Slowdown in Banca Channel Growth for PSU-Backed Life Insurers
The growth of life insurance companies through the bancassurance channel, particularly those backed by public-sector banks (PSBs), has slowed down in 2024-25 (FY25). This slowdown is attributed to changes in incentive structures as several PSU banks have shifted their focus back to core operations and scaled back insurance sales through banca channels.
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In contrast, life insurance companies affiliated with private-sector banks have nearly doubled their growth through the bancassurance channel during the same period. This divergence in growth rates has been observed amid growing concerns about misselling through the bancassurance channel, prompting PSBs to scale back their insurance sales efforts.
The shift in focus by PSU banks back to their core operations has directly impacted the growth of life insurance companies relying on the bancassurance channel. As a result, these insurers are experiencing a slowdown in their business growth through this channel.
