The East-focused nationalised bank that offers a distribution network of over 2,000 branches, which can translate into a Rs 200 crore business
As many as sixteen life insurance companies are in the fray for becoming the bancassurance partner of United Bank of India. At stake is a potential Rs 200 crore premium business that the bancassurance partner can get from the East-focussed nationalised bank that offers a distribution network of over 2000 branches, sources said.
The life insurance companies have given their respective presentations between January 14 and 16. It is expected that a decision will be taken within the next 2-3 months, sources said. When contacted, a UBI official said the decision will be intimated in due course.
A majority of offices of life insurers are located in semi-urban towns which are with a population between 10000 to 99999. Private sector insurers had offices in 572 districts covering 79.67% of all districts in the country, as per Insurance Regulatory Development Authority's (Irda) latest report. This makes it all the more necessary for the private sector life insurers to use the wide distribution network of state-run banks to sell products. Bancassurance is the arrangement entered by a bank and an insurance company, through which the insurance company sells or markets its products to the bank's customer base. Bancassurance is usually the largest distribution channel for life insurers, because banks have a captive base of customers to whom they sell life insurance for hefty commissions.
This week six companies, including Bajaj Allianz Life, Bharti Axa Life, Canara HSBC OBC Life, DHFL Pramerica Life and Edelweiss Tokio Life made presentations to the bank. On Tuesday, five life insurers, including Exide Life, HDFC Standard Life, ICICI Prudential Life and IndiaFirst Life gave their presentations. On Wednesday, another five companies including Max Life, PNB Metlife, Reliance Nippon Life, and SBI Life gave respective presentations.
United Bank of India already has a bancassurance partner in the form of Life Insurance Corporation (LIC). The bank had signed a memorandum of understanding on October 28, 2014, with LIC for selling the life insurer's products through all the bank branches across the country. At the end of the ongoing selection, UBI will have tie-ups with two life insurance firms.
Corporate agents, including banks, have in recent past announced tie-ups with more than one insurance company. This has happened after the Irda nudged them to have 'open architecture'. According to the norms, banks can tie up with up to three life, non-life and standalone insurers each, instead of only one insurance company earlier. At the end of March 2018, there were 68 insurers operating in India; of which 24 are life insurers, 27 are general insurers, 6 are standalone health insurers exclusively doing health insurance business.
In August 2018, the UBI's bancassurance department had selected Bajaj Allianz General Insurance and Tata AIG General Insurance as partners for selling general insurance products, while Star Health & Allied Insurance was chosen as a partner for standalone health insurance business.
JOINING HANDS
- The East-focused nationalised bank that offers a distribution network of over 2,000 branches, which can translate into a Rs 200 crore business
- A majority of offices of life insurers are located in semi-urban towns which are with a population between 10000 to 99999
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