needs of the customers and are therefore able to provide accurate advice on the kind of insurance policies that customers needs to buy. Insurance selling through the Bancassurance model is very popular around the world, particularly, Europe. Insurers in these countries have formed successful partnerships with banks to provide their products and services to bank customers at very affordable rates

Bancassurance could bring about a revolution in the way insurance is bought and sold in India. With a combined network of 65,000 bank branches accessing more than 300 million retail-banking customers, insurance services can be made available at affordable prices to people even in remote corners wherever a bank branch exists.

This benefits everyone - better market reach for insurance companies, easier access to insurance coverage for the individual policy buyer, particularly the remote hinterlands of the country and additional an revenue source for banks.

Banks, particularly those in the public sector and the old, established private banks, have traditionally been one of the most respected financial institutions in our country. When customers forge a relationship with a bank, they entrust their life's savings to the bank. Banks and bankers therefore have a strong and, often maintain a lifelong bond with their customers.

With insurance available at their local branches, customers can be assured that their money is safe in the hands of a trusted institution and that the branch managers who advise them would do so keeping the customer's interests in mind.

With banks now making a concerted foray into creating a financial supermarket, customer can enjoy the benefits of choosing multiple financial products from one place. Through bancassurance, customers can integrate their insurance products with bank products such as car loans, home loans, etc, to ensure better financial planning. All this can be done at a single place - over the counter at the local bank branch.

With the banks taking care of the insurance process, service issues are considerably reduced. For example premiums can either be directly credited to the insurance company through the bank account by giving standing instructions or paid through banks ATMs, etc.

Of course the greatest advantage of Bancassurance still remains - easy and affordable insurance available at a nearby local bank branch with which customers may have a longstanding relationship.

The advent of bancassurance has been considerably hastened with many insurance companies already entering into tie-ups with banks to distribute their insurance products to bank customers. Other insurance companies, which form part of larger banks, have started training their staff and introducing special insurance counters at their bank branches to provide insurance services to their customers. Bancassurance has also provided people in rural areas the opportunity to avail of life insurance thanks to even regional rural banks, which have sold insurance policies to farmers, etc, with great success.

In a country where insurance planning forms an insignificant priority to majority of the people, Bancassurance will not only provide the people greater opportunity to protect their family, but also provide them a choice of availing that protection at an affordable rate. All this, a mere walk away from the nearest bank branch.

*The author is chief marketing officer, SBI Life Insurance Co.