Banks to sell insurance products as central bank approves bancassurance

All scheduled banks operating in Bangladesh can now act as agents of insurance companies. At the same time, banks can engage in marketing and selling insurance products.

The Banking Regulations and Policy Department of Bangladesh Bank (BB) issued instructions to this effect on Tuesday.

Bancassurance is an arrangement between a bank and an insurance company, allowing the insurance company to sell its products to the bank’s client base.

According to the instructions, Bancassurance, through scheduled banks operating in the country, has been introduced. All banks granted authority under the Bank Companies Act, 1991, can engage in the business of marketing and selling insurance products as ‘corporate agents’ of insurance companies starting on Tuesday (Dec 12).

Bancassurance, a term originating from France, was first launched in France and Spain around 1980. Life insurance policies are sold through banks in most European countries and have gained popularity in various Asian countries. It was introduced in neighbouring India about three centuries ago, and Pakistan and Sri Lanka have also found success with bancassurance.

In Bangladesh, bancassurance will be implemented mainly through the branches of banks, adhering to approved policies and guidelines. There has long been a concern that the general public’s trust in the insurance sector is relatively low; hence bancassurance can be a more trustworthy place.

The concept is that customers need not visit an insurance company for insurance products; instead, they can obtain these services directly at their bank branch.