Insurance to form 1/3rd of banks’ fee-based income
Insurance activity is expected to form one-third part of banks’ total Rs 9,200 crore strong fee-based income in near future revealed, G.C. Chaturvedi, joint secretary (Banking and Insurance), ministry of finance (MoF). Addressing a seminar organised by Financial Express and Asia Insurance Post on “Optimising Growth Opportunities Through Distribution Matrix: Emerging Bancassurance” in Mumbai, Mr. Chaturvedi said that bancassurance is one of the potential growth areas. Life insurance industry has grown at a phenomenal growth rate of 46% this year, even the Life Insurance Corporation has grown around 35%, he added “In India major part of about 96% of the life insurance business is done by the career agents, while the bancassurance contributes just 2%. However within a span of next five years it is expected that 13% of the life, and 5% of non-life business would be from bancassurance,” he added.
The bancassurance business is growing at robust pace, it becomes essential for the banks as well as the insurance players to focus on the further growth opportunities and find out the challenges, he said. He also stated that insurance players should consider public sector banks (PSBs) for distributing their products as they have large branch network of about 67,000 branches, and also has rural penetration. Banks need to be cautious on the aspect of forced selling, and also need to be prudent on issues such as solvency and liquidity, stated Mr. Chaturvedi. He also stressed on the aspect of dual regulation for the bank providing bancassurance from RBI and IRDA. Currently the insurance penetration as a percentage of GDP for India is 2.88%, where the major chunk of 2.2% comes from the life insurance business. Moreover the per capita density for India has increased from $6 five years ago to $16.4.