Scribd Logo
Upload

Welcome to Scribd!

  • 210 views

    Bancassurance in Pakistan M A Ahmed

    Uploaded by

    Muzammil Hassan
    Bancassurance has significant potential for growth in the life insurance sector in Pakistan over the next three years. While bancassurance agreements first began in the late 1990s and early 2000s, the business has expanded rapidly since 2007. Currently, 16 major banks actively participate in bancassurance relationships with private life insurers. Over the next three years, the bancassurance channel is expected to double its new annual life insurance business from the current Rs. 2.8 billion to an estimated Rs. 5.6 billion. Key factors that will influence this continued growth include the increasing adoption of technology solutions, further regulatory support from the SECP, and the potential entry of State Life into bancassurance agreements

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Bancassurance in Pakistan M A Ahmed

    Uploaded by

    Muzammil Hassan
    210 views39 pages
    Bancassurance has significant potential for growth in the life insurance sector in Pakistan over the next three years. While bancassurance agreements first began in the late 1990s and early 2000s, the business has expanded rapidly since 2007. Currently, 16 major banks actively participate in bancassurance relationships with private life insurers. Over the next three years, the bancassurance channel is expected to double its new annual life insurance business from the current Rs. 2.8 billion to an estimated Rs. 5.6 billion. Key factors that will influence this continued growth include the increasing adoption of technology solutions, further regulatory support from the SECP, and the potential entry of State Life into bancassurance agreements

    Original Description:

    bancassurance

    Original Title

    Bancassurance in Pakistan M A Ahmed.ppt

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Bancassurance has significant potential for growth in the life insurance sector in Pakistan over the next three years. While bancassurance agreements first began in the late 1990s and early 2000s, the business has expanded rapidly since 2007. Currently, 16 major banks actively participate in bancassurance relationships with private life insurers. Over the next three years, the bancassurance channel is expected to double its new annual life insurance business from the current Rs. 2.8 billion to an estimated Rs. 5.6 billion. Key factors that will influence this continued growth include the increasing adoption of technology solutions, further regulatory support from the SECP, and the potential entry of State Life into bancassurance agreements

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    210 views39 pages

    Bancassurance in Pakistan M A Ahmed

    Uploaded by

    Muzammil Hassan
    Bancassurance has significant potential for growth in the life insurance sector in Pakistan over the next three years. While bancassurance agreements first began in the late 1990s and early 2000s, the business has expanded rapidly since 2007. Currently, 16 major banks actively participate in bancassurance relationships with private life insurers. Over the next three years, the bancassurance channel is expected to double its new annual life insurance business from the current Rs. 2.8 billion to an estimated Rs. 5.6 billion. Key factors that will influence this continued growth include the increasing adoption of technology solutions, further regulatory support from the SECP, and the potential entry of State Life into bancassurance agreements

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 39

    BANCASSURANCE IN PAKISTAN

    PROSPECTS FOR LIFE INSURANCE


    Mohammed Ali Ahmed General Manager, EFU Life Assurance Ltd Karachi Insurance Institute 23 February 2011

    Definitions of bancassurance

    Introduction Worldwide experience Evolution and current scenario in Pakistan Products Sales models Technology Challenges SECPs role The next 3 years

    Introduction

    Collaboration between Bank and Insurer to distribute insurers products

    Insurer provider of products and services insurance risk taker Bank distributor

    Level of collaboration can vary from basic level to high level integration

    Benefits to all parties


    Banks Fee based income Low capital high ROE Improved customer service Culture shift Market opportunity Customer expectation Success in markets around the world Insurance Companies New distribution channel A warm customer base Better persistency Higher premiums Profitable Growth Competitive products Success in markets around the world Customers
    Changing attitudes & awareness Want options One stop financial service Trust banks

    Depth of relationship
    Distribution Agreement Playing the field
    This can be likened to the early days of youth when it is normal to have a number of different relationships. Loyalty is pretty low and long term commitment rarely a consideration. Temptation to switch partners for a prettier one

    Strategic Alliance Going steady


    Having played the field for a while, it is likely that one partner will demonstrate the best fit in terms of commitment, attention, behaviour and attitude. The relationship develops to a point where each understands the other a little better and both start to consider the others needs and aspirations. Loyalty sets in and plans for the longer term begin.

    Joint Venture Moving in


    Once courting has been going on for a while, it is natural to settle down with one partner and start enjoying an even closer relationship. Both partners get to know each other intimately and a relationship of mutual trust and respect develops. Any problems or difficulties are resolved jointly and amicably.

    100% Fully Owned Financial Services Group Go alone


    Marriage brings about a whole raft of new responsibilities and a relationship that should be built on a secure foundation. Both partners look for ways to get more out of each other and to contribute to a long and prosperous relationship.

    Depth of relationship

    One to One Exclusive model One to Many

    Many to Many Open architecture model

    International experience
    Bancassurance has been well established in Europe, Far East, and growing in India and Middle East.
    Sales via Bank Channels

    International experience
    Bancassurance share in European life insurance market

    International experience
    Bancassurance share in emerging markets, 2005

    International experience
    Bancassurance target markets, 2007

    Evolution in Pakistan
    1996 1999 Credit Life 2000 Mail Inserts 2003 Bancassurance Agreements 2011 16 Banks active

    Depositors Insurance

    Evolution has seen product offering move from Simple to Sophisticated products over the last 15 years Major thrust has been from 2007 onwards with business volumes increasing exponentially

    Banks active in Bancassurance

    Life Bancassurance in Pakistan


    New Business - 2010 Bancassuranc e Total Industry

    Sales agents Private sector only

    Bancassuranc e

    Sales agents

    Active life companies


    EFU Life

    NJI Life
    ALICO

    State Life is exploring to enter

    Target Market
    Target Market for Bancassurance

    Existing Bank customers


    Potential Bank customers

    Target market is spread across all lines of bank business

    Key to success in bancassurance is to identify the opportunities available in the bank customer base and offer the right financial planning solution

    Customer segmentation
    Possible approaches

    Slicing of Bank Database


    Targeting Customer Life Stage Event Trigger Approach Which one is correct ? depends on the bank, its target market and strategy to banking and bancassurance

    All or a combination of the above can be used

    Slicing of bank database


    Preferred Banking or General Banking

    Segmentation by worth to bank

    Professionals Self-employed

    Segmentation by occupation / role in society

    Government Employees Businessmen Students

    Targeting customer life stage


    Student
    Young, Single Young, married with family Wealth Accumulation stage Wealth Management stage Retirement

    Event trigger approach


    Birth Admission to University

    Wedding
    New Job Purchase of House

    Career Change
    Business Set-up Loss of Property Retirement Grandchildren Death

    Customer life cycle and financial needs

    Life Products
    Simple Bundled with bank products - deposits - credit cards - mortgages - personal loans Sophisticated

    Active selling: - Personal accident - Term life


    Advice products: - Savings, Investments - High risk cover

    Life Cycle Financial Needs Product Solution


    Life cycle segment
    Young singles

    Financial Needs
    Discretionary Income for Consumption Cash access Regular savings Car purchase As above + High level savings & investment House purchase

    Product Solutions
    Current account / ATM Debit / credit card Savings facility Car insurance As above + Investment linked plans Deposit savings account Mortgage Travel , Mortgage Insurance Education Planning Health insurance Disability Income insurance As above + Investment Products Additional pension fund contributions Investment Products Annuities

    Couples (no children)

    Families (young children)

    Family protection Mortgage Protection Access to cash As above + School / College expenses Maximize savings for retirement

    Families (older children) Pre-retirees (empty-nest)

    Retirees

    Regular income in retirement

    Technology
    Key initiatives which can assist in distribution: Point of Sale (POS) system Website Mobile phone

    Product complexity and distribution channels

    Sales models Branch distribution


    Referral model:

    Bank only generates leads and passes to insurer


    Trained insurance companys consultants convert lead to sales Banks role is limited with little or no involvement in sales matters Direct Sales model: Bank generates leads and converts to sales Bank has robust sales management setup with its own sales team

    Sales numbers are driven to quite an extent by bank

    Referral model
    Product management Sales management

    Bancassurance management

    Operations

    Marketing

    Involvement from banks side

    High

    Medium

    Low

    Direct Sales model


    Product management Sales management

    Bancassurance management

    Operations

    Marketing

    Involvement from banks side

    High

    Medium

    Low

    Challenges

    Alignment of vision Management structure in banks Banks expectations Product value Persistency System /Operations constraints Change of personnel Conflict with other sales channels

    Alignment of vision

    Short term vs Long term vision Executive level commitment Financial sustainability of model Acceptance of insurance as a product cultural shift

    Bancassurance management structure


    Ownership and accountability for the business model
    HOCB

    Dedicated Bancassurance Management Team


    Operations Product management

    Branches

    Sales team

    Banks expectations

    Financial Focus mainly on first year remuneration margins Bargaining tool TAT and client servicing aspects Strong ownership of client

    Product value

    Cost saving to be reflected in better product value Banks willing to reduce policyholder value in return for higher commission???

    Persistency

    Limited focus of banks on persistency Persistency is key for life insurance company Insurer has to make significant efforts to make the bank realize the importance of this KPI Good persistency can result in repeat sales and flow of renewal income

    Systems / Operations constraints

    Direct debit systems do not always work efficiently Weaknesses in operations setup No or limited MIS setup reliance on insurer

    Conflicts with other sales channels

    Conflicts with insurers other distribution channels Sales agency channel Banks approach an existing client of sales agency Sales agents approach an existing client of bank Insurer has to maintain delicate balance Give preference to customer choice of channel

    Change of personnel

    Business model usually driven by personnel rather than institution not the ideal setup Only some banks have a strategic executive level focus on bancassurance Change of bancassurance team in bank can lead to disruptions in business New team may have different strategy and vision Also may have preference for another insurer! Insurer has to build relationships once again

    Role of SECP

    SECP has played a very positive role in promoting bancassurance Pakistan is one of very few countries to have guidelines from regulator Guidelines will bring discipline in the market All important areas are now streamlined and under regulatory supervision

    Next 3 years

    Channel will continue to grow and gain prominence For private sector will contribute major part of new business State Life will also make an entry Technology will be key Point of Sale systems will be common New business expected to double from Rs. 2.8 billion in 2010 to Rs. 5.6 billion in 2013 from private sector companies

    Thank you!

    You might also like