COOPERATION OF BANKS AND INSURANCE COMPANIES

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COOPERATION OF BANKS AND INSURANCE COMPANIES

• Romeo JANTEA

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Bancassurance

• what bancassurance really is
• what are the benefits and challenges
• what insurance products are appropriate
• what models of cooperation are possible
• what are the key success factors
• what goes on in different countries

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What Is Bancassurance?

• Bancassurance selling insurance through bank
  branches. Simple!
• More
• Change sales management with sales support
• Simplify product structure
• Support by back and front office functions
• Package combine with bank products
• Motivate by more than commission

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Benefits for Partners
BANK
INSURER

• Access to large customer group
• Lower cancellations
• Lower distribution costs
• Economy of scale (standardized products)

• Diversification of solutions for customers
• Cross-selling
• Customer loyalty / retention
• Fee income

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Challenges for Partners
BANK
INSURER

• Product development
• Different sales support
• No direct management of sales staff
• Claims management

• Risk covering new concept for bank
• Different sales argumentation
• Integration of insurance products in motivation
  schemes
• Impact of bundled products on IT

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Bancassurance Insurance Products

• One key word simplification
• Bank staff will never be insurance agents !
• Easy to explain and sell
• Complementary to a bank product OR offer what
  bank products can not risk coverage
• Simple better profit possibilities than bank
  products
• Single payment

MAIN REQUIREMENTS FOR PRODUCTS
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Bancassurance Insurance Products

• RISK
• Credit risk with loans / mortgages
• Term life, Critical Illness, Disability, Accident
• SINGLE PREMIUM
• Unit Linked with fixed duration simple options,
  Annuities
• CLASSIC LIFE
• Regular premium endowment, Whole life
• NON LIFE
• Travel, Property, Personal liability, Auto

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Cooperation Models
PARTNERSHIP
STRATEGIC ALLIANCE

• Products from more insurers in the bank network
• Very low level of integration
• Insurers focus is not the bank

• Products only from one insurer
• Product development for the bank
• Minimum integration steps

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Cooperation Models
VERTICAL INTEGRATION
JOINT VENTURE

• Ownership
• Dedicated product development by insurer
• Full focus on bank
• Integrated strategies and systems

• JV between insurer and bank
• Common distribution of insurances and bank
  products
• Distribution integration only

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Sales Support Levels
SALES ON LOCATION
PRODUCT DELIVERY

• Insurers employees sell to clients in bank
  branches
• Commission split
• Bank provides access to branch clients

• Insurer provides products
• Bank provides
• Training
• Sales support
• Sales activities
• Motivation

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Sales Support Levels
SELLING SUPPORT
ADVISORY SUPPORT

• Insurer provides
• Product
• Training
• Insurer employees support for branch
• Bank provides
• - Sales Activities
• - Motivation

• Insurer provides
• Product
• Training
• Marketing
• Sales support
• Bank Advisors
• Bank provides
• - Sales Activities
• - Motivation

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Key Success Factors
SPECIALISTS OPINION
OVER 80
Distribution factor network coverage Human
factor sales management Brand factor strength
of the brand
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Key Success Factors
SPECIALISTS OPINION
OVER 70
Customer factor focus on customer service /
satisfaction Customer factor single view of the
customer Process factor use of CRM techniques /
tools Product factor complementarity / logical
fit
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Key Success Factors
SPECIALISTS OPINION
OVER 60
Process factor integration of bank and
insurer Process factor providing advice /
solutions, not selling products
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Bancassurance in Europe
Weight of bancassurance in life insurance sales
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Bancassurance in Europe

• U K visiting bank branches is discouraged
• Spain, France, Belgium, Italy customers visit
  bank branches regularly (every 2 weeks)
• Spain highest density of bank branches in
  Europe, 1 bank branch / 1000 inhabitants
• Spain, France, Belgium, Italy strong brands and
  reputation of banks, direct customer contact
  highly appreciated

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Bancassurance in Europe

• Product adaptation Fortis (Belgium) reduced
  number of options for car insurance from 1000
  to 28
• Result Simplicity, Lower UW and admin costs,
  Easier understanding for bank staff
• Insurer must adapt to the bank culture.
• Bank and insurer must have a common vision on
  business strategy and objectives.

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Thank You!