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BANCASSURANCE

BANCASSURANCE. GROUP MEMBERS:. ATIYAH MUHAMAD 122105 ACHIP A/P NE YUM 122759 NORAINI MOHD JUNUS 123902 FARAH IRYANTI ISHAK 123083 NORHAIDAWATI ABD MAJID 122094. INTRODUCTION.

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BANCASSURANCE

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  1. BANCASSURANCE

  2. GROUP MEMBERS: • ATIYAH MUHAMAD 122105 • ACHIP A/P NE YUM 122759 • NORAINI MOHD JUNUS 123902 • FARAH IRYANTI ISHAK 123083 • NORHAIDAWATI ABD MAJID 122094

  3. INTRODUCTION • Bancassurance, is a popular buzzword in the financial world today, has been one of the most significant developments in the global financial services sector over the past decade.

  4. DEFINITIONS • What is bancassurance? • There are many possible definitions available due to the diversity of strategies.

  5. DEFINITIONS (cont.) • Bancassurance is commonly defined as a strategy adopted by banks and insurance companies which aim to co-operate in an integrated manner within the financial services market.

  6. ISSUE: ARE BANCASSURANCES BEING A MAJOR ROLE IN INCREASING INSURANCES’ PROFITIBILITY?

  7. BANCASSURANCE AS A DISTRIBUTIONAL CHANNEL • The highly successful penetration of bancassurance by domestic insurers has evolved a more diversified distribution system. • Internal capacities of insurers have also been strengthened with greater investments made, notably in technology, to enhance productive capacity, encourage innovation, increase efficiency and improve service levels.

  8. Policies and Measures toStrengthen the Insurance Industry • Strengthening Financial Resilience • Enhanced Corporate Governance Standards • Strengthening Avenues for Consumer Redress • Promoting Growth of Bancassurance • Consumer Education Programme • Enhancing Competition in Reinsurance

  9. DEVELOPMENT OF BANCASSURANCE IN MALAYSIA

  10. Key Trends and Drivers • The first bancassurance arrangement in Malaysia was approved by Bank Negara Malaysia (the Bank) in late 1993. • In 1994, premiums generated through bancassurance represented less than 2% of new premiums in the life sector.

  11. BANCASSURANCE OPPORTUNITIES

  12. CONSUMERS • personal visits to bank branches are still common (averaging at more than two visits per month) among Malaysians, this give banks an opportunity to promote insurances product to their existing customers. • the high level of confidence and trust generally placed by the public in banks make them particularly well-positioned to attract consumers to purchase life products from their distribution outlets.

  13. PRODUCTS • Bancassurance products in Malaysia:- • credit-related products • ex: consumer credit insurance products purchased by borrowers in connection with mortgages, vehicle loans and overdraft facilities provided by banks. • non-credit related products • ex : primarily of education, traditional whole life and medical insurance policies,

  14. CHART 1: DISTRIBUTION OF LIFE PRODUCTS THROUGH BANCASSURANCE

  15. Table 1 : Insurance Using Bancassurance As Distribution Channel

  16. Table 1: Insurance UsingBancassurance As Distribution Channel (cont.)

  17. PROFITABILITY • At end of 2004, bancassurance has evolved into a primary distribution channel for life insurance, capturing 48% of new life premiums written in the industry. • Comparing from the previous years it shows a very big difference in increasing for life insurance with conjunction of bancassurance.

  18. CHART 2 : BANCASSURANCEPENETRATION

  19. EXPANSION OF INSURANCE INDUSTRY THROUGH BANCASSURANCE • An increasing percentage of bancassurance as distribution channel have also increase the profit for insurers. • This occur as bank productively use their extensive customer database. • Bancassurance as distribution channel certainly has decreased the distribution costs for insurers.

  20. CHART 3 : NEW LIFE BUSINESS PREMIUMS BY DISTRIBUTION CHANNELS

  21. BANCASSURANCE AS DISTRIBUTION CHANNEL • ADVANTAGES : • shares customer database with banks • banks as a trustworthy organization will attract more customers • decreased distribution cost • products that had previously not been feasible are now made possible through this channel • mainly, increase insurers profit earning

  22. BANCASSURANCE AS DISTRIBUTION CHANNEL • Disadvantages : • required to follow a regulation that sets by BNM. • insurance industry going to be very competitive this cause as a result of more options for the customer • lack of knowledge regarding insurance from bank’s staff • reducing in numbers of insurances agents

  23. RECOMMENDATION • Staff of banks involved in marketing of insurance products should fulfill themselves same knowledge required as insurance agents. • Banks should improve their information systems to support their increasing database of customers • As customers become more critical towards the service, banks should be more customers oriented

  24. CONCLUSIONS • Bancassurance does become a role in increasing profit to insurance industry. • The current status of bansassurance is a primary distribution channel for insurance products.

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