1. Bancassurance
Huge Potential for Growth……
Strategic
Bancassurance
Forum
April 12-13, 2010
Gulf Hotel, Bahrain
Ashish Kaushik
Manager Bancassurance
Bajaj Allianz Life Insurance, India
2. “There is no stronger force than an idea
whose time has come.”
Victor Hugo
(19th Century French Novelist)
Banks & Insurers across the World have realized Bancassurance is
the distribution channel, which would help them achieve
economies of scale and boost their revenues in the 21st Century
3.
4. Consideration for Banks…
1. Increase in Fee Based Income
6. Provide integrated
financial services tailored to
2. Reduce reliance on
the life cycle of customers
interest spreads as the major
16 2/3 %
1 source of income
16 6 %
2/3 2
16 2/3 %
16 2/3 % 16 2/3 %
3
5
3. Leverage extensive
customer base
16 2/3 %
5. Reduce risk based capital 4
req. for the same level of
revenue
4. One stop shop for all
Financial Services
5.
6. BANCASSURANCE
US Market 2008
Non Interest Income/ total revenues
(%)
Median Net Change in net
Number Of Median Net Number Of Banks Income with income with Banks with
Asset Size Banks Income ($ m ) with Insurance Insurance($ m ) insurance (%) All Banks Insurance
Over $10 bn 89 93.37 65 93.37 0 32 32
$1 bn - $ 10 bn 470 8.73 267 10.7 23 20 22
$ 500 mn- $ 1 bn 632 3.88 331 4.78 23 18 20
$ 250 mn- $ 500 mn 1128 2.06 539 2.75 33 16 18
under $ 250 mn 5343 0.47 2136 0.83 76 13 15
All 7563 0.69 3338 1.16 69 14 17
Source: Bank Insurance Market Research Group
The median income for banks with insurance selling operations is
significantly higher than banks which don’t sell insurance.
7.
8. Consideration for Insurers…
Immediate access to New
Markets
Improve sales
Increase in Market
effectiveness & after sales
Penetration
service
Insurer
Reduce reliance on
Develop new financial traditional distribution
products more efficiently channel
Combine Cost Saving &
Increased Profitability
9.
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11.
12. Key Success Factors…
Commitment
of Partners
Motivation
Selection of
&
Selection Customer
Training of
Bank Staff of Partner Segments
Sales &
Product
Distribution
Offerings
Model
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23. Customer Segmentation
A good segmentation must be
realistic, easy to implement,
simple to explain and, above all …
insure success in every effort
made
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36. Bancassurance
- Distribution Model
• Integrative / Generalist Model
• Specialist Model
• Financial Planning Model
36
37. Bancassurance
- Distribution Model
• Integrative / Generalist Model
– Product distribution through existing bank channel
– Bankers themselves sells the product to customer
– Process managed by banks and insurer act as only
product/service provider
e.g. Telemarketing, direct mail
37
38. Bancassurance
- Distribution Model
• Specialist Model
– Distributes insurance product through generally
employees or representatives of the insurance company
– Bankers help to identify the prospects who further
contacted by insurance professionals
– Requires less training and higher compensation to support
the referral process
– It lengthens the process of sale
38
39. Bancassurance
- Distribution Model
• Specialist Model
– Distributes insurance product through generally
employees or representatives of the insurance company
– Bankers help to identify the prospects who further
contacted by insurance professionals
– Requires less training and higher compensation to support
the referral process
– It lengthens the process of sale
39
40. Bancassurance
- Distribution channels
• Career Agents
• Special Advisers
• Salaried Agents
• Bank Employees / Platform Banking
• Corporate Agencies and Brokerage Firms
• Direct Response
• Internet
• e-Brokerage
• Outside Lead Generating Techniques
40
41. 10 Success Factors
• Leverage Multiple Channels for Distribution
» Branches, Sales force, Direct Marketing .
» Employ former Bank Employees.
• Critical to Motivate Branch Staff
» Commissions.
» Incentive Plans for Employees.
» Trips & Awards
» Promotional Campaigns to Banks’ Customer
• Create a Strong Retail Mindset
» Retail Business Know-how .
» Mass Customer Marketing.
42. 10 Success Factors(Contd..)
• Well Researched Marketing Effort Needed.
» Use Dominant Brand .
» Direct Customers Campaign/Quick Start.
• Deep Knowledge of the Customer must be
starting point.
» Leverage Customer information .
» Start with the product that directly appeal to the
customer.
• Develop 2 to 3 simple savings product esp. for
the bank.
43. 10 Success Factors(Contd..)
• Invest in the right technology infrastructure.
» Sale support system in the branches .
» Tailor Sales IT to the Bank.
• Design operational flows esp. for the bank.
• Develop a robust Contract Agreement for the
bank.
• Follow a Business Plan.
44. Case Study : Standard Chartered Bank & BALIC
Ø Standard Chartered Bank – One of the Largest Foreign Bank in India
Ø Catering to the High NetWorth clients and the Mass Affluents’
Ø 83 Branch Offices with presence in 25 cities
Ø Customer Base of 2.50 million
Ø Deposit Base of over Rs. 135 billion (USD 3 bn)
Ø Client Habits : Savvy Customer Base with both high branch traffic and
Off-Site Banking habits.
Ø Joint operations were rolled out in January 2002 with 25 FSCs covering 30
Bank Branches.
45. Case Study : Standard Chartered Bank & BALIC
Model Results
Ø A designated person stationed in Ø The Benchmark for the Indian
each Branch selling Insurance. Industry for Bancassurance
Ø Selling through multiple Channels Ø Bancassurance contributes 20%
of Distribution :- Branch Banking, of total income from Retail
Priority Banking, Outbound Sales Banking operations
Team, Mortgages, Credit Cards etc Ø Avg Productivity per person is
Ø Over 250 Sales Staff dedicated over 12-15 policies per month
selling Insurance in these and Avg Ticket Size stands at
Distribution Channels USD 1,100.
Ø Dedicated Operation Staff for Ø GWP of USD 100 mn for FY 08-
processing SCB Proposals 09 & earnings to Bank to be in
Ø Fortnightly Saturday Schools for range of USD 25-30 mn
Sales Staff Ø Regular UnitLinked Products fit
in the clients needs of the Bank.
46. Distributions servicing different Customer Segments
Channels of Distributions
In-Branch Dedicated Relationship
Out Bound
Sales Team Relationship Managers
Sales Team
Managers
Distributions Catering to Different Customer Segments
Retail High
Loan New
Walk-in Networth SMEs
Customers Customers Customers
customers
47. Channel Distribution : Standard Chartered Bank…
15% 1%
12%
72%
Branch Banking Priority OBST SME
Branch Banking / Walk-ins Contribute over 70% of
Insurance Sales
48. Case Study : Syndicate Bank & BALIC
Ø Syndicate Bank – Nationalised Bank with a dominant holding by the
Government
Ø Catering to Middle Class and Rural Base
Ø 2000 Branch Offices with presence in 500 cities and town
Ø Customer Base of over 22 million
Ø Deposit Base of over Rs. 462 bn (USD 10.2 bn)
Ø Client Habits : Branch Walk-ins for transactions with advice from the
Branch Staff / Manager for all financial decisions
Ø Bancassurance tie-up with Bajaj Allianz in October 2003
49. Case Study : Syndicate Bank & BALIC
MODEL
• Integrated Model Implemented with the Bank Staff being regularly
trained to directly sell Insurance to its customers.
• Phase wise Roll Out started in Oct’ 03 with 11 Insurance Managers
covering 40 Branches.
• Lastly over 1500 branches covered, with 250 Bank employees
selected as Insurance managers & over 175 employees of BALIC, to
promote insurance sales
• GWP of approx. USD 45 mn for FY 08-09 & Earnings to Bank to be
in range of USD 7-9 mn
• Traditional endowment, Pension Product and Mortgage Reducing
Term Assurance are the key products sold.
• Among the most successful Public Sector Bank Distribution tie-up
in India. Over 50,000 policies sold annually
