PPT BANCASSURANCE

BANCASSURANCEBANCASSURANCE

GROUP MEMBERS:GROUP MEMBERS:ATIYAH MUHAMAD 122105ATIYAH MUHAMAD 122105ACHIP A/P NE YUM ACHIP A/P NE YUM 122759122759NORAINI MOHD JUNUS 123902NORAINI MOHD JUNUS 123902FARAH IRYANTI ISHAK 123083FARAH IRYANTI ISHAK 123083NORHAIDAWATI ABD MAJID 122094NORHAIDAWATI ABD MAJID 122094

INTRODUCTIONINTRODUCTIONBancassurance, is a popular Bancassurance, is a popular buzzword in the financial world buzzword in the financial world today, has been one of the most today, has been one of the most significant developments in the significant developments in the global financial services global financial services sector over the past decade.sector over the past decade.

DEFINITIONSDEFINITIONSWhat is bancassurance? What is bancassurance? –There are many possible There are many possible definitions available due to definitions available due to the diversity of strategies.the diversity of strategies.

DEFINITIONS (cont.)DEFINITIONS (cont.)Bancassurance is commonly Bancassurance is commonly defined as a strategy adopted defined as a strategy adopted by banks and insurance by banks and insurance companies which aim to co-companies which aim to co-operate in an integrated manner operate in an integrated manner within the financial services within the financial services market. market.

ISSUE:ISSUE:

ARE BANCASSURANCES BEING A ARE BANCASSURANCES BEING A MAJOR ROLE IN INCREASING MAJOR ROLE IN INCREASING

INSURANCES’ PROFITIBILITY?INSURANCES’ PROFITIBILITY?

BANCASSURANCE AS A BANCASSURANCE AS A DISTRIBUTIONAL CHANNELDISTRIBUTIONAL CHANNEL

The highly successful penetration of bancassurance by domestic insurers has evolved a more diversified distribution system.

Internal capacities of insurers have also been strengthened with greater investments made, notably in technology, to enhance productive capacity, encourage innovation, increase efficiency and improve service levels.

Policies and Measures toPolicies and Measures toStrengthen the Insurance Strengthen the Insurance IndustryIndustryStrengthening Financial ResilienceStrengthening Financial ResilienceEnhanced Corporate Governance Enhanced Corporate Governance StandardsStandardsStrengthening Avenues for Consumer Strengthening Avenues for Consumer RedressRedressPromoting Growth of BancassurancePromoting Growth of BancassuranceConsumer Education ProgrammeEnhancing Competition in Reinsurance

DEVELOPMENT OF BANCASSURANCE IN MALAYSIA

Key Trends and DriversThe first bancassurance arrangement in Malaysia was approved by Bank Negara Malaysia (the Bank) in late 1993.In 1994, premiums generated through bancassurance represented less than 2% of new premiums in the life sector.

BANCASSURANCE OPPORTUNITIESBANCASSURANCE OPPORTUNITIES

CONSUMERSCONSUMERSpersonal visits to bank branches are still common (averaging at more than two visits per month) among Malaysians, this give banks an opportunity to promote insurances product to their existing customers.the high level of confidence and trust generally placed by the public in banks make them particularly well-positioned to attract consumers to purchase life products from their distribution outlets.

PRODUCTSPRODUCTSBancassurance products in Malaysia:-

credit-related products– ex: consumer credit insurance products

purchased by borrowers in connection with mortgages, vehicle loans and overdraft facilities provided by banks.

non-credit related products– ex : primarily of education, traditional whole life and medical insurance policies,

CHART 1: DISTRIBUTION OF LIFE CHART 1: DISTRIBUTION OF LIFE PRODUCTS PRODUCTS

THROUGH BANCASSURANCE THROUGH BANCASSURANCE

Table 1 : Insurance Using Table 1 : Insurance Using Bancassurance As Distribution Bancassurance As Distribution

ChannelChannel INSURERS INSURERS

ProductProduct -Prestige Life-Prestige Life-Complete Woman-Complete Woman-Smart Kidz-Smart Kidz-Personal Accident-Personal Accident-Healthcare-Healthcare-Drive Care Plus-Drive Care Plus-Travel Insurance-Travel Insurance

- Personal customer- Personal customer - life insurance- life insurance - child’s - child’s educationaleducational - critical illness- critical illness- Business customer- Business customer

Marine Cargo InsuranceMarine Cargo Insurance

Table 1: Insurance Table 1: Insurance UsingBancassurance UsingBancassurance As As

Distribution Channel (cont.)Distribution Channel (cont.)StrategyStrategy Penetrate market by Penetrate market by

using Hong Leong Bank using Hong Leong Bank as bancassurance as bancassurance distribution channeldistribution channel

Joint venture with Joint venture with HSBCHSBC

ProfitProfit An increasing profit by An increasing profit by 35.4% in year 2004 35.4% in year 2004 compare with year 2003compare with year 2003

A minor increase at A minor increase at profit by only profit by only 4.25%4.25%

Media for Media for promotionpromotion

Via insurer’s web site, Via insurer’s web site, as well as Hong Leong as well as Hong Leong Bank web site as Bank web site as distribution channeldistribution channel

Manulife have their Manulife have their own web site for own web site for the promotion also the promotion also as promotion via as promotion via HSBC website, HSBC HSBC website, HSBC also have an also have an executives to executives to coordinates coordinates consumer through consumer through hotlinehotline

PROFITABILITYPROFITABILITYAt end of 2004, bancassurance has evolved into a primary distribution channel for life insurance, capturing 48% of new life premiums written in the industry.Comparing from the previous years it shows a very big difference in increasing for life insurance with conjunction of bancassurance.

CHART 2 : BANCASSURANCECHART 2 : BANCASSURANCE PENETRATIONPENETRATION

EXPANSION OF INSURANCE EXPANSION OF INSURANCE INDUSTRY THROUGH INDUSTRY THROUGH BANCASSURANCEBANCASSURANCE

An increasing percentage of An increasing percentage of bancassurance as distribution bancassurance as distribution channel have also increase the channel have also increase the profit for insurers.profit for insurers.This occur as bank productively use This occur as bank productively use their extensive customer database.their extensive customer database.Bancassurance as distribution Bancassurance as distribution channel certainly has decreased the channel certainly has decreased the distribution costs for insurers.distribution costs for insurers.

CHART 3 : NEW LIFE BUSINESS PREMIUMS BY

DISTRIBUTION CHANNELS

BANCASSURANCE AS BANCASSURANCE AS DISTRIBUTION CHANNELDISTRIBUTION CHANNEL

ADVANTAGES :ADVANTAGES :

shares customer database with banksshares customer database with banks banks as a trustworthy organization banks as a trustworthy organization will will

attract more customersattract more customers decreased distribution costdecreased distribution cost products that had previously not products that had previously not been been

feasible are now made possible feasible are now made possible through through

this channel this channel mainly, increase insurers profit mainly, increase insurers profit earningearning

Disadvantages :Disadvantages : required to follow a regulation that required to follow a regulation that sets by sets by

BNM.BNM. insurance industry going to be very insurance industry going to be very

competitive this cause as a result of competitive this cause as a result of more more

options for the customeroptions for the customer lack of knowledge regarding insurance lack of knowledge regarding insurance

from bank’s stafffrom bank’s staff reducing in numbers of insurances reducing in numbers of insurances agentsagents

BANCASSURANCE AS BANCASSURANCE AS DISTRIBUTION CHANNELDISTRIBUTION CHANNEL

RECOMMENDATIONRECOMMENDATIONStaff of banks involved in marketing Staff of banks involved in marketing of insurance products should fulfill of insurance products should fulfill themselves same knowledge required themselves same knowledge required as insurance agents.as insurance agents.

Banks should improve their Banks should improve their information systems to support their information systems to support their increasing database of customersincreasing database of customers

As customers become more critical As customers become more critical towards the service, banks should be towards the service, banks should be more customers orientedmore customers oriented

CONCLUSIONSCONCLUSIONSBancassurance does become a Bancassurance does become a role in increasing profit to role in increasing profit to insurance industry.insurance industry.The current status of The current status of bansassurance is a primary bansassurance is a primary distribution channel for distribution channel for insurance products.insurance products.