Bancassurance might play a less important role over the next few years, as banks’ advantages in marketing insurance policies would diminish with fewer people visiting traditional bank branches, National Chengchi University (NCCU) said in a report on Wednesday.
The bancassurance channel sold NT$333 million (US$11.56 million) in first-year premiums (FYP) in the first 10 months of this year, which accounted for 50.78 percent of all FYPs generated by life insurance policies, the report said, citing data compiled by the Life Insurance Association.
“The ratio, which hit a high of 65.65 percent in 2010, has been sliding from the peak over the past few years, as banks, which usually promoted the products to their clients face-to-face, found marketing more challenging, with fewer consumers using the branches,” said Peng Jin-lung (彭金隆), chairman of the university’s Department of Risk Management and Insurance.
The ratio is forecast to fall to below 50 percent by the end of this year, which would be the lowest in the past decade, Peng said.
That is because banks’ financial agents or customer relationship managers are more familiar with savings-type policies, and are more willing to sell the products due to higher commissions and simpler product design, but sales of savings-type policies have been curbed by regulations implemented this year, he said.
By comparison, although protection insurance policies — such as heath insurance products — have been growing, banks do not have much advantage selling them compared with salespeople from insurance companies due to limited time, he said.
“It takes more time to explain the complicated terms of health insurance policies and you have to be ready at any time to answer clients’ questions, as health insurance policies are more controversial,” Peng said.
“Bank agents cannot compete with insurance salesmen on that,” he said.
Bancassurance only registered a market share of 2.19 percent for health insurance policies last year.
In the next decade, bancassurance would still be a vital distribution channel for life insurance policies, but their importance would decline, Peng said, adding that banks should move toward digital services or to reconsider their wealth management strategy.
The Taiwan branch of BNP Paribas Cardif would work with its bank partners to develop a digital platform to enhance customer experience and the quality of bancassurance services, branch chief executive officer Christine Cheu (丘舒盈) told a news conference in Taipei on Wednesday, at which the report was released.
The company announced that it would continue to sponsor the next 10-year NCCU CARDIF Bancassurance Research Center program, pledging NT$20 million.
By sponsoring the center, the insurer hopes to understand how insurance firms and bancassurance channels can stay abreast of the new trends, and how to digitally transform and continue to grow bancassurance business, it said.
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