The term `bancassurance' refers to selling of insur- ance products by banks. Here, insurance companies tie-up with banks and through them sell insurance products to the customers. Under this system, banks act as corporate agents to insurance companies in selling their insurance plans. As a result, banks earn additional revenue besides regular interest income from banking business, known as fee-based income. It is a purely risk-free income for the banks, since they act as corporate agents between the insurance company and the client. Bancassurance is at a nascent stage in India. It originated in 2000 when the government issued notification under the Banking Regulation Act which allowed Indian banks to conduct insurance business. It gained momentum after the Insurance Regulatory and Development Authority (IRDA) passed a notification on `Corporate Agency' regulations in October 2002. As per the concept of Corporate Agency, a bank can act as an agent for one life and non-life insurer each.

Bancassurance has witnessed a rapid grown in almost all the countries across the globe. It has been more successful in Europe than any other country of the world. Its growth primarily depends on a country's demography, economic and legislative prescriptions. The concept of bancassurance is relatively new in the US. The Glass-Steagall Act of 1933 prevented banks in the US from entering into alliance with different financial services providers, thereby putting a barrier on bancassurance. As a result, life insurance was primarily sold through individual agents, who obviously targeted rich people, leaving a majority of the American middle class households underinsured. With the US Government repealing the Act in 1999, the concept of bancassurance started making headway in the US also. In the Asian context, it has been estimated that bancassurance would contribute almost 16% of the life premium in the Asian markets in the coming years, primarily with the growth that is expected in India and China.

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