Mumbai: Pitching for open bancassurance distribution for life insurance market in India, Japanese giant Nippon Life on Monday said this distribution model can add 50 million new customers and generate Rs 60,000 crore of additional premium in the next five years.
The Japanese insurance major believes that the open bancasurance architecture has the potential to double life insurance market in India in the next five years.
"Open Bancassurance architecture can significantly improve existing penetration level and add over 50 million people into the insurance fold in the next five years, within public sector banks alone," Kazuhide Toda, Asia Pacific Head of Nippon Life Insurance Business told PTI here.
According to industry estimates public sector banks (PSBs), with over 400 million bank accounts, have achieved just over one per cent insurance penetration in these accounts, which is about 4 million account holders have insurance.
"If insurance penetration in customer accounts with Public Sector Banks alone was to jump to 15 per cent, with an average premium of Rs 10,000, it will translate into an additional Rs 60,000 crore in premium-which is roughly doubling the existing insurance market," Toda said.
The bancassurance market size in India is around Rs 9,500 crore for the year FY14 and is likely to show a significant increase in the current year.
Toda added that "open bancassurance architecture will also have a significant impact on the expected FDI into the life insurance sector with increased interest amongst existing foreign JV partners and new entrants.
Nippon acquired 26 per cent stake in RCAM for Rs 1,450 crore in 2012 while valuing the company at Rs 5,600 crore at that time.
Moreover, Nippon will hike its stake in India's top fund house Reliance Mutual Fund from 26 per cent to 49 per cent.
"The company welcomes RBI's recent norms to simplify and support an open Bancassurance model in life insurance in India. We are committed to growing our presence in India and open bancassurance architecture offers huge growth potential for the Industry," Toda said.
Nippon Life manages over USD 500 billion (Rs 30 lakh crore) in assets, the highest in the world for any life insurer, while RCAM is part of Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group.
