Bancassurance Rapid Growth

For bancassurance to be both successful and sustainable in the future, the industry must be able to achieve a "win-win-win-win" proposition: not just a lucrative partnership between banks and insurers, but a beneficial relationship that includes customers and countries as well, said Mr Marcelo Teixeira, Global Head of Bancassurance and Head of Strategic Development Emerging Markets at QBE. He was speaking at the 18th Asia Conference on Bancassurance & Alternative Distribution Channels in Jakarta, Indonesia yesterday.

The industry needs to pay close, if not more attention, to the latter two stakeholders in the widened bancassurance ecosystem. Given the shift in consumer demographics, with the younger generation’s preference for instant gratification, for customers to win, their interests and needs will have to come first. “Countries like Indonesia win when insurance penetration levels increase significantly and the existing protection gap narrows,” he added.

And while banks in recent times have been compensated handsomely for access to their distribution networks, he said the sale of access to their customer bases is not a long-term business model to maintain customer satisfaction. “For banks to win in the longer term, they need to match evolving customer needs and preferences.”

Can’t evade new tech

On the insurers’ part, to win, they would also have to find the right strategic partner and be able to differentiate themselves by the customer experiences they create throughout their service offerings. Aside from working with banks, insurance companies will also need to embrace non-traditional partners to accelerate channel integration and increase business process automation.

Similarly, Mr Edy Setiadi, Deputy Commissioner of Non-Bank Financial Institutions, Indonesia Financial Services Authority (OJK), recognised that the traditional insurance model is being disrupted by changes in many aspects including consumer expectations, regulations and technologies, which insurers should not undermine. And while FinTech/InsurTech might be perceived to be more attractive, he said bancassurance can still benefit by integrating new tech into its business model.

“Insurance companies will have no choice but to adapt; it is not the strongest or the most intelligent that will survive, but those that can best manage the changes who will triumph,” Mr Setiadi added.

Harness digital to increase penetration

Meanwhile, Ms Na Jia, Head of ReMark Asia Pacific and SCOR Global Distribution Solutions noted that insurance is currently facing “a crisis of value and a deficit of trust”, although this was more prevalent in developed markets. While the good news is that insurance is more positively viewed in emerging markets, in part due to the lack of a comprehensive social safety net among other reasons, many consumers do not feel the need for life insurance.

However, of these consumers, she highlighted two categories that held potential growth, with improved and better targeted insurance propositions and associated messaging via the use of data. The first, “procrastinators” who understand the need for insurance, but have no push to purchase; thus, a sense of urgency must be created. And the second, “migrating innocents” who may not currently recognise the need for insurance, but through changes in personal circumstance will be more receptive; hence, insurers must develop effective, relevant and personalised communications.

Ultimately, Ms Jia said the industry’s future must include a more integrated and digital approach to explaining and illustrating the benefits of protection to customers. Regardless of market or region, all insurance stakeholders must work towards synthesising advice and customer support into a multi-touchpoint, digital journey to encourage consumer understanding and simplify the purchase pathway. But first, she urged companies to concentrate on engaging and educating customers. “There’s not only a protection gap, but an engagement gap that exists between insurers and customers.”