Studying the Bancassurance Phenomenon: A Literature Review

The academic literature dealing with the combination of the banking and the insurance industries is not very extensive, reflecting the fact that bancassurance is a relatively recent phenomenon, especially in the US, where it has been allowed only since 1999 with the passage of the Gramm-Leach-Bliley Act (GLBA). A much wider empirical research stream deals with bank diversification in activities beyond the traditional deposits and lending business, but engagement in the insurance activity is often treated as an aside. As outlined in Chen et al. (2009), most studies focusing on bancassurance have only been descriptive in nature, providing a broad insight into the economic rationales, advantages and drawbacks for all of the involved institutions. Only a few authors have provided quantitative findings on the viability of bancassurance combinations as a new business model for financial firms. Empirical analyses focusing on bancassurance are hindered not only by the recent development of the phenomenon, but also by the availability of limited public information: for example, looking at a bank profit and loss account, it is quite difficult to distinguish the weight of the insurance business from other sources of non-interest income. And it is not easy to collect information on different forms of cooperation between the banking and the insurance industries, especially in respect of ‘soft integration’, such as non-equity strategic alliances or cross-selling agreements.