Bancassurance
The combination of banking and insurance has seen great development in the European banking sector. It acts as a risk management technique in which a bank providing a mortgage loan is also providing an insurance service, default by the mortgage holder or death, the bank can use the life insurance to pay for the remaining mortgage.
Advantages of Bancassurance.
- Convenience
- Profit maximization
- Increasing market share
- Increasing customer loyalty
- Diversification and risk reduction
- Economies of scale
Disadvantages of becoming a one-stop centre
- Bank may become overwhelmed by too many products
- Substandard service delivery
- Cannibalization