What is Bancassurance? Another important term in economics or business study is bancassurance. The term bancassurance is a familiar term used in economics and accounting. Bancassurance is a cooperation program between a bank and an insurance company, where the bank will sell insurance products from the insurance company to its customers.

What is Bancassurance?

Both parties will later share commissions from the sale of the insurance product. When viewed from an economic aspect, bancassurance provides benefits to both parties, where banks will benefit from selling additional products for their customers, and insurance companies will get additional customers without the need to bother.

The main pillar of insurance sales in bancassurance lies with bank staff, especially bank tellers. A bank teller is a job position in a bank that has the most interactions with consumers. Through bank tellers, consumers can find out information about the insurance programs offered and bank tellers can hook insurance consumers so that the income of banks and insurance companies can increase.

Types of bancassurance

There are generally two business models applied in bancassurance , namely

Model Integrated

The integrated model is the bancassurance model where insurance activities are highly integrated with the processes carried out in the bank. This means that banks are very influential in the insurance program that customers take. The premium is usually collected by the bank, and the debit is taken directly from the customer’s account at the bank. In most cases, asset management is also carried out by the bank.

Model Not Integrated

Unlike the integrated model, in the non-integrated model the sales of insurance products are limited by certain regulations. This is because in this model not all of the insurance products offered can be sold by branch bank staff, but can only be sold by official financial advisors from banks who have met certain qualifications. Usually these financial advisors operate as bonded agents and sell exclusively insurance products.

The selection of a business model in bancassurance will have an impact on all aspects of activities in bancassurance itself. Aspects that are affected include company structure, sales and marketing strategies, product design, and sales remuneration.

Advantages of bancassurance

As is the case with all insurance products, bancassurance also has advantages and disadvantages. The advantages of bancassurance are:

• Can increase profits, both for banks and insurance companies.
• Insurance companies will easily get additional customers.
• For customers, bancassurance can be used for various investment purposes, for example, old age savings, education funds, and funds for unexpected needs.
• Bancassurance can meet the needs of savings, financial planning, and protection for investment.
• Customers can easily monitor the growth of investment funds.
• Customers are free to add or withdraw funds at any time without worrying about losing insurance coverage.

Disadvantages of bancassurance

After describing the advantages of bancassurance , here are some of the disadvantages of bancassurance :

• Even though bancassurance is an investment product with a higher yield potential, bancassurance has a greater investment risk.
• The investment return from bacassurance is not guaranteed by the bank.
• In some countries, bancassurance is prohibited from running.
• In some countries, bancassurance regulations are very strict.

3 Customer’s Rights

A customer who purchases a bancassuranre product has the following rights:

1. Get the sum insured
2. Certain bancassurance products can provide additional benefits for critical illness, hospitalization, death due to accidents, and others.
3. Customers can get updated information on changes and developments regarding bancassurance.