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

Smarter Tablet Use Could Transform Insurance

By reducing administrative tasks and automating paperwork, tablets can increase agentsí selling time and help them respond to customers in seconds, not hours.

Insurance Wake-Up Call: Embrace the Shared Economy Opportunities

SMA believes that insurers must embrace a "shared economy," crowdsourcing and open innovation to get ahead in the new marketplace.

Silicon Valley Ventures

A trip to area hotbed of technological innovation calls into question the potential viability of insurers' legacy systems, operations and processes.

The Lion and the Mouse: Start-ups Pitch to Top Insurer

Insurers should be on the lookout for innovative partnership arrangements that produce unique and valuable solutions.

Open Source Continues its March into the Enterprise

Insurers have a range of open-source options for running their businesses.

Sometimes The Best Way to Speed Up is to Slow Down

Insurers across all lines of business increasingly recognize that their core systems are not able to properly position them to deal with imminent competitive threats.