India Bancassurance Benchmarking survey

2009-10

An insightful study of bancassurance

performance and practices that describes,
analyses and forecasts trends in India
As a leading global consulting firm with several years of experience
and some of the best talent in actuarial advice and distribution,
Towers Watson closely tracks trends and developments in this
sector. We published a pioneering Bancassurance Benchmarking
survey in early 2007 (under our former, pre-merger name, Watson
Wyatt) with a comprehensive study benchmarking several critical
aspects of insurance distribution through banks.

We are now pleased to announce the completion of the second

edition – the Towers Watson India Bancassurance Benchmarking
Survey 2009-10 which chronicles the growth of the channel, issues
commonly faced, key challenges and the opportunities/potential.
The report contains extensive commentary and insights on the
distribution practices, processes and approaches adopted by
bancassurers. It also analyses the product landscape, sales
management and operational aspects of life insurance and general
insurance companies.

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The growth of bancassurance in India

From an unknown channel when the insurance sector opened up in India about ten years
ago, bancassurance has now secured its position as a key distribution platform, and is widely
attracting the attention of banks, insurers, regulators and policy planners. India is known for its
large variety of banks and extensive branch networks, and over the last few years, these
branches are increasingly being utilised to serve the insurance needs of over 400 million bank
customers.

Tied agency 100%

Bancassurance channel 93% Bank Distribution

Brokers 79% 93% of the life

insurance companies
Non-banking corporate agents 71%
are using the
Referral partners 57% bancassurance
channel.
Direct sales team 57%

Telesales 29%

Others 14%

Internet 14%

0% 20% 40% 60% 80% 100%

Percentage of respondents

Private life insurers in India have accrued about 29% of their new business in FY2008-09 from
the banking and non banking finance company (NBFC) channel, equivalent to about Rs100
billion (about US$2.2 billion). Whilst the proportion is far less for general insurers, the rate of
growth continues to be healthy.

100%
100%
100%
86% 86% Products
90%
Percentage of respondents

80% 71% 71%

67% Motor insurance is
70%
the top selling product
60%
Bank for general insurers
50%
33% 33% 33% 33%
33% NBFC through the bank and
40% 33%
29% 29% NBFC channel followed
30%
14%
by PA, Home and
20%
Property insurance.
10%
0%
Motor Personal Home Property Health Travel Disability Cancer
accident contents specific

Yet, as the survey reveals, the key factor inhibiting an even higher rate of growth of general
insurance sales through the bancassurance channel is the lack of hard targets/KPIs for
general insurance products and the resultant low priority accorded amongst the range of
products that bank branch mangers are now expected to sell.

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The modest renewal ratio of general insurance policies sold through the bank channel has
also been a matter of concern.

The results are based on a comprehensive survey of key banks, NBFCs and insurers,
supplemented by a series of face-to-face interviews with the participants plus extensive
insights gained during the work done by Towers Watson consultants. The report also contains
references to global models and practices based on our international experience in both
mature and emerging bancassurance locations.

NBFCs 43% 43% 14%

Distribution
experience
Foreign Banks 50% 50%
Banks and NBFCs
have varying degree
of life insurance
Private Sector Banks 67% 33%
distribution experience
with public sector
banks beginning to
Public Sector Banks 33% 50% 17% get into more active
cross selling mode.

All Banks 50% 19% 31%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents

Less than 3 years 4 - 6 years More than 6 years

63%
75%

NBFCs
38% Motivating bank sales
38% force
13%
13% Delay or non-receipt of
renewal notices and
policy documents are
80%
two key issues facing
73%
67%
banks and NBFCs.
Banks
27%
13%
13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percentage of respondents

Commission-related issues Delay in completing financial requests Delay in completing non-financial requests
Delay in completing the underw riting Delay / non-receipt of policy documents Delay / non-receipt of renew al notices

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The key contents of this survey include:

• Strategy and development of bancassurance operations at banks

• Operational sales model at banks and non-banking finance companies

• Lead generation and management processes

• Performance management and rewards/incentives schemes

• Training and development provision

• Product mix and product development considerations

• Sales effectiveness and sales activity management processes

• Customer management and measurement of service delivery

• Performance and productivity parameters

The Towers Watson India Bancassurance Benchmarking survey will enable you to:

• Make informed decisions on your future channel strategy by providing detailed analysis
and comments about bank distribution of life insurance and general insurance products

• Identify potential improvements to the effectiveness of your bancassurance operations

based on comparisons with trends and practices of other benchmarked companies

• Gain clearer insight into the competitor landscape through a combination of benchmarking
responses and extensive commentary based on the knowledge gained by our
experienced team of consultants

• Identify how you currently differentiate your offering, or how you could differentiate in the future,
based on this in-depth picture of how key players position themselves in the market

• Understand the potential issues facing the bancassurance segment as we enter a new
post-crisis decade

The Towers Watson India Bancassurance Benchmarking survey is available in hard or

soft copy format. The report is available at a nominal price of Rs.10,000 for sale within India
and available for US$ 300 for overseas orders.

To order your copy, please write to rcsindia@towerswatson.com or call +91 22 42329900

About Towers Watson

Towers Watson is a leading global professional services company that helps organisations
improve performance through effective people, risk, and financial management. With 14,000
associates around the world, we offer solutions in the areas of employee benefits, talent
management, rewards, and risk and capital management. Towers Watson covers the length
and breadth of India and operates from five offices in four cities.

For more information, please visit www.towerswatson.com

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