The recent tie-up between Punjab National Bank and MetLife India Insurance Co. Pvt. Ltd is another prime example of how Indian banks are slowly diversifying their product range. After the recession, retailing became hard for India’s largest nationalised bank. Despite having one of the broadest networks and biggest customer bases in India, PNB had put all their ‘capital intensive’ eggs into one basket, and it was becoming increasingly difficult for them to make a sale.
But with PNB now picking up a 30% stake in MetLife, it’s a win-win situation for both. Here’s how –
- It will be an enormously positive branding exercise, as the insurance company will be able to reach out to over 3.5 crore PNB customers while retailing their products through the bank’s 4,500 branch offices.
- Dealing with PNB directly will simplify operations for MetLife as the bank will act as a single group policy holder, underwriting the insurance cover for all its current and savings account holders.
- Being associated with a bank of such long standing repute, MetLife automatically becomes an even more trustworthy name, especially in the north Indian rural market (which can otherwise be very difficult to penetrate).
- Premium payments become very easy to collect when dealing with a bank. . On the basis of a premium debit authorization submitted by the applicant, the bank will simply debit the customer’s account towards premium for the insurance plan.
- The biggest advantage for PNB will be the ability to expand its product range and reduce risk. This brings the bank a step closer to its longstanding goal of becoming India’s biggest financial supermarket, retailing a wide variety of services and products.
- The MetLife Group is a brand name with tremendous global recall.
- The product itself is very customer friendly. Met Group Life is a yearly renewable term plan and its uniqueness lies in its affordability and simplicity as it can be procured with the minimum amount of formalities. The face amount can be as low as 1 lac, depending on the customers comfort level.
- Met Group Life is the only product in the market that offers a cover beyond 55 years of age. The customer can even avail the income tax benefit under Sec 80 C of the Income-tax Act, 1961. This will do wonders for the bank’s image, considering the average customer retention rate for PNB is one of the highest in India.
The non-requirement of any medical tests is another attractive feature of this plan. The procedure is restricted to a simplified application form with basic details and a declaration of good health. On receiving the appropriate details, MetLife will issue a Certificate of Insurance over the counter.
With more and more banks looking to partner with insurance companies and the Government’s recent decision to relax the norms on ‘a single bank selling multiple insurance brands’, things are looking up for the financial sector. Some respite, after what can only be termed as roller coaster 2010- 2011.