Bancassurance Growth in FY25: PSBs Slow, Private Banks Lead
Why in the news
Life insurance sold through banks diverged in FY25: state-run lenders retreated while private lenders pressed on.
Growth comparison
| Group | Trend |
|---|---|
| PSB-backed insurers | 7% (FY24), 6% (FY25), 2% in March FY25 |
| Private bank-backed insurers | 15% (FY25); March 7% versus 8% in FY24 |
Why PSBs slowed
- Staff incentives for insurance sales were dropped.
- RBI wanted banks to concentrate on core banking and view insurance as a service.
- Misselling and forced selling concerns were voiced by Nirmala Sitharaman and Debashish Panda at the SBI Conclave (Nov 2024).
Bank-wise
- Low single digits: PNB, Canara Bank, Union Bank of India.
- Double digits: SBI, Bank of Baroda, Bank of India.
Emerging trends
- Customers shifting to online purchase; fewer branch visits.
- Banks use PIVC (Pre-Insurance Verification Calls) to check sales.
Exam angle
- Bancassurance: insurance distributed via banks.
- Regulator: IRDAI.