Bancassurance in the new trend

14-May-2016 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

Being considered as one of the key distribution channels, bancassurance is counting of 30-60 percent of the profits of the life insurers in some Asian markets such as Thailand, Indonesia, China, Singapore and Hong Kong.

Revenues from bancassurance in such markets has recorded breaking increase over the last decade. In the market which bancassurance is known as one of the key distribution channels, this channel has contributed 20 percent of the turnover of the banks.

In comparison with the total life insurance revenues, that of bancassurance in Vietnam is really at low rate. In 2015, bancassurance turnover only amounted about 5 percent of the total revenues of the life insurers.

Though revenues from bancassurance in Vietnam market is still modest, this not-be-really-new channel is supposed to be the one able to generate surprising growth for life insurers, in which more and more players has engaged.

“It took about ten years for individual agency channel to build up current position. Bancassurance is on the first steps, but there are lots of supportive elements”, said an insurer leader.

Certainly, it is not easy to develop bancassurance as rapidly as the said markets, due to many obstacles to the booming of this channel, such as the popularity of by-cash transaction tradition, and the banks being in the restructuring process…

Bancassurance in Vietnam is still considered as a sub channel, but for some insurers, e.g. Prudential, AIA Vietnam, generali Vietnam, Manulife, it has become an important channel with significant contribution to their business in relation to both turnover and business efficiency.

Manulife Vietnam is focusing on simplifying sale process, provide skills and specialism training for staffs, applying the customer demand-based sale tool instead of selling what they have.

Bancassurance is said to be one of the strategy of Manulife, not only in Vietnam but in Asia.

In April 2015, Manulife was adopted as the DBS Bank’s strategic exclusive partner in four large markets, namely Singapore, Hong King, Indonesia and China. In September 2015, Manulife also completed the deal with Standard Chartered Bank to become the exclusive provider of the compulsory saving fund in Hong Kong. Both are the long – term partnerships for 15 years.

Looking forward the future of this distribution channel, an insurance expert shared that a prominent consultancy firm has just forecasted that bancassurance would not be able to develop in Vietnam in a short time. Still, now we can see a very different picture: bancassurance has become one of the critical channels.

“As the banking sector is still underdeveloped in Vietnam, bancassurance has emerged in the end of last decade. From its appreance, bancassurance has marked quite slow but stable steps and now became the 2nd important channel of the insurer, following the individual agent one”, said by the above expert.

With the decreasing profits generated from interest, several banks has been aware that bancassurance is a solution to turnover resource supplementation. Long-term corporation also means a long-term partnership being win-win for both banks and insurers.

Thereby, the insurers are able to access the loyalty customers of the banks, using the wide banking network to promote sale and grasp market share in the context of competition getting more and more drastic. On the other hand, this strategy can help the banks’ growth, inspire new retail ideas and boost the banks’ growth targets.

This has forced some banks to open to different life insurer partners; meanwhile the other adopted the exclusive mode. The success of the partnership during the past time is expected to encourage the banks to make decision on taking part in exclusive alliance in this 2016.

As said by circle experts, one thing more important is the more and more active intervention by the Ministry of Finance in the development and widening of the distribution channel in Vietnam. This is one of the remarkable basic for bancassurance on its roadmap to become a key alternative channel for life insurance products.

 

Category: Finance

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