Celent Says

Bancassurance Taking Off as Distribution Channel

Prathima Rajan
Insurance Experts' Forum, October 25, 2010

While my earlier article discussed how the bancassurance channel is shaping up in various regions in Asia Pacific, this write-up sheds some light in terms of market share and growth of bancassurance in its various regions. This channel is definitely picking up in most of the Asia Pacific region, but is still behind the dominent agent channel.

In Mainland China, bancassurance accounted for 27% market share of total insurance sales, while the agent channel dominated the market (37% market share) in 2009. The insurance market in China is undergoing structural changes within the market, which is expected to boost the premium income of insurers via banking channel.

In Hong Kong, banks have become an important distribution channel for life, health and mandatory provident funds, supplying up to 40% of the market’s new business. HSBC and Hang Seng Bank together held 40% of the Mandatory Provident Fund (MPF) market.

In Taiwan, the concept of “one stop shop” has become a common philosophy for banks. Premium income for individual life insurance new business from bancassurance accounted for 68% in 2009. Banks contributed 88% to new individual annuities, 66% to new investment-linked businesses and 51% to new life insurance businesses. The P&C market is dominated by agents and brokers (67% of the market share). Additionally, the personal accident/health insurance market is mostly under taken by insurance companies themselves, thus accounting for 91% of this line of business.

In Singapore, insurance agents make up the main sales channel for life insurance. The market share, however, has declined from 66% in 2004 to 61% in 2009. Bancassurance accounted for 22% of the total weighted new business premium income.

Bancassurance market share in Malaysia has grown from 45% in 2005 to 51% in 2008. The agency network had traditionally been the main distribution method, but gradually has lost some ground to bancassurance. Agency network accounted for 47% market share in 2004, which dropped to 44% in 2008. Domestic insurers account for over 80% of the bancassurance market.

In South Korea, solicitors and internal employees make up the main sales channel for the life insurance industry. In 2008, the bank channel grew to 37%, next only to solicitors and internal employees of the insurance companies with 54%.

The Indian life insurance market is dominated by tied agents, more so with the state-owned Life Insurance Corporation of India (LIC). Over 75% of new business premium is generated by individual agents. However, individual agents in private companies account for less than 50% of total sales, while more than 40% is attributed to the bank and direct selling channel. Banks and brokerage firms have 30% and 20%, respectively, of the P&C insurance market.

Markets such as Thailand, Malaysia and China have better acceptance of the bancassurance channel as opposed to India and Singapore, as brokers and agents are still major insurance carriers in these region. It is also noteworthy that all developing and accelerating markets are evidencing high potential for growth in bancassurance.

This blog has been reprinted with permission from Celent. Prathima Rajan is an analyst based in Celent's India office.

Readers are encouraged to respond to Prathima using the “Add Your Comments” box below. She also can be reached at prajan@celent.com.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

With Google Favoring Mobile, Will The Industry Take it Seriously?

Google’s search engine will now will favor mobile friendly content over traditional website content; within the insurance industry, the greatest initial impact is likely to be felt by insurance distributors.

Why Some Technologists Get Cold Feet on Mobile

There are those who believe that favoring one channel or mode over another will lead to even more silos and dysfunction than we already have in many organizations.

Insurance IT Spending and Budgeting Benchmarks

New research from Novarica highlights areas of concern and offers insights on insurers spending and budgeting decisions.

Enterprise Mobilemania Continues Unabated

More than half of companies are spending more on developing mobile applications -- but are they more efficient?

Why Insurers Need More Than a Policy Admin System

For some insurers, not being able to handle the volume of quotes that are being submitted to them means leaving significant money on the table.

The Pitfalls of Using Assembly Line Methods to Create Software

Most of the time, when the business needs IT, it is for custom software development, just like creating a concept car.