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Chang Hwa delves into insurance

"Because of our 166 branch offices, we will provide a powerful distribution network that is more far reaching and more convenient than any insurer operational here"

Hsieh Chao-nan, president of Chang Hwa Bank

Officials at Chang Hwa Bank (彰化銀行) said the institution will team up with three insurance companies next week to offer customers the opportunity to buy insurance policies through the bank's branches nationwide.

The bank is scheduled to sign the partnership agreement on Oct. 3 with ING Aetna Life Insurance Co, Cathay Life Insurance Co and Cardif Risques Divers SA, Chang Hwa's vice president Hsieh Chao-nan (謝昭男) told the Taipei Times yesterday.

"Because of our 166 branch offices, we will provide a powerful distribution network that is more far reaching and more convenient than any insurer operational here," Hsieh said.

Asked whether forging business ties with insurance companies is also a part of the bank's plans for Chang Hwa to transform itself into a financial holding company, Hsieh said "You can say that."

Chang Hwa, one of Taiwan's three major state-run banks, will officially launch a new insurance agency next week.

The bank is expecting good customer response during the initial stage, with premium income estimated at NT$10 million per month.

"Over the longer term, while it is a little early to guess, it will certainly be a good business for us -- say NT$150 million a year -- in view of what has occurred with other banks like Taishin International Bank (台新銀行) and Fubon Commercial Bank (富邦銀行)," Hsieh said.

Chang Hwa currently employs some 6,000 people in Taiwan, with nearly half of that number are licensed to function as part-time insurance policy salespeople next week, Hsieh said.

Indeed, faced with Taiwan's economic slowdown, many banks in Taiwan are seeking to cooperate with insurance companies that offer unemployment insurance policies as profit margins for the traditional saving and loan business are shrinking fast.

Chang Hwa will join with Cardif, the insurance arm of BNP Paribas SA of France, to sell unemployment insurance policies in Taiwan.

"At this point in time we believe it is of the utmost importance for people to have unemployment insurance," Hsieh said.

Such policies will protect banks' interests as well, Hsieh said, as customers who buy unemployment insurance policies are at less of a risk when they sign mortgage, automobile or consumer loans with banks.

Several other banks have expressed strong interest in cooperating with insurance firms to sell unemployment insurance in view of the rising jobless rate in Taiwan.

According to reports in the local Chinese-language media, Bank SinoPac (華信銀行), Ta Chong Bank (大眾銀行), EnTie Commercial Bank (安泰銀行) and Union Bank of Taiwan (聯邦銀行) are all said to be exploring that sector of the market.
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