Bancassurance in Asia

In: Business and Management

Submitted By fishyfish
Words 3423
Pages 14
Bancassurance in Asia
APRIA Annual Conference, Seoul 24 July 10:20 – 11:50 am

Clarence Wong, Swiss ReinsuranceCompany, Hong Kong

Summary Bancassurance has seen rapid development in Asia over the past decade, mainly driven by deregulation in many key markets. It was virtually non-existent in 2000, but has risen in importance since to account for a significant share of distribution. The main business model has also diversified from simple distribution agreement to joint ventures and integrated financial services provisions. There is no doubt that bancassurance has been a great success in Asia over the past decade. However, from the perspective of an industry practitioner, I would like to draw on three important yet inter-related issues regarding the future of bancassurance. First, the economics of bancassurance to insurance companies.Second, the prospects of non-life distribution through banks.Third, the role bancassurance in closing the region's protection gap. Let me cover the first issue. In many markets, particularly emerging Asian markets like China and India, insurers have successfully leveraged of bancassurance to maintain or expand their market share in the early phase of market liberalization and deregulation. It is, on the other hand, well-known that insurers complaint all the time about the high distribution commission associated with bank channels. There are other constraints like higher lapse ratio and difficulties in selling complicated (higher-margin) products. As a result, we are already see in some cases insurers reverting to focus on traditional agents. In any case, we observed that insurers in many regional markets are shifting their focus from market share to profitability. This could bode unfavourably to bancassurance given its high commission, lower retention rate, and lower profit margin. The second issue I want to cover is non-life…...

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