Bancassurance to help expand bank operations
Kathmandu, October 16:
Laxmi Bank Ltd (LBL) has become the first bank in Nepal to start Bancassurance business. Senior officials of LBL informed journalists today about the ‘bancassurance’ product, in a changed competitive banking environment.
Suman Joshi, CEO of LBL said that bancassurance is a combination of banking and insurance businesses and the bank has been the first to introduce this concept which would be started from November. Joshi said that LBL already has received approval from Beema Samiti to carry out insurance-related transactions.
From November LBL will offer insurance products through banking channels, he said. This is an additional product to diversify banking services, said Joshi. With this sort of service being started soon, customers, banks and insurance can all benefit, he said.
This initiative is also one of the additional instrument/ products to strengthen the revenue base of the bank. Initially, LBL has joined hands with LIC Nepal to carry out insurance related businesses.
Bancassurance is a standard financial service product wherein two models exist in which banks undertake tasks such as ‘assume risk’ and ‘distribution’ only, said Joshi. The
prevailing regulations that govern the financial services industry permit banks to conduct bancassurance.
LBL presently is adopting only the first model, said Joshi. “Consumers can avail of insurance through their bank accounts, thus simplifying access and processes. Similarly, insurance companies have one more medium to access a larger and untapped customer segment that are the bank’s customers. Banks will allow us to strengthen relationships with customers by offering a wider scope of services to suit their changing lifestyle and needs,” says LBL statement.
A growing disposable income base, frequent changes in employment and longer retirement period for customers mean that they require an alternative and more complex financial product to manage their existing and future wealth, say the bank’s officials.
The bank will cross sell and promote insurance products through its growing number of branches and also through remote channels such as internet, SMS and ATMs, said the bank’s CEO.