Role of Industry 5.0 in Bancassurance: A Theoretical Perspective

Role of Industry 5.0 in Bancassurance: A Theoretical Perspective

Diksha Verma, Pooja Kansra, Pawan Kumar
Copyright: © 2024 |Pages: 16
DOI: 10.4018/979-8-3693-1343-5.ch013
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Abstract

The insurance companies cannot target every customer for selling insurance products as it is not possible for them to target customers at grand level, but banks can reach every customer even in rural or remote areas as well. Therefore, bancassurance as a mode of distribution is an approved and accepted method by all institutions nowadays along with Industry 5.0 concept which has relatively become new trend. Although various studies are available related to bancassurance, there is less discussion on bancassurance along with Industry 5.0. Because digital banking is quite a new concept and especially Industry 5.0 adopted by banks nowadays is an emerging concept therefore association of Industry 5.0 with bancassurance and their implications have been addressed in the present study. The present study will help to provide a comprehensive view of the role of Industry 5.0 in bancassurance and will be helpful to the bankers, government, policymakers, and researchers.
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Introduction

The Indian insurance sector has come a long way in terms of growth and development since the time when insurance businesses were regulated by the public sector (Radhika, 2012; Mannar, 2015). Insurance industry has relied on the public sector for a longer duration and has witnessed sluggish and uneven progress for those many years (Turkyilmaz et al., 2011; Pillai and Arumugan, 2023). A committee was made under the chairmanship of R.N. Malhotra in 1994 to examine the market conditions and implement the participation of private sector in insurance arena. It was found from the committee that only 22 percent were availing insurance and the rest were uninsured out of total strength of the country (Newar, 2013; Kumar, 2016; Agarwal, 2019). Various steps were initiated for improving insurance penetration among customers and also to accelerate the efficiency of insurers for overall growth of the industry (Mohamed et al., 2015). Thereafter, on the recommendations of IRDA in 1999 a bill was approved to reduce the restrictions and to allow the foreign players to enter Indian boundaries (Sinha, 2005; Kumaraswamy, 2012; Bhushan and Murtaza, 2014). More than 200 years old Indian insurance industry has witnessed several ups and downs (Shah and Chugan, 2018). The insurance industry has experienced considerable growth in terms of registered insurers, insurance premiums, number of policies and claims, etc. since its inception.

Insurance Sector in India

Insurance penetration and density are significant indicators of growth and development of insurance in the country (Rakshit, 2017; Shukla, 2018; Vimala and Alamelu, 2018). Nevertheless, rapid growth has been observed in the number of registered insurers and premiums underwritten (IRDA Annual Report, 2021-22) still, the penetration of insurance products amid the citizens of India is quite less. Irrespective of the extraordinary efforts for promotion of insurance in India like Jan-Dhan-AadharMobile policies, the nation has not performed well in this area. Various insurance schemes run by Indian Government including Atal Pension Scheme and other schemes by the name of Pradhan Mantri have been introduced by the government in recent years but the level of penetration is only 4.2 percent in comparison to a global penetration rate of 7.5 percent (Cafemutual, 2023). Insurance penetration in India was 4.2 percent in the year 2021-22 which was same as the previous year's penetration of 2020-21 which means no growth was reported in the year 2021-22 in penetration level. Globally if compared, as per 2021-22 survey, India was ranked at 27th position in terms of insurance penetration (IRDA Annual Report, 2021-22). Fortunately, the insurance density of India has shown consistent growth from 2001-02 to 2021-22 and globally India was ranked at 28th position in terms of density (IRDA Annual Report, 2021-22). Both of these metrics indorse that in both the terms discussed above Indian insurance sector is far behind other nations of the globe thus, even after so many years of its inception, future scope for development and growth is existing.

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