Recently bancassurance tie-ups have caught the attention of people for its its inability to sustain a healthy relationship. Bancassurance-a combination of banking and insurance business has undoubtedly been a boon to the insurance segment but off late it has not been able to hold the customers belief mainly because of its lack of continuity ability. This definitely has affected the reliability of this medium of selling insurance.

This channel of insurance distribution through banks had originated in France and has been a success story ever since it was introduced in India. A number of private insurers tied up with banks one after the other, the trendsetter being Aviva Life Insurance which now has as much as 17 tie ups with cooperative banks. But lately a number of banks have either changed or broken up their existing tie-up partnerships. Now looking at this changing colour of bancassurance, it may not be possible for every individual to bank upon this concept of selling insurance. For example, recently, Dena Bank switched over its partnership with Life Insurance Corporation of India, which it had earlier tied up with Kotak Mahindra Life. About six of the tie-ups have come to an end since the time bancassurance came to be used when private insurers became a part of the insurance industry in the year 2000. The recent one to end up its bancassurance relationship is the Centurion Bank, which has now joined hands with Aviva by replacing Bajaj Allianz Life Insurance. The major reasons plotted for this bank-insurance company breakup is the change in the management system in the Public Sector Banks (PSB) that occurs every 2-3 years. Every time a new authority takes control over the duties it results in a change in the distribution network and the effect of which we can see now. This hampers the healthy continuity relationship in a bancassurance tie up.

But on the other side, insurers like Aviva continue to garner large volume of its business through this medium. Despite the reliability factor, it still continues to be one of the proven successful channels of distributing insurance products and the result has been so imposing that the private insurer Aviva will very soon extend its bancassurance approach to Sri Lanka for its new expansion spree.