BANCASSURANCE By Jean Louis PIQUET April 14th, 2005 hannover life re ®
BANCASSURANCE By Jean Louis PIQUET April 14th, 2005 hannover life re ®
Dec 27, 2015
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BANCASSURANCE
By Jean Louis PIQUET
April 14th, 2005
hannover life re ®
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
2
IntroductionBANCASSURANCE
Started in the 70's
Take off in the 80's, with the development of unit linked product and saving products
Introduction
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
IntroductionBANCASSURANCE
BANCASSURANCE MARKET SHARE (Life Insurance)
1993 1996 1999 2002 2003 (Forecast)
Collected
Bancassurance
Traditional Insurance Company
51 %
49 %
59 %
41 %
60 %
40 %
61 %
39 %
62 %
38 %
Reserves
Bancassurance
Traditional Insurance Company
44 %
56 %
53 %
47 %
57 %
43 %
59 %
41 %
60 %
40 %
Introduction
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
BANCASSURANCE Introduction
TOP TEN INSURANCE GROUP IN 2003
(Premium in Md EUR)
WW France
Life Non Life
Axa 71.6 10.9 4.6
CNP 19.5 17.2 1.4
AGF 16.5 5.3 4.3
GROUPAMA 12.9 3.6 6.9
PREDICA / PACIFICA 11.4 10.7 0.7
GENERALI France 9.6 6.1 3.4
BNP Paribas Assurance 9.3 6.6 0.0
Sogecap 5.9 5.7 0.0
ACM 4.9 3.7 1.2
UAF 4.5 3.9 0.2
Source FFSA
Introduction
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
Introduction
5
BANCASSURANCE
But what is Bancassurance?
• French Term
• Standardized Mass Product
• Easy to understand / easy to sell
• Limited guarantee
• Sold though a bank distribution channel
Introduction
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
6
ProductsBANCASSURANCE
What kind of products ?
- Mainly life products that can be broken down in 3 categories
. Financial and repayment products
. Depositors products
. Simple standardized package products
Products
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
7
BANCASSURANCE Products
Personal accident
Credit Insurance
Mortgages / Mortgage Endowments
Estate management
Group pension plan / asset management
Products
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
8
BANCASSURANCE Products, Training and Profit
Products
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
9
BANCASSURANCE
How to sell ?
Bank network (branches, local office),
Direct and mail,
ATMS,
Telebanking,
World wide web.
How to sell ?
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
10
Why ?BANCASSURANCE
Bancassurance : why?
- Diversification of banking activities
- Improvement of customer loyalty
- Convergences of bank and insurance activities
- Complementarity in economical cycles
- Complementarity of the risks
- To put on end to the market share's decrease on the saving products
- A new source of profit
- One contact bringing financial and insurance solutions
Why entering into ?
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
11
BANCASSURANCE Why ?
Client Child Education
Property InsuranceCredit Life Insurance
Save for retirement
Buy a car
Buy a house
Credit Life Insurance
Unit Linked Product
Life Insurance
Motor Insurance
Why entering into ?
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
12
Why ?BANCASSURANCE
For a Bank
• Intense competition :
- Increase income generated - Reduction of the Bank fixed cost - Opportunity to increase productivity - Risk diversification
• Customers preference - Shifting investment towards products with higher ROI - Favourable tax
• Increase customer loyalty - Detecting the need - Detecting cultural / social change - Cross selling potential - Client oriented
Why entering into ?
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
13
BANCASSURANCE Advantages ?
For Bank Better hit ratio Lower cost Better processing technology Higher knowledge of potential needs.Advantages
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
14
BANCASSURANCE
For an Insurance Company
• Source of new business
- Access to new client easily - Geographic / Demographic new scope
• Wider range of products
• Products otherwise not feasible
• Administration : Economy of scale
• Defensive positioning
Why ?
Why entering into ?
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
15
BANCASSURANCE Advantages ?
For Insurers
Know customer -> risk assessments easier Increase market penetration Access to different market segment Improve public image Lower cost Product that match the need (peace of mind) Delivery at doorstep Convenience in payment Easy & automatic renewal
Advantages
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
16
European overviewBANCASSURANCE
France :
- 60 % of the market share- 35 % of the market share (Term Life Insurance )- 7 % of the market (Non Life Insurance)- 69 % of the market (New Individual Saving)- Bank establishing Bancassurance Company
Spain :
- 65 % of the market (Life Insurance)- A 30 % growth in average since the 15 past years- Alliance between Bank and Insurance Companies- A regional specifity which quicken the Bancassurance set up (Regional Saving Bank = 50 % of the premium)
European overview
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
17
European overviewBANCASSURANCE
Portugal : - 82 % of the market share- But a rather small market (= population 4 Mios)
Italy :
- Amato Law 1990- From 8 % market share in 1992 to 50 % in 2002- 70 % market share for saving product ("unit linked" or "index linked")
Belgium :
- The first Insurance Groups are Bancassurer
- First distribution network
- 56 % market share
European overview
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
18
European overviewBANCASSURANCE
UK : - From 40 % Broker's market share in 1992 to 54 % in 1999- From 15 % Bancassureur's market share in 1990 to 9 % in 2003
Germany : - Direct sale forces : 85 % in 1992 – 54 % in 1999- Broker : 8 % in 1992 – 20 % in 1999- Bancassurance : 1 % in 1992 – 18 % in 1999- Growth of markets shares of Bancassurance due to agreement between
Bank and Insurers.European overview
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
19
Distribution agreement (exclusive or not)
A Bank wholly or partially acquires a Company
The Bank start establishing a Insurance Company
The way to achieve BABANCASSURANCE
The way to BA
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
20
Distribution agreement (exclusive or not)
• Strength : - No cost for the bank- Product can be branded or co –
branded
- Basic training for bank employee
• Weakness : - Need a close cooperation between Insurance Company / Bank
- No gain for Database access (or nearly nil)
- Insurance products must match the need
- Low reactivity to cultural and social change.
The way to achieve BABANCASSURANCE
The way to BA
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
21
The way to achieve BABANCASSURANCE
A Bank wholly or partially acquires a Company
• Strength : - Easier access to Database- Dedicated products
- Better cooperation between Insurance Company and Bank
• Weakness : - Higher cost for the bank- Higher reactivity to the change
- Bank employees need a training
The way to BA
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
22
The way to achieve BABANCASSURANCE
The Bank start establishing a Insurance Company
• Strength : - Dedicated products
- higher efficiency in detecting the needs and customers habits
- Very close cooperation between Insurance Company and Bank
• Weakness : - Need staff training- High capital cost
- Need to acquire Insurance skill
The way to BA
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
23
BANCASSURANCE The way to achieve BA
Distribution agreement : • OIB & MIC
• NBK & ALICO
• BBK & BKIC
Merge and Acquisition :• ING (Netherland) – National Nederlanden & NMB
Postbank
• Arope Insurance (Blom Bank)
• Dubai Islamic Bank & Aman Bank
• Citigroup / Travelers Life & Annuity
Establishing a new company :• Bancassurance Lebanon (CA / Fransabank / Libano
Française)
• Sogecap / NSGB Life (Société Générale) in Egypt
• Assurance Biat (Natexis) in Tunisia
The way to BA
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
24
BANCASSURANCE Key of success
External Factors
Legal & Fiscal Environment i.e. Amato Law in Italy (+)i.e. Glass Steagal Act in U.S. (-)
Low rate of Insurance penetration
Key of success
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
25
BANCASSURANCE Key of success
Internal Factors
Organisation / IT System integration
Remuneration / Training
Public image
Products sold
Key of success
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
26
BANCASSURANCE Potential Risks
Potential risks
Lack of sufficient experience
Complexity of the structure making supervisory oversight more difficult
Difference of culture between Bank and Insurance
Inadequate capital allocation
An aggregate risk exposure rather than acting as a hedge
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
27
BANCASSURANCE The Future
Shop Insurance :
- Carrefour- Auchan
Insurance Bankers :
- AGF (Banque AGF)- AXA (Banque Directe -> AXA Banque)- Prudential (Egg)
The Future
hannover life re ®
Introduction
The way to BA
Key of success
Potential risks
Products
The Future
How to sell ?
European overview
Why entering into ?
Advantages
28
Thanks for your attention!
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