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Understanding the Bank Insurance Model

The Bank Insurance Model (BIM), also known as bancassurance, describes a partnership between a bank and insurance company where the insurance company sells its products through the bank's sales channels. This allows insurers to maintain smaller sales teams as bank staff become the point of contact for customers. Both the bank and insurer share commissions from insurance policies, which are administered by the insurer. BIM differs from the traditional insurance model by relying more on bank sales channels than independent agents.

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Rahul Sharma
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6 views1 page

Understanding the Bank Insurance Model

The Bank Insurance Model (BIM), also known as bancassurance, describes a partnership between a bank and insurance company where the insurance company sells its products through the bank's sales channels. This allows insurers to maintain smaller sales teams as bank staff become the point of contact for customers. Both the bank and insurer share commissions from insurance policies, which are administered by the insurer. BIM differs from the traditional insurance model by relying more on bank sales channels than independent agents.

Uploaded by

Rahul Sharma
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

The 

Bank Insurance Model ('BIM'), also sometimes known as 'Bancassurance', is the term used to
describe the partnership or relationship between a bank and an insurance company whereby the
insurance company uses the bank sales channel in order to sell insurance products.

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.

Bank staff and tellers, rather than an insurance salesperson, become the point of sale/point of contact for
the customer. Bank staff are advised and supported by the insurance company through product
information, marketing campaigns and sales training.

Both the bank and insurance company share the commission. Insurance policies are processed and
administered by the insurance company.

BIM differs from 'Classic' or Traditional Insurance Model (TIM) 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 (HIM), 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.

BIM is extremely popular in European countries such as Spain, France and Austria.

The usage 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 the United States, when theGlass–Steagall Act was repealed after the passage of the Gramm-Leach-
Bliley Act. 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.

Privatbancassurance 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.

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