The bank insurance model
), also sometimes known as bancassurance
, is the partnership or relationship between a bank and an insurance company, or a single integrated organisation, whereby the insurance company uses the bank sales channel
in order to sell insurance products, an arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base.
BIM allows the insurance company to maintain smaller direct sales teams as their products are sold through the bank to bank customers by bank staff and employees as well.
Bank staff and tellers, rather than an insurance salesperson, become the point of sale
and point of contact
for the customer. Bank staff are advised and supported by the insurance company through product information, marketing campaigns and sales training.
The bank and the insurance company share the commission. Insurance policies are processed and administered by the insurance company.
This partnership arrangement can be profitable for both companies. Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base
without having to expand their sales forces or pay commissions to insurance agents or brokers.
Bancassurance, the sale of insurance and pensions products through a bank, has proved to be an effective distribution channel in a number of countries in Europe, Latin America
, Asia and Australia.
BIM differs from classic
or Traditional Insurance Model
) in that TIM insurance companies tend to have larger insurance sales teams and generally work with brokers and third party agents.
An additional approach, the hybrid insurance model
), is a mix between BIM and TIM. HIM insurance companies may have a sales force
, may use brokers and agents and may have a partnership with a bank.
is extremely popular in European countries such as Spain, France and Austria.
The use of the term picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalised recently. It is a controversial idea, and many feel it gives banks too great a control over the financial industry or creates too much competition with existing insurers.
In some countries, bank insurance is still largely prohibited, but it was recently legalized in countries such as when the Glass–Steagall Act was repealed after the passage. But revenues have been modest and flat in recent years, and most insurance sales in U.S. banks are for mortgage insurance, life insurance
or property insurance
related to loans. But China recently allowed banks to buy insurers and vice versa, stimulating the bancassurance product, and some major global insurers in China have seen the bancassurance product greatly expand sales to individuals across several product lines.
is a wealth management process pioneered by Lombard International Assurance and now used globally. The concept combines private banking and investment management
services with the sophisticated use of life assurance as a financial planning
structure to achieve fiscal advantages and security for wealthy investors and their families. The banks are the agent of the insurance companies to sell them more and more policies. Bancassurance is an efficient distribution channel with higher productivity and lower costs than traditional distribution channel.