STAR UNION TO BANK ON BANCASSURANCE TO SELL PRODUCTS

Mumbai: Star Union Daiichi Life Insurance — the three way joint venture between Bank of India, Union Bank and Dai-ichi Life of Japan plans to hit the ground running. The insurer will distribute its products through employees of its two promoter banks who have been trained in insurance distribution.

Star Union Daiichi is expecting to get its license to sell insurance products from the regulator soon. Although the company is yet to commence business, it has a distribution network in place thanks to its promoters involvement in the distribution process. Bank of India distributed products for ICICI Prudential through the referral model while Union Bank had a bancassurance partnership with HDFC Standard Life and the private insurer trained a large number of the bank’s employees.

Talking to ET, Kamalji Sahay, who has been designated as CEO of Star Union said that the company would use the existing distribution infrastructure for selling insurance. After Bank of India and Union Bank put in their application to set up their own company, they ceased to be insurance distributors for ICICI Prudential and HDFC Standard Life whose products they sold earlier.

Mr Sahay was an executive director (personnel) of the Life Insurance Corporation. “Bank of India and Union Bank together have a network of over 5,000 branches. We expect at least one person in each branch to be selling life insurance” said Mr Sahay. Additionally the regional rural banks sponsored by the two banks have more than 1,400 branches to tap the life-insurance business in the rural areas.

Mr Sahay said that the company would initially sell its products predominantly through the bancassurance route and its products would be structured accordingly. “While initially we will focus largely on the banking channel, eventually we will have a tied agency force of our own”. The company is in the process of putting in place its senior management team.

M Balachandran, former chairman of Bank of India, has been appointed as chairman of the company.
The joint venture agreement, among others, envisages, a capital stake of 51% by BoI, 26% by Daiichi Life and 23% by Union Bank. The joint venture company would have an initial paid-up capital of Rs. 250.00 crore. Dai-ichi Life is a leading player in the Life Insurance Segment in Japan and is one of the top 10 life insurers in the world and the second largest life insurance company in Japan.

Source: The Economic Times