Distribution Agreement Model in Bancassurance

Bancassurance, the combined selling of banking and insurance products, has become an increasingly popular business model in recent years. One important aspect of bancassurance is the distribution agreement between the bank and the insurance company. In this article, we will discuss the various distribution agreement models that can be implemented in bancassurance.

1. Exclusive distribution agreement:

In this model, the bank exclusively sells the insurance products of one particular insurance company. This model ensures that the bank is fully committed to promoting the insurance products of the partner company, and the insurance company benefits from the bank`s established customer base.

2. Non-exclusive distribution agreement:

In this model, the bank is allowed to sell insurance products of multiple insurance companies. This model provides the bank with greater flexibility in selecting the insurance products that best meet the needs of their customers. It also provides the insurance company with a wider distribution network.

3. Joint venture distribution agreement:

In this model, the bank and the insurance company create a joint venture to sell insurance products. This model allows both companies to share the risks and rewards of the venture, and can lead to a closer working relationship between the partners.

4. Referral agreement:

In this model, the bank refers customers to the insurance company, but does not actually sell the insurance products themselves. This model is beneficial for banks that do not want to commit resources to selling insurance products, but still want to provide their customers with access to insurance products.

When selecting a distribution agreement model, it is important to consider the strengths and weaknesses of each model, as well as the goals and resources of both the bank and the insurance company. It is also important to ensure that the agreement complies with relevant regulations and laws.

In conclusion, the distribution agreement model is an important aspect of bancassurance. Selecting the right model can help banks and insurance companies achieve their business objectives and provide customers with access to a wider range of financial products.