Formulating Policy for Bancassurance Activities Using Evidence from the U.S. Financial Market

In this research we evaluate the relationship between bancassurance activities and the profitability of banks in the U.S. Using data for the period 1996–2014, we explore different bancassurance schemes—i.e., types of convergence between banks and insurance entities—and test whether and how the integration with insurance underwriters (“underwriters”) or insurance brokers (“brokers”) affects the profitability of U.S. banks. We find that mergers with some specific types of insurance organizations may yield enhanced benefits. Specifically, our core results indicate that the most profitable types of integration have been those between banks and multiline insurers. While our findings pertain to the U.S. experience in this area, our results may be of interest to regulators in other countries where bancassurance activities have been restricted to certain forms, e.g., as currently enforced in Egypt.