Disadvantages Of Bancassurance India

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Anil Chandhok and Mittal, R.k.(2004), have conducted a research in order to find out the lapsing ratio of the various branches of life Insurance corporation of India, operating in the state of Haryana. They attempted to identify the reasons for the lapsing and to learn the impact of high lapsing ratio. The research revealed that, 20 per cent of the policies lapse within the first year itself. The authors are of the view that the high first year lapsing ratio highlights the fact that, more efforts are being made to procure new life insurance business, where as adequate attention is not being paid towards the retention of the procured business. They are apprehensive that, the high first year lapsing rate would increase the overhead expenses and …show more content…

The second factor favouring bancassurance in India, according to her, would be the special features such as: the product design - a link with loan products, the special rural flavour, and 'information technology enabled sales approach, planned sales training to bank staff, and the special staff incentive schemes for motivating bank staff to promote bancassurance. The author has concluded that, bancassurance will become the most successful of the multi-channel distribution strategy adopted by the life insurance companies.
Pandey, K.C. (2004), has identified the changes that have taken place in the insurance market to be: direct marketing through dedicated sales force; effectively functioning bancassurance model; the major role played by the corporate agents in assisting the policy holders to select the right type of policies and telemarketing i.e., usage of databases with the aid of call centers. The author has suggested that, it is imperative for the insurance companies to reinvent themselves with the changing dynamics of the

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