Bancassurance

Bancassurance is the selling of insurance and banking products through the same channel, most commonly through bank branches selling insurance. The sales synergies available have been sufficient to be used to justify mergers and acquisitions.

Some of the sales synergies come through the extensive customer base that banks have. Some come from opportunities to sell insurance together with some banking products. For example, banks generally insist on life insurance for mortgage borrowers. Although borrowers are not obliged to buy insurance from the lender, many do (despite it often being very over-priced) as it is an easy option.

Credit cards and personal loans create opportunities for banks to sell protection insurance (another high margin business) and the knowledge a bank has of its customers' finances creates opportunities to sell other products.

Bancassurance has become significant. Banks are now a major distribution channel for insurers, and insurance sales a significant source of profits for banks. The latter partly being because banks can often sell insurance at better prices (i.e., higher premiums) than many other channels, and they have low costs as they use the infrastructure (branches and systems) that they use for banking.

What has not happened to any great extent, at least in Britain, is the merger of banks and insurers to form integrated bancassurance companies.

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