On an average, each Indian sales person sells Rs 80,000 p.a. However, performance of sales force is widely dispersed, with top 10 per cent of sales force accounting for nearly 85 per cent of premium income. Though our experience suggests that concentration is prevalent in other countries as well, it as not as acute as in India. This allows banks to serve customers in a targeted manner. International experience suggests bank sales forces have productivity three times that of direct sales force and better customer retention.
Banks also have greater reach through their branches.
Compared to 2000 branches of LIC, banks, taken together, have over 40,000 branches. Banks will also have lower costs because they can share their distribution and selling costs over a larger product and customer base. International experience shows that banks have about a 30 per cent cost advantage on acquisition costs. However, there are key challenges in making bancassurance work, these will be stronger for Indian banks. This requires careful analysis of the product costs, actual distribution costs, etc.