Bancassurance: Does it influence efficiency on banking sector?

Abstract

The study was conducted to evaluate the impact of bancassurance on the efficiency of banks in Tanzania, focusing on customer satisfaction levels, and bancassurance penetration. Data collection method involved questionnaires, annual financial reports from major Tanzanian banks offering bancassurance services and regulatory publications from Tanzania Insurance Regulatory Authority (TIRA) and Bank of Tanzania (BOT).  The results indicated that high customer satisfaction positively influences bank efficiency by boosting revenue and customer retention also bancassurance penetration enhances bank efficiency through economies of scale and better resource utilization. Main limitations of the study were the disclosure and availability of bancassurance data from the banks involved in this activity, mostly did not provide the data or provided data which could not affect analysis. Policy implications include encouraging banks to adopt best practices in customer service and operational management to maximize the benefits of bancassurance. The study highlights the importance of a supportive regulatory framework that fosters bank-insurance collaborations, promoting financial inclusion and stability. Furthermore, enhanced customer satisfaction is also essential, as satisfied customers contribute to long-term cost efficiency. Banks are encouraged to streamline claims processes, improve digital services, and provide robust customer service to strengthen client loyalty and profitability.

Keywords: Bancassurance, Bancassurance Penetration, Customer Satisfaction, Efficiency