best practices in bancassurance - insurance professional · entry – threats & opportunities...

Best practices & Challenges in bancassurance

Maximizing the Profits

Manoj Kumar, Chartered Insurer

ACII (UK), CPCU (USA), ARe (USA), ARM (USA), FIII (India). MBA

Email: manoj@einsuranceprofessional.com

Agenda

Best Practices in Bancassurance

Types of Agreements

Unlocking the Hidden Profit

Product Mix in a Bancassurance Partnership

Entry – Threats & Opportunities

Strategic Advantages for Banks

Challenges Ahead

Best Practices in Bancassurance 2

Best Practices in Bancassurance

What is it?

How do we achieve it?

Best Practices in Bancassurance 3

Pillars of Bancassurance

Best Practices in Bancassurance 4

Goal Congruence

Insurance Companies

Customers

Banks

Best Practices in Bancassurance

It is achieved by the following:

Goal Congruence Right Partnership

Product Mix

Distribution Mix

Innovation

Customer Empowerment Choice

Convenience

Best Practices in Bancassurance 5

Types of Agreements

Distribution Agreement

Marketing Agreement

Product Development & Support

Marketing Outsourcing

Best Practices in Bancassurance 6

Types of Agreements

Distribution Agreement

Exclusive, Non-Exclusive

Features:

Standard Products

Standard Distribution Channels

Focus on Market Penetration

Simple Products – PA, Home, Travel, Car, etc.

Lower Commission Levels

Best Practices in Bancassurance 7

Types of Agreement

Marketing Agreement Focus on marketing / sales

Selective products

Joint marketing Platform banking

Direct sales

Complex products Life, Investment, Pension, etc.

Commercial Line Products

Higher Commission Levels Best Practices in Bancassurance 8

Types of Agreement

Product Specific Agreement

Specific Product – tailored

Exclusive

Long term

Value addition from the bank

Best Practices in Bancassurance 9

Types of Agreement

Marketing Outsourcing

Call Center Outsourcing

Sales Team Outsourcing

Best Practices in Bancassurance 10

Unlocking the Profits

Untapped Resources within Banks

Trade Finance

Corporate Lending

Retail

Cards

Accounts

Deposits

Personal Loans

Mortgage Loans

Investment Banking – Mutual Funds, Bonds Best Practices in Bancassurance 11

Product Mix

Depends on the following factors:

Bancassurance Life Cycle

Early, Youth, Matured

Customer Segment

Retail, Corporate

Customer Profile

Age, Wealth, Socio-economic Background

Distribution Channels

DM, CC, Branch Network, Direct Sales

Best Practices in Bancassurance 12

Product Mix

Segment-wise Product Mix

Retail Customers Homeowners’

Motor

Travel

Medical

Investment Products

Corporate Customers Fire

Engineering

Marine Best Practices in Bancassurance 13

Product Mix

Products as per Bancassurance Life Cycle

Early Stage: PA, Home, Travel, Car

Youth Stage:

Child Education

Pension Plans

Growth Plans

Matured Stage:

Bonds

Mutual Funds

Structured Products Best Practices in Bancassurance 14

Product Matrix

Type of Products

Bancassurance Life Cycle

Early Youth Mature

Simple Products √ √ √

Complex Products √ √

Structured Products √

Best Practices in Bancassurance 15

Threats & Opportunities

Threats – Entering into Bancassurance

Heavy Investment into IT and Manpower

Conflict with Core Banking Products

Service Issues – Reputational Risk

Mis-Selling

Changing Goal Post for the Banks

Best Practices in Bancassurance 16

Threats & Opportunities

Opportunities – Entering into Bancassurance

Fee Income

One-Stop Shop

Customer Retention

Customer Acquisition

Diversification of Risk

Gateway to Risk Taking – Creating an Insurance Subsidiary

Best Practices in Bancassurance 17

Strategic Factors for Banks

Closer to Customers

Long Term Relationship

Known Spending Pattern

Convenience

Easier Communication

Generally better equipped IT

Distribution Network – Better Spread Best Practices in Bancassurance 18

Challenges Ahead!

Best Practices in Bancassurance 19

Challenges Ahead

From a Banker

Best Practices in Bancassurance 20

Challenges Ahead

To become a Financial Consultant

Best Practices in Bancassurance 21

Challenges Ahead

From a Seller

Best Practices in Bancassurance 22

Challenges Ahead

To a Marketer

Best Practices in Bancassurance 23

Challenges Ahead

From a Broker

Best Practices in Bancassurance 24

Challenges Ahead

To Risk Taker (Insurance Company)

Best Practices in Bancassurance 25

Best Practices in Bancassurance 26