B. General Insurance: Accelerating Bancassurance penetration

While general insurance has historically been led by agents and brokers, bancassurance is gaining share:

• In FY 2023-24, bancassurance contributed approximately 17.5% of gross direct premiums in the general insurance segment (Rs. 6,308 crores, USD 757 million).
• Health, personal accident, and credit-linked products (e.g., home, vehicle loans) are key growth categories.
• The model is especially effective for simple, bundled, or pre-approved covers integrated into banking journeys.

C. Market Potential

The bancassurance market (life + general) was valued at Rs. 55,809 crores in 2023-24. The Indian life insurance market is expected to grow at 10.5% annually* (Allianz Global Insurance Report 2025), and the general insurance market by 6.20% annually, for next 10 years to 2034.

With increasing reliance on bank partnerships by both new-age and traditional insurers, the channel’s strategic importance is expected to grow further — especially in Tier 2–4 cities.

Several India-specific factors make bancassurance a highly effective and scalable model:

1. Extensive Reach

India has over 159,000 physical bank branches, of which nearly 102,000+ (64%) are in semi-urban and rural regions. This distribution infrastructure offers insurers ready access to underserved populations without duplicating infrastructure costs, that agents and online channels cannot reach with the same level of trust and familiarity.

2. High Consumer Trust in Banks

Indian consumers trust their banks more than most other financial intermediaries. This trust extends to product recommendations, making banks credible platforms for insurance cross-sell.

3. Contextual and Lifecycle-Based Cross-Selling

Bancassurance enables contextual product offers, such as:

• Home loans → property insurance
• Fixed deposits → term or endowment plans
• Salary accounts → group health or personal accident cover

Such lifecycle alignment improves both take-up rates and customer satisfaction.

4. Digitally Enabled Sales and Onboarding

Thanks to IRDAI reforms, most banks now offer:

• e-KYC and CKYC-based issuance
• Pre-approved, bundled product journeys
• 100% digital fulfilment (some policies issued in under 5 minutes)

This reduces friction and extends reach even in digitally assisted environments.

5. Data-Driven Personalisation

Bancassurance partnerships are increasingly driven by data and analytics, allowing for highly personalised, need-based insurance offerings. Banks and insurers are leveraging transaction data, behaviour patterns, and demographic indicators to optimise outreach, improve conversion, and enhance persistency.

Banks have access to transaction data, income profiles, and customer demographics — enabling insurers to tailor offerings and improve both conversion and persistency through AI/ML models.

India supports a mix of bancassurance partnership models, allowing flexibility and alignment with strategy:

A. Corporate Agency (Tied / Multi-partner)

The bank acts as a corporate agent of insurers. The IRDAI allows banks to tie up with a maximum of three life, three general, and three health insurers under this model. Public sector banks (e.g., SBI, PNB, BoB) predominantly use this approach. It allows insurers to build deep product integration, co-develop offerings, and train bank staff extensively. However, sales are limited to selected insurers.

Regulations permit up to 3 life, general and health insurance partners.

The corporate agency model enables focussed collaboration and product alignment between the Insurer and the Bank, though customer choice is somewhat limited

B. Open Architecture

This model enables banks to offer products from a wider range of insurers. It offers customers a wider choice for products and enables price and feature comparisons. However, it may dilute individual insurer focus and training effectiveness unless managed carefully with digital tools and tiered partner strategies to manage complexity. Popular among private and foreign banks (e.g. Yes Bank, IndusInd, AU Small Finance Bank). Some Banks have adopted product or geography based semi-exclusivity to manage this complexity.

C. Joint Ventures (JV)

Where Banks and insurers form equity partnerships. This results in full integration, joint product development, shared distribution strategy, and long-term alignment. It is more capital intensive but ensures high retention and deep engagement.

Seen in cases like ICICI Prudential, HDFC Life, and Public Sector Bank led companies such as PNB MetLife, Canara HSBC, India First and SBI Life.

The bancassurance model has received explicit policy support in recent years:

> DFS Directive (2025)

India’s Department of Financial Services directed public sector banks to treat insurance distribution as a core function, reinforcing its strategic importance and pushing for greater participation in underpenetrated geographies.

> IRDAI’s ‘Insurance for All’ Roadmap

Under the Vision 2027 strategy, the IRDAI is focusing on simplified product offerings, ease of distribution, and innovative digital insurance journeys. Key reforms include:

• Standardization of products and simplifying product approvals.
• Supporting video-based onboarding and paperless journeys -> Video-based KYC approvals.
• Relaxation of POS agent regulations to onboard bank staff quickly.
• Encouraging bundled and inclusive products.\

> Digital Infrastructure and Ecosystem Development

   Regulatory allowances now enable:
– Use of web aggregators and fintech’s in distribution partnerships.
– Simplified regulatory sandbox approvals for new bancassurance models (e.g., health wallets, embedded credit card covers).
– Introduction of Bima Sugam platform for paperless distribution and claims tracking.

The upcoming regulatory sandbox expansions are expected to streamline policy sales, claims, and comparison across the industry — further strengthening bancassurance ecosystems.

Despite its growth, bancassurance has structural risks that must be addressed:

1. Risk of Mis-selling

Incentives tied to premium volume can encourage inappropriate product recommendations, especially for long-term savings or high-cost traditional plans.

2. Post-Sales Gaps

Customer service, claims follow-up, and grievance redressal often fall between the bank and insurer, creating friction for the end user.

3. Data and Consent Frameworks

Sensitive financial and health data sharing must be governed by strong protocols and customer consent. This is an emerging area of regulatory focus.

4. Limited Choice in Exclusive Tie-Ups

In tied agency models, customers may not be offered the most suitable or competitively priced product — impacting satisfaction and long-term retention.

5. Staff Training and Knowledge

Bank staff vary in insurance awareness and skill, especially outside metro locations. Without sustained training, productivity and quality can suffer.

For Banks

• Elevate bancassurance to a strategic business line with its own KPIs, analytics, and product innovation.
• Embed insurance into digital journeys including mobile apps, net banking, and assisted voice channels for account opening, lending, renewal, and lifestyle events.
• Move from volume to value metrics: Track persistency, suitability match rate, claims satisfaction—not just policy count.
• Strengthen internal sales governance frameworks to prevent mis-selling, especially in PSU networks.
• Invest in training, compliance systems, and customer support protocols.
• Use transaction data to enable lifecycle-based insurance triggers (e.g., child education milestones, new credit cards, EMI status).

For Insurers

• Design bank-specific, flexible and modular products with simplified features, renewable covers, and hyper-personalised pricing models that can be issued instantly.
• Create co-branded digital platforms and dashboards for policyholders.
• Offer field support teams and digital tools for branch and frontline training.
• Invest in real-time integration with bank APIs, offering instant underwriting and policy issuance.
• Set up support units and grievance redress teams dedicated to bank partners.

For Regulators and Policymakers

• Reinforce customer suitability norms and sales conduct standards.
• Reward banks and insurers that improve policy persistency, not just distribution numbers.
• Incentivise inclusive product development for underserved groups.
• Ensure data governance and customer protection through evolving norms under Bima Sugam.

Bancassurance in India has transformed from an optional sales route into a national distribution priority. It enables insurers to scale cost-effectively, banks to enhance customer value, and the broader ecosystem to deliver on financial protection and inclusion goals.

As regulatory support deepens, technology accelerates, and customer expectations rise, bancassurance will play a pivotal role in shaping the next decade of insurance growth in India — not just as a channel, but as a platform for access, trust, and impact.