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COOPERATION OF BANKS AND INSURANCE COMPANIES

COOPERATION OF BANKS AND INSURANCE COMPANIES. &. Romeo JANTEA. Bancassurance. … what bancassurance really is … what are the benefits and challenges … what insurance products are appropriate … what models of cooperation are possible … what are the key success factors

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COOPERATION OF BANKS AND INSURANCE COMPANIES

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  1. COOPERATION OF BANKS AND INSURANCE COMPANIES & Romeo JANTEA

  2. Bancassurance … what bancassurance really is … what are the benefits and challenges … what insurance products are appropriate … what models of cooperation are possible … what are the key success factors … what goes on in different countries

  3. What Is Bancassurance? Bancassurance = selling insurance through bank branches. Simple! More: Change “sales management” with “sales support” Simplify … product structure Support … by back and front office functions Package … combine with bank products Motivate … by more than commission

  4. Benefits for Partners Diversification of solutions for customers Cross-selling Customer loyalty / retention Fee income Access to large customer group Lower cancellations Lower distribution costs Economy of scale (standardized products) BANK INSURER

  5. Challenges for Partners Risk covering = new concept for bank Different sales argumentation Integration of insurance products in motivation schemes Impact of bundled products on IT Product development Different sales support No direct management of sales staff Claims management BANK INSURER

  6. Bancassurance Insurance Products One key word:simplification Bank staff will never be insurance agents ! Easy to explain and sell Complementary to a bank product OR offer what bank products can not – risk coverage Simple better profit possibilities than bank products Single payment MAIN REQUIREMENTS FOR PRODUCTS:

  7. Bancassurance Insurance Products RISK Credit risk with loans / mortgages Term life, Critical Illness, Disability, Accident SINGLE PREMIUM Unit Linked with fixed duration & simple options, Annuities CLASSIC LIFE Regular premium endowment, Whole life NON LIFE Travel, Property, Personal liability, Auto

  8. Cooperation Models Products from more insurers in the bank network Very low level of integration Insurer’s focus is not the bank Products only from one insurer Product development for the bank Minimum integration steps PARTNERSHIP STRATEGIC ALLIANCE

  9. Cooperation Models JV between insurer and bank Common distribution of insurances and bank products Distribution integration only Ownership Dedicated product development by insurer Full focus on bank Integrated strategies and systems JOINT VENTURE VERTICAL INTEGRATION

  10. Sales Support Levels SALES ON LOCATION PRODUCT DELIVERY • Insurer’s employees sell to clients in bank branches • Commission split • Bank provides access to branch clients • Insurer provides products • Bank provides • Training • Sales support • Sales activities • Motivation

  11. Insurer provides Product Training Insurer employees support for branch Bank provides - Sales Activities - Motivation Insurer provides Product Training Marketing Sales support Bank Advisors Bank provides - Sales Activities - Motivation Sales Support Levels SELLING SUPPORT ADVISORY SUPPORT

  12. Key Success Factors SPECIALISTS OPINION OVER 80% Distribution factor – network coverage Human factor – sales management Brand factor – strength of the brand

  13. Key Success Factors SPECIALISTS OPINION OVER 70% Customer factor – focus on customer service / satisfaction Customer factor – single view of the customer Process factor – use of CRM techniques / tools Product factor – complementarity / logical fit

  14. Key Success Factors SPECIALISTS OPINION OVER 60% Process factor – integration of bank and insurer Process factor – providing advice / solutions, not selling products

  15. Bancassurance in Europe Weight of bancassurance in life insurance sales

  16. Bancassurance in Europe U K: visiting bank branches is discouraged Spain, France, Belgium, Italy: customers visit bank branches regularly (every 2 weeks) Spain: highest density of bank branches in Europe, 1 bank branch / 1000 inhabitants Spain, France, Belgium, Italy: strong brands and reputation of banks, direct customer contact highly appreciated

  17. Bancassurance in Europe Product adaptation: Fortis (Belgium) reduced number of options for car insurance from ~ 1000 to 28 Result: Simplicity, Lower UW and admin costs, Easier understanding for bank staff Insurer must adapt to the bank culture. Bank and insurer must have a common vision on business strategy and objectives.

  18. Thank You!

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