Job In Bancassurance - Creating Value In Bancassurance

Job In Bancassurance

Bancassurance has grown from almost zero in the year 2000 to a range of 30-50 percent share in most Asian markets. However, insurance companies have found it increasingly hard to generate value in this channel that is proportionate to the top line. Banks have been able to negotiate very competitive commissions across Asia, and products are mostly very simple, single-premium, investment products that offer little differentiation in the market beyond price. Life insurers and banks often have arm's length relationships where the life company is barely more than a capacity provider.

Banks have mostly focused on converting their customers' deposits into simple savings products that have a more attractive interest rate - and hence, the product has generated strong customer demand. In this scenario it is very difficult for the life company to add a lot of value to what the banks are doing; since the banks are adding all the value, the low share of the profits to the insurer is probably justified. But, as we described, we believe that in most Asian markets, banks will soon have collected the low-hanging fruit and growth in these types of products will max out - if they don't change their model.