For the first time since its birth in the expansive 1990s, the value and probity of the banking/insurance hybrid known as bancassurance is coming in for some serious evaluation.

It’s seen as good for the companies providing the range of services that bancassurance offers, but not necessarily for the customer.

Bancassurance allows major banks to use their existing customer relationships as a new source of revenue by selling other financial products, like life and general insurance. And it comes free of the cost of intermediaries because the bank already owns the customers.

The major catalyst for a second look at the real value to consumers of bancassurance is coming from the forced sale of the insurance arms of Dutch financial services group ING and the Royal Bank of Scotland.

In Australia the major banks continue to develop bancassurance lines, and have built significant insurance and funds management arms of their own.

But the sale last week by Suncorp of its funds management arm Tyndall calls into question a company’s ability to concentrate on several disparate businesses at once when the competition is rather tougher than it is in banking.

The risks of minor parts of the corporation doing something stupid that endangers the viability of the whole business have been amply demonstrated in recent years by local bankers and (foreign) insurers alike.

While Suncorp continues to operate a bank, its increasing national insurance footprint and its concentration on competing for dominance in that market must make the bank’s long-term inclusion in the group questionable.

And admittedly ING and RBS are selling off their insurance operations only because they have to. Both companies have had to negotiate bailouts from the European Commission as a result of the global financial crisis, and are being restructured – as banks.

Banks control 35% of the premium in the European life insurance market – 65% in Spain, 60% in France and 50% in Belgium and Italy.

In the UK, RBS is the second-largest general insurance provider.

Bancassurance has been slower to develop in the US, where the Glass-Steagall Act of 1933 – which was repealed in 1999 – banned the mixing of banking and insurance.

It has also been slow to develop in Asia, where markets like Japan and South Korea kept the two arms separate until comparatively recently. But bancassurance is developing in China and India.

In China, Axa through its joint venture with Minmetals agreed to the Industrial and Commercial Bank of China becoming a strategic partner.

This will enable the French insurer to distribute insurance products to the bank’s 200 million customers through 16,000 branches.

Axa Asia Pacific Holdings would have been part of this deal, but under the AMP takeover agreement, its stake will be sold to the French parent.

It’s significant, then, that two of Europe’s largest banks are emerging from near-death experiences with their managements saying they are returning their focus to the thing their customers value most about them – banking.

It’s a message that resonates with consumers who fear the increasing power of banks.

That alone won’t change a thing. But what could affect the future course of bancassurance is the financial regulators, whose role following the global financial crisis is evolving from pure supervision to actually defining the shape of financial markets.

The near-collapse of AIG and some of the big European bancassurers – all playing in areas they shouldn’t have and all too big to be allowed to fall over – gives pause for thought. Is bancassurance in fact assisting the development of giants which dominate the financial services landscape and have too much power and influence?