1.1 BACKGROUND INFORMATION OF THE RESEARCH
Bancassurance is the selling of insurance and banking products through the same channel, most commonly through bank branches selling insurance. The sales synergies available have been sufficient to be used to justify mergers and acquisitions.
Some of the sales synergies come through the extensive customer base that banks have. Some come from opportunities to sell insurance together with some banking products. For example, banks generally insist on life insurance for mortgage borrowers. Although borrowers are not obliged to buy insurance from the lender, many do as it is an easy option.
Credit cards and personal loans create opportunities for banks to sell
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The public has immense faith in banks. Share of bank deposits in the total financial assets of households has been steadily rising. Banks have enormous retail customer base. Banks world over have realized that offering value-added services such as insurance helps to meet client expectations. Competition in the Personal Financial Services area is getting `hot’ in Ghana. Banks seek to retain customer loyalty by offering them a vastly expanded and more sophisticated range of products. Insurance distribution helps to increase the fee-based earnings of banks to a considerable extent. Internationally, insurance activities contribute significantly to banks’ total domestic retail revenues. Banks can put their energies into the `small-commission customers’ that insurance agents would tend to avoid. Banks’ entry in distribution helps to enlarge the insurance customer base rapidly. This helps to popularize insurance as an important financial protection product. Bancassurance helps to lower the distribution costs of insurers. Acquisition cost of insurance customer through banks is low. Selling insurance to existing mass market banking customers is far less expensive than selling to a group of unknown customers.
Experience in Europe has shown that Bancassurance firms have a lower expense ratio. This benefit could go to the insured public by way of lower premiums.
The specific objectives of the study are;
• The degree of awareness created for Bancassurance by the bank