Professional Documents
Culture Documents
Mukul Gupta
CFO & Head Bancassurance Bajaj Allianz Life Insurance, India
Victor Hugo
(19th Century French Novelist)
Banks & Insurers across the World have realized Bancassurance is the distribution channel, which would help them achieve economies of scale and boost their revenues in the 21st Century
Agenda
Impact of Bancassurance on Increasing Insurance Penetration and Realizing Growth India Case Global Bancassurance Trends Industry Evolution - India The Bancassurance Opportunity Case Study : BALIC & Standard Chartered Bank Case Study BALIC & Syndicate Bank
The key factors impacting development of Bancassurance across the globe are: Regulatory Environment in the country Banking Habits Is Visiting the Bank natural to customers?
Europe - Bancassurance accounts for the 35% of the sales in the European life insurance market and is the dominant distribution channel in a number of South European countries such as Belgium, France, Italy, Spain and Portugal. US Bancassurance started developing post the crumbling of barriers set by the Glass-Steagaal Act in late 1990s Asia Bancassurance is in its nascent stage in Asian Life Insurance Market but is developing very rapidly due to presence of Brick & Mortar Model of Banking in most of the Asian countries.
Banks dominate Life distribution in Southern Europe, and making progress in Northern Europe
Distribution channels - Life
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
14 %
rt ug al
Ita ly
G er m an y
ai n
nc e
Sp
Fr a
Be l
Agents
N et he rl
Po
an d
gi u
Brokers - IFAs
Success of Bancassurance vary through out Europe due to different regulatory environment in each country
UK
Others
S u K re o th o a
n o e ia I dns
M la ia a ys
o ko g Hn n
S g p re in a o
Ta n h ila d
h a C in
Countries
Due to presence of Brick & Mortar Model of Banking, Bancassurance is increasing its Market Share very rapidly
Jpn aa
n ia Id
Strategic Alliances
A higher degree of integration in product development, service provisions and channel management Possible sharing of customer DB Requires investments in IT and sales personnel
Joint Ventures
Degree of integration
Clear mutual ownership of products and customers Sharing of customer DBs Requires strong and long-term commitments from both sides
Low
Control Resource commitment Ability to satisfy customer needs value added Reward opportunity Management complexity Convergence of interest
High
Insurer
Sales & marketing expertise for insurance products Profit maximization selling insurance products Strong technical expertise Product know-how Financial strength Brand
50%
50%
Insurance
of Partner
Product Offerings
Industry Evolution
Up to 1999
LIC Monopoly No. of Players No Private Players allowed Agency only 800K Agents
2005 onwards
13 Private Players Pvt Insurers gain over 28% share
Confidence in Bancassurance BA takes 20% + share among Private Players Fastest Growing Distribution Channel ULIPs are the most popular products, accounts for 75% of Sales through Private Insurers Bancassurance regulations become clearer Multiple models allowedCA, Referral, Broking
Distribution Focus
Products
Regulatory Environment
p oo C
cy en rr Cu % 10
s g in av lS al Sm
s nk ba
's C F B N 1%
2%
% 14
Results
The Benchmark for the Indian Industry for Bancassurance Bancassurance contributes 20% of total income from Retail Banking operations Avg Productivity per person is over 12-15 policies per month and Avg Ticket Size stands at USD 1,100. Projected GWP of USD 100 mio for FY 05-06 & earnings to Bank to be in range of USD 25-30 mio Regular UnitLinked Products fit in the clients needs of the Bank.
Loan Customers
New Customers
SMEs
15% 12%
1%
72%
Branch Banking
Priority
OBST
SME
Thank You
Annexures
16 1 % 2/3 16 6 % 2/3
16 2/3 %
5
16 2/3 % 3 16 2/3 %
3. Leverage extensive customer base
5. Reduce risk based capital req. for the same level of revenue
Insurer
Develop new financial products more efficiently Combine Cost Saving & Increased Profitability Reduce reliance on traditional distribution channel
European Life bancassurers progressively abandon the intermediary role to gain access to long-term profits (bank-owned model)
Germany: numerous cross share-holdings between banks & insurers make acquisitions or mergers more difficult Italy France: bank-owned units = 56% of total Life & pension premiums vs. 44% for the distribution agreement Netherlands, branch networks
Spain
Asia: mainly distribution agreements & strategic alliances, other models facing regulatory restrictions
S Korea, India, China, Japan
US: mainly distribution agreements & banks acquiring large brokers. Concentration on Life products.
Singapore