Bancassurance Industry Analyzed in New Research Report by Timetric

29 Mar 2013 • by Natalie Aster

In the consolidating world of financial services, the concept of bancassurance has taken a central role in the strategy of a growing number of financial institutions. Insurance products distributed through the banking channel have become a natural choice for mass-market clients looking for simple and low-cost products available from a trusted financial institution. Globally, bancassurance has emerged as an important insuranie distribution channel that has not only allowed insurance companies to expand their geographical presence but also enabled banks to expand their overall product portfolio.

Bancassurance models differ between markets and are still evolving

Bancassurance – the sale of retail insurance products to a commercial bank’s client base – has evolved different models since its origins in the European Union (EU) in the mid-1980s. The different models determine profitability, product design and operational challenges. The classic European model is an integrated one, with common ownership or some form of exclusive commitment between the insurance provider and bank distributor. In the US, the model involves almost total separation between the two, while in many emerging markets in Asia-Pacific, where foreign insurers compete for shelf space on the limited number of domestic bank distribution platforms, a third structure is evolving.

Bancassurance growth differs significantly between geographical regions

New report "2020 Foresight: Bancassurance" by Timetric states that in the US, despite early indications that bancassurance might achieve market penetration levels in life insurance comparable to the one-third share it has in Europe, US banks have struggled to achieve a market share of 2% and essentially offer a range of third-party insurance products to provide choice to their clients. In contrast, in the booming markets of Asia-Pacific and Latin America, the market shares of the bancassurance channel are rapidly approaching European levels. In Latin America, the demand for pension products and simple savings oriented life insurance products are the main drivers, whereas in Asia-Pacific, growth is fostered by life insurance, protection, endowment, health and pension products.

Report Details:

2020 Foresight: Bancassurance
Published: March, 2013
Pages: 95
Price: US$ 3,495.00

Financial crisis creates disparate impact on bancassurers

The recent financial crisis of 2007-9 has had a traumatic impact on global bancassurance. Sales of life and other long-term investment products have collapsed as banks prioritize deposits to replenish their liquidity, and clients flee the equity market in favor of liquidity and cash. Lower sales of non-life products reflect reduced volumes of consumer loans as clients deleverage. Besides this, the long-term durability of bancassurance links has also been affected. While the overall durability of joint ventures and ownership links has historically been quite positive, the crisis has not only seriously damaged leading bancassurance competitors such as Fortis, KBC and ING, who have been forced to retrench by massive asset losses, but has also driven many to divest themselves of banking or insurance affiliates because of a need for capital in the downturn. The recent EU decision to order the divestiture of ING’s insurance businesses is a good example of this.

More information can be found in the report “2020 Foresight: Bancassurance” by Timetric.

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