New Financial Services market report from Timetric: "2020 Foresight: Bancassurance"

Boston, MA -- (SBWire) -- 05/17/2013 --In the consolidating world of financial services, the concept of bancassurance has taken a central role in the strategy of a growing number of financial institutions. Insurance products distributed through the banking channel have become a natural choice for mass-market clients looking for simple and low-cost products available from a trusted financial institution. Globally, bancassurance has emerged as an important insurance distribution channel that has not only allowed insurance companies to expand their geographical presence but also enabled banks to expand their overall product portfolio. The value of commissions earned through bancassurance is expected to grow globally. The key markets with high growth prospects include India, Singapore, Turkey, China and Chile. In Asia-Pacific, growth will be fostered by the entry of large foreign insurance players and a favorable macro-economic environment. In Turkey, the business is expected to grow owing to the growing demand for pension products in the country.

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Key Highlights

- Bancassurance - the sale of retail insurance products to a commercial bank's client base - has evolved different models since its origins in the European Union (EU) in the mid-1980s. The different models drive profitability, product design and operational challenges. The classic European model is an integrated one, with common ownership or some form of exclusive commitment between the insurance provider and bank distributor.
- In the US, despite early indications that bancassurance might achieve market penetration levels in life insurance comparable to the one-third share it has in Europe, banks have struggled to achieve a market share of 2% and essentially offer a range of third-party insurance products to provide choice to their clients. In contrast, in the booming markets of Asia-Pacific and Latin America, the market shares of the bank channel are rapidly approaching European levels.
- The recent financial crisis of 2007-9 has had a traumatic impact on global bancassurance. Sales of life and other long-term investment products have collapsed as banks prioritize deposits to replenish their liquidity, and clients flee the equity market in favor of liquidity and cash. Lower sales of non-life products reflect reduced volumes of consumer loans as clients deleverage.
- Bancassurance business drivers differ between geographical regions. The key business drivers in the Americas are high levels of bank penetration, the presence of large foreign players, the brand equity of banks, savings in the economy, financial deregulation, tax advantages and domestic credit availability. In Europe, bancassurance is driven by the growth of relationship banking, a favorable tax structure, a general decline in interest rates and the reduction in social security expenditure undertaken by governments.

Scope

Companies Mentioned in this Report: Mapfre, Wells Fargo, Credit Agricole, ING Group, BBVA Seguros SA de Seguros y Reaseguros, HSBC, Samsung Life Insurance Company, China Life Insurance Company

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