Alternate Distribution Channel

Banks and post offices play an important role in achieving the government's target for the proportion of the insured population to reach 75 per cent by 2020 from the current 54 per cent.  Life Insurance Association of Malaysia President Vincent Kwo Shih Kang said the two distribution channels could reach out to the under-served markets such in the rural and semi-urban areas.
In the past, the focus of life insurance and takaful has always been the urban areas. Banks and post offices must play a role in now focusing on the rural and semi-urban areas. The Insurance Industry must also find a better way to distribute the insurance products.

Bancassurance presents a unique proposition for insurers to widen their outreach while maintaining acquisition costs at manageable levels. By leveraging on banks' existing branch network and customer base, which are well established throughout most Asian markets, insurers are able to scale up quickly into geographical areas and consumer segments.

He said in Malaysia, bancassurance accounted for 36 per cent of new life insurance business premium and 39 per cent of gross contribution for takaful business in 2013.