Bancassurance is an arrangement between a bank and an insurance company that allows the insurance company to sell its products to the bank's client base. This partnership arrangement can be profitable for both companies. Banks earn additional revenue by selling insurance products, and insurance companies expand their customer bases without increasing their sales force.The benefits of bancassurance are clear for banks. They can offer a wider range of products to their customers, which builds loyalty and increases customer stickiness. In addition, banks benefit from economies of scale in terms of distribution and administration costs. Selling insurance through the bank's existing infrastructure is more efficient than setting up a separate operation just to sell insurance policies.For insurers, bancassurance provides access to new markets at low cost. By leveraging the banking infrastructure, insurers can reach large numbers of potential customers quickly and easily with little incremental expense beyond what it would take to establish relationships with individual banks. And because insurers already have experience marketing and selling their products, they don't need to spend time or money educating consumers about why they should buy coverage from them specifically.
