An agreement between a bank and an insurance company

What is Bancassurance?

Bancassurance refers to an agreement between a bank and an insurance company. In bancassurance, the insurance company can use the bank’s distribution channels to sell products. Banks, in return, receive a certain fee from the insurance company.


Bancassurance Diagram - Bank + Insurance Company



  • Bancassurance refers to an agreement between banks and insurance companies.
  • In bancassurance, insurance companies sell their products through the bank’s outlet.
  • It can benefit banks and insurance companies, as well as customers.


History of Bancassurance

Bancassurance as a term first appeared in France in the 1980s. At first, many countries believed that the practice of bancassurance would give banks too much control over the financial products in the market. As a result, it was restricted.

Today, many countries allow the practice, demonstrating notable growth around the world. It is most successful in Europe.

In bancassurance, banks provide the distribution channel, and insurance companies remain product developers. It allows two sectors to leverage the existing network that banks have.

For banks, they can earn extra income by providing its platform to insurance companies. They can also get an opportunity to provide more products to customers. More-rounded services will help banks to enhance customer loyalty. As a result, they can become the center of financial products for the individual customer.

For insurance companies, they can achieve more sales through the distribution network of banks. Insurance companies also have access to customers of partnered banks. This helps in developing their products.

Customers’ financial needs can be satisfied through bancassurance. They can save time and energy because they have access to two different financial services at once. Moreover, they are more familiar with their financial advisors from the bank, smoothing the product reviewing and selecting process. In bancassurance, the bank’s customer relationships play a vital role.


Bancassurance Products

Banks, through bancassurance channels, typically focus on selling life insurance products because they generally command a higher price than non-life insurance products.

Moreover, banks can find and promote the most suitable life insurance for customers based on their credit and personal needs.



Bancassurance requires both banks and insurance companies to work together; however, it is not an easy task to integrate the business operations of the two sectors.

In bancassurance, insurance companies lack direct control over the selling of their products. It can be harder to manage marketing strategies. For example, it can be difficult for insurance companies to target the right customers.

For banks, their employees need to learn about insurance products, which requires a larger workload and training. In the case of multiple bancassurance agreements, bank advisors may have conflict incentives. They may recommend one product over another out of self-interest. It is also difficult to define who should take legal responsibility in case of customer disputes.

To solve the problems, banks and insurance companies need to align their objectives. Moreover, insurance companies can provide sales training for bank employees. This helps to achieve mutual goals and reduce miscommunication.


Going Digital

Digitalization is significantly impacting the bancassurance business model, and banks are slowly moving their bancassurance business online.

The internet reduces the gap between the product developer and customers. In this sense, banks can lose their network advantages in the bancassurance agreement. Moreover, insurance companies can collect customer behaviors online to tailor products more personally suitable to customers.

Digitalization challenges both banks and insurance companies to refine their bancassurance agreement. They need to respond to the change together and transform the way they serve their clients.


Related Readings

CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below:

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