HDFC Bank, the country’s second largest private sector bank, has decided to end its four-year-old bancassurance partnership with group firm, HDFC Chubb General Insurance Company. HDFC Chubb is 74 percent owned by Housing Development Finance Corporation (HDFC), the promoter of HDFC Bank.
The general insurance company has been going through a rough weather due to differences between the two joint venture partners, HDFC and Chubb. The partners recently agreed to part ways, but the modalities are still to be worked out. HDFC Bank has finalized a new bancassurance partner in Bajaj Allianz General Insurance Company, sources in the bank said. The bancassurance alliance is likely to be announced soon.
HDFC Bank expects to earn commission income of Rs 50 crore per annum from selling Bajaj Allianz’s products, against just Rs 5 crore now through its alliance with HDFC Chubb. Bajaj Allianz will get access to HDFC Bank’s customer base of over 10 million across 531 branches spread over 228 cities across India.
Besides getting better incentives, a prime reason for HDFC Bank to end its tie-up with HDFC Chubb was the latter’s limited range of products. The bank could sell just personal accident and motor insurance. With the new tie-up, HDFC bank, a big provider of home loans will be able to sell mortgage insurance, householders’ insurance, property insurance besides health insurance, SME insurance, and various retail insurance products to its customers.
Bajaj Allianz was found strong on service levels, credibility and strong tie-ups with banks. The insurer has a tie-up with over 20 banks including UTI, IDBI, United Bank of India, Jammu and Kashmir Bank. On the other hand ICICI Lombard has tie up with four banks-ICICI Bank, American Express Bank, Centurion Bank, and ABN Amro Bank.