One of major structural changes in modern banking is the convergence process of the banking and insurance sectors. The process results in establishment of banking and insurance groups, called also bankassurance. At present the term bankassurance refers to a stable merge of a banking institution with an insurance institution in order to offer banking and insurance products within the framework of existing banking structures. First banking and insurance groups were established in England and France in the 60's. They were commercial banks that started offering simple life insurance products to their customers. In France, banks' share in the insurance sector, largest in Europe, increased from 32% in 1986 to 51% in 1994. The success of banking institutions in the insurance sector encouraged the former to expand their insurance activity with new products. At present, they offer both life insurance and property insurance. The activity of pioneers stimulated other banking institutions to extend their product portfolio with insurance services. Banking and insurance groups may be subdivided into the following four basic models: de novo, mergers, joint-venture companies and alliances.

In Europe banking and insurance groups development has been affected mostly by liberalization of legal acts that enhance cooperation between banking institutions and insurance companies. Given differences in legal regulations binding in individual countries, one may observe different pace of development of banking and insurance groups and different forms of the related process. However, as a consequence of derelugation, traditional barriers separating financial services sectors into three groups - banking, insurance and investment - have been shifted. Apart from liberalization of legal regulations one may also cite other factors affecting to a much extent the process of bancassurance development. They may be broken down by the nature of related factors - exogenous (external) and endogenous (internal). Exogenous factors may be divided into those affecting the establishment of banking and insurance groups directly and those affecting indirectly - through changes in the whole financial system. Direct factors comprise demographic changes, changes in savings options, tax differentials, high growth capability, and low penetration of the insurance sector. Indirect factors include domestic market liberalization, developments in the macroeconomic environment, deregulation, and globalization of financial markets. The effect of synergy accompanying mergers banking and insurance activities is major endogenous factor underlying banks decision to take up insurance activity. Moreover, such mergers result in diversification of income sources which, in turn, reduces risk and stabilizes profit.