Bancassurance: How Banks and Insurers Partner to Sell Insurance Products

What is bancassurance?

Bancassurance is a commercial arrangement in which a bank offers insurance products from an insurance company to its customers. The bank acts as a distribution channel, earning fee or commission income, while the insurer gains access to the bank’s customer base without expanding its own salesforce.

How it works and who benefits

• Banks: Earn additional revenue from commissions and deepen customer relationships by offering bundled financial solutions.
• Insurers: Expand distribution reach and sales volume cost-effectively.
• Customers: Gain convenience through one-stop access to banking and insurance products, often at branch or online channels they already use.

Market dynamics and global trends

• Regional strength: Bancassurance is most established in Europe and the Asia‑Pacific region. Major European players include Crédit Agricole, ABN AMRO, BNP Paribas, and ING.
• Penetration varies: In 2013, bank channels accounted for about 83.6% of life insurance sales in Italy, 66.2% in Spain, 64.2% in France, and 62.6% in Austria; penetration has been much lower in other countries.
• Product mix: Life insurance dominates bancassurance globally. In 2018 roughly 29% of life insurance was distributed through banks, while property & casualty distribution via banks remained low (around 2%).
• Growth outlook: Research firms estimate strong growth—one forecast valued the global bancassurance market at about $1.27 trillion in 2021 and projected growth to about $1.80 trillion by 2027 (approx. 5.9% CAGR), driven largely by aging populations and demand for health, life, and retirement products.

History and regulation

• Origins: Modern bancassurance began in France in the 1970s, with wider adoption in Spain during the 1980s.
• United States: Historically constrained by separation between banking and insurance activities. The Bank Holding Company Act of 1956 and state-by-state rules limited activity; by the late 1980s many state‑chartered banks could sell insurance. The Gramm‑Leach‑Bliley Act of 1999 removed most federal barriers, though insurance regulation and licensing remain primarily state responsibilities.
• Regulation focus: Rules typically address licensing, disclosure, suitability of recommendations, and potential conflicts of interest between banks and insurance providers.

Consumer advantages and disadvantages

Advantages
– Convenience: Purchase or review insurance where customers already bank—useful in underserved areas or for customers seeking simplicity.
– Greater product access: Banks can introduce life, health, and other insurance products to customers who might not otherwise seek them.

Disadvantages
– Potential limited competition: Customers may rely on offers presented by the bank rather than shopping the broader market.
– Advice quality: Bank staff may not have the same depth of product expertise as specialized insurance agents or brokers.
– Suitability risks: Misaligned sales incentives or insufficient advice can lead to customers purchasing unsuitable products.

Common products sold through banks

• Life insurance (dominant product in most markets)
• Health and accident insurance
• Retirement and pension products
• Property and casualty products (less commonly distributed via banks)

Key takeaways

• Bancassurance is a widely used distribution model that aligns the sales capabilities of banks with insurers’ product offerings.
• It is particularly strong in Europe and Asia‑Pacific and is growing globally, especially for life and retirement-related products.
• The model benefits banks and insurers financially and offers customer convenience, but it also raises concerns about competition, pricing, and the quality of advisory services.
• Regulatory approaches vary by country; in the U.S. banks can sell insurance but state supervision and licensing remain central.