An Overview of Bancassurance / Bancatakaful: Pakistani Regulations in the Framework of International Model Law

Abstract

Using a bank’s customer base to promote insurance products is known as bancassurance. It is a promising channel for selling insurance products around the world. However, in Pakistan, SECP has received numerous reports of mis-selling cases. Therefore, this paper has analyzed bancassurance products and mainly covers the regulatory policy challenges and suggestions to adopt best practices in Pakistan. The paper identifies the best practices in countries like UK, and India as cross-country comparison. The objectives of this study are to investigate widely practiced bancassurance models, examine the issues and the problems related to the practice of bancassurance products in Pakistan that potentially affects its customers. This study examines the implementation of bancassurance and its actors, which include banks, the distribution channel, insurance services, financial services, and service quality. Customers choose bancassurance because of their relationship and trust with the bank, particularly the local bank branch. Another critical component that can considerably enhance this system is digitization. Adopting current technologies and digitalization can improve customer accessibility and enhance sales of this product. This study was carried out using a qualitative technique. This study recommends the possible improvements in existing legal and regulatory framework in the light of international best practices.