Life Bancassurance in the Asia-Pacific Region: Protection-Related Life Insurance
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What is the research?
Finaccord’s report titled Life Bancassurance in the
Drawing on a survey of over 470 banking entities, the study finds that 45.0% offer at least one of the types of protection-related life insurance researched, giving a total of 390 initiatives in the three fields combined. Hence, given that the aggregate market for protection-related life insurance across the eight countries, excluding creditor cover, is worth around
In addition to identifying the schemes for distribution of protection-related life insurance through the bancassurance channel, the research also classifies and analyses these according to the operating model used, distinguishing, for example, between captive, joint venture and external underwriters. Furthermore, it also calculates the weighted share of partnerships of the underwriters and other product providers involved, thereby illustrating not only which competitors hold which partnerships but also which competitors hold the most significant distribution deals.
What methodology has been used?
The majority of Finaccord’s survey of the provision of protection-related life insurance by banks and other lending institutions in the
•whether risk life insurance, critical illness insurance and income protection insurance are available to customers;
•if so, how… through an external underwriter, multiple external underwriters, an external broker, a captive broker, a joint venture underwriter, a captive underwriter or a combination of these approaches?
•if so, who are the product providers?
Combined with Finaccord’s unique and proprietary quantification of the size and growth of the market for protection-related life insurance in each of the eight countries, with accompanying commentaries concerning the constituent product segments, this is the most thorough and comprehensive research into this subject ever published.
What is the report structure?
Executive Summary: providing a concise evaluation of the principal findings of the report.
Introduction: offering rationale, description of methodology and definitions.
Regional Overview: this includes quantification of the size and growth of protection-related life insurance across the eight countries, an analysis of the rates of provision of risk life, critical illness and income protection insurance by banking entities, an investigation into the operating models used, and a unique and valuable snapshot of the weighted share of partnerships for these products across the region as a whole. This latter analysis indicates which providers of protection-related life insurance have established the distribution partnerships with the greatest sales potential.
Specific country chapters (eight): an in-depth investigation into the distribution of risk life, critical illness and income protection insurance in each country including an introduction to the banking sector, national market size and growth data for the category of protection-related life insurance as a whole, commentary concerning the overall importance of bancassurance as a distribution channel, analyses of operating models used by banks and other lending institutions that are active in these fields, computation of the weighted share of bancassurance partnerships among product providers in these countries, and data illustrating the size and growth of key bancassurance competitors.
What are the key features of the research?
Key features of this report include:
•analysis of a combined total of 390 partnerships for the distribution of risk life, critical illness and income protection insurance through banking entities across eight
•identification of the providers used by the 215 banks and other lending institutions that are active in one or more of these areas;
•a unique computation of the importance of bancassurance partnerships for every country and for the
•discussion of the importance of bancassurance as a channel in each country, with data for the market shares of leading captives, joint ventures and other key bancassurance underwriters;
•quantification of the size, segmentation and growth of gross written premiums for protection-related life insurance in each country across a five-year time frame.
How can the research be used?
You may be able to use this report plus the PartnerBASE™ dataset and market data annexe that accompany it in one or more of the following ways:
•gain access to a source of information that provides a comprehensive overview of the provision of protection-related life insurance by a majority of significant banking entities in these eight countries in the
•identify partnership opportunities for protection-related life insurance that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;
•understand which product providers have been successful in establishing distribution relationships with the most important banking entities;
•assess the background to the most significant bancassurance deals, including those that involve major international competitors such as
Who can use the research?
1.Insurance companies: this study is a uniquely comprehensive guide to a major segment within the bancassurance market of eight
2.Banks and other lending institutions: the research will help banking entities to understand how their bancassurance strategy compares to that of other comparable institutions both in their domestic market and across other key
3.Management consultancies: are you helping an insurance company or bank with its bancassurance strategy in the specific field of protection-related life insurance? Understand the current status of bank distribution of risk life, critical illness and income protection insurance in the
4.Investment banks and private equity companies: with some banking and insurance institutions under financial pressure, this research may be useful to understanding where there is scope for them to divest captive or joint venture providers in order to raise capital.
What are some of the key findings?
Key findings from the executive summary include:
•the approximate value of the market for protection-related life insurance across the eight countries investigated, excluding creditor cover, was
•Hong Kong,
•an analysis of the weighted share of ultimate holding companies (i.e. groups) with bancassurance partnerships for protection-related life insurance indicates that
•however, the international insurance group with bancassurance relationships for these products across the largest number of countries among those researched is Aviva, which was found to have established deals with banks in six of the eight countries.
0.0 EXECUTIVE SUMMARY 1
The total market is worth almost
... within which non-creditor policies account for over 90% of the total value 2
Real inflation-adjusted growth rates are highest in
Bancassurers’ distribution share of protection-related life insurance exceeds 30% only in five countries 5
45% of entities surveyed have a partnership for at least one type of protection-related life policy 6
The largest banks in
Aviva is active in this area of the bancassurance market in six of the eight countries researched 8
1.0 INTRODUCTION 9
What is this report about? 9
Distribution partnerships with banks and other lending institutions constitute the focus of this report 9
Rationale 9
Nearly half of banking organisations surveyed sell at least one type of the products covered by this report 9
Methodology 10
Survey of banks and other lending institutions 10
Market data 12
Definitions 12
Risk life insurance 12
Critical illness insurance 12
Income protection insurance 13
Weighted provider share of partnerships 13
Operating models 13
Abbreviations and exchange rates 14
PartnerBASE™ and market data annexe 14
Finaccord 15
2.0
Introduction 17
Market analysis – protection-related life insurance 17
The combined market across eight countries grew by 5.3% in nominal terms between 2008 and 2012 17
In real terms, the market of
Non-creditor insurance makes up more than 90% of total protection-related life insurance 20
Per capita premiums for protection-related life insurance vary widely across the eight countries 23
Bancassurance analysis 24
Provision rates and operating models for risk life insurance 24
Banking entities in
Many partnerships are set up in conjunction with a single external underwriter 24
...though the utilisation of multiple partners is preferred in three major countries 24
When viewed on a weighted basis, the use of multiple external partners becomes more prevalent 27
Provision rates and operating models for critical illness insurance 30
The provision rate for stand-alone critical illness insurance is highest in
Provision rates and operating models for income protection insurance 36
Income protection insurance is fairly widespread in
Where offered by banks, it is usually sourced from a single, external underwriting partner 36
…and use of this operating model is even more pronounced on a weighted basis 39
Distribution share of bancassurance for protection-related life insurance 41
Finaccord’s analysis illustrates the influence of bancassurance on a standardised basis 41
Banks have made least progress as distributors of protection-related life insurance in
Presence of international groups in the
Insurance groups operating in
…with several international providers visible among the top eight groups 43
Aviva is present in six of the eight bancassurance markets under consideration 45
... with AIA,
3.0 CHINA 46
Banks and other lending institutions covered 46
Introduction to the banking sector 46
…while ICBC is the largest bank by assets 47
The joint-stock commercial banks provide a full range of banking services 47
…while many city commercial banks have expanded into other regions 48
The rural commercial banks were created to improve access to credit for China’s village-dwellers 48
Foreign banks in
Doubts about the level of bad loans that may be lurking in the economy hang over the banking sector 49
Introduction to bancassurance 49
Bancassurance in
…but new regulations introduced in 2010 seem to have disrupted the expansion 50
…while further regulatory notices issued in 2011 are meant to cut down on bribery and mis-selling 50
Relationships between banks and insurers have often been weak and sometimes short-lived 51
…as joint ventures between banks and insurers appeared late and remain relatively rare 51
…although there are signs that large financial conglomerates may develop in the foreseeable future 51
Market size and growth of protection-related life insurance 52
Protection-related life insurance grew by a compound average rate of 16.4% between 2008 and 2012 52
The market for term life insurance is traditionally limited but now being boosted by micro-insurance schemes 53
Critical illness insurance is an important product in
Distribution share of banks 54
Bancassurance sales for life insurance have soared but new rules have restrained further growth 54
Bancassurance provision rates, operating models and partnerships 55
Risk life insurance 55
More than a third of Chinese banks promote some form of risk life insurance 55
…while
Taikang can also count on a large number of national agreements 56
Allianz China Life is collaborating with two of the ‘big four’ banks and three foreign lenders 56
The Shanghai branches of
CPIC has a large number of partnerships with smaller banks in
…while Sun Life Everbright has struck agreements with four medium-sized lenders 57
While agents provide the main channel for CITIC Prudential, its sales through banks have also grown 58
China Construction Bank’s partnerships tend to be mostly determined at the local or provincial level 59
Critical illness insurance 61
Bancassurance agreements for critical illness insurance normally involve a single external underwriter 61
Income protection insurance 63
Chinese banks are not involved in the marketing of income protection insurance 63
Performance of key bancassurance underwriters 63
HSBC Life’s income from bancassurance sales accounts for 85% of its entire business… 63
…while ING-BoB Life signed its first agreement with
4.0
Banks and other lending institutions covered 64
Economic background 64
The service industry dominates
…and in terms of ease of doing business the SAR ranks second in the world by one measure 64
Introduction to the banking sector 65
While the
…HSBC is the largest group in the SAR by the same measure 66
The banking sector is highly consolidated 66
Introduction to bancassurance 67
Bancassurance in
A large number of banks have set up captive insurance subsidiaries 67
The
Market size and growth of protection-related life insurance 67
Protection-related life insurance represents only a small part of the total life insurance market 67
Critical illness insurance is often bundled with protection-related life insurance products 68
Distribution share of banks 69
Banks play a significant role in the distribution of protection-related life insurance 69
Bancassurance provision rates, operating models and partnerships 69
Risk life insurance 69
Nearly two thirds of
In terms of weighted partnerships, BOCG Life also leads the market for risk life insurance 69
Hong Kong Life was set up as a joint venture between four banks and one insurance provider 70
… while
Aviva's partnership with
Critical illness insurance 72
Critical illness insurance is often bundled with other types of cover 72
Income protection insurance 74
Only three banking institutions are offering this form of cover in
Performance of key bancassurance underwriters 76
The two largest life insurance providers in
5.0
Banks and other lending institutions covered 77
Economic background 77
... and was relatively unaffected by the global financial crisis 78
... although it still faces many significant problems 78
In the
Introduction to the banking sector 79
In terms of its total number of retail customers
... in a sector in which government-owned banks account for a majority of branches 79
Substantial swathes of the Indian population remain unbanked 80
The RBI follows a policy that generally encourages banking sector consolidation 80
... with a number of mergers and acquisitions in evidence in recent years 80
Introduction to bancassurance 81
Unusually, the distribution share of banks is higher in non-life insurance than in life insurance 81
... although is growing in both fields as the traditional agency model comes under pressure 81
Most insurance companies use bank distribution as a part of a multi-channel strategy 81
…with over 20 other joint ventures having been established since then 82
The bancassurance channel is characterised by relatively strict regulation in India… 83
…with banks not being permitted to tie up with any more than one life and one non-life insurer 83
Regulations governing bancassurance partnerships are likely to change in the near future 83
Market size and growth of protection-related life insurance 84
The market for protection-related life insurance declined in value between 2008 and 2012 84
Critical illness insurance is often offered as a rider rather than as a stand-alone product 84
A small proportion of protection-related life insurance is due to creditor insurance 84
Distribution share of banks 85
Bancassurers accounted for around 12% of the total life insurance market in 2012 85
Bancassurance provision rates, operating models and partnerships 86
Risk life insurance 86
Over three quarters of banking organisations researched offer risk life insurance… 86
... with SBI Life and LIC again ranked most highly by weighted share of partnerships 86
... albeit many other joint ventures are also active in this field 86
MetLife India benefits from a key partnership with
Critical illness insurance 89
Relatively few banking institutions in
Thanks to two partnerships, Reliance General is ranked first by weighted share of partnerships 89
... followed by HDFC ERGO 89
... and ICICI Lombard 89
Eight banking organisations utilise external underwriters of critical illness cover 89
Income protection insurance 91
Income protection insurance is rarely marketed by banking organisations in
Performance of key bancassurance underwriters 91
Around one quarter of the Indian life insurance market is controlled by joint ventures 91
6.0
Banks and other lending institutions covered 93
Economic background 93
The Indonesian economy swiftly recovered from the Asian financial crisis… 93
…and is well positioned for further growth 94
In the
Introduction to the banking sector 95
In terms of its total number of retail customers
…and Bank Tabungan Negara is the largest mortgage lender 95
Government-owned banks have a strong position in the market 95
A number of foreign entities are active in the market 95
DBS bid for Bank Danamon at the beginning of 2012 96
Introduction to bancassurance 96
Bancassurance accounts for around 41% of life insurance premiums in 2012… 96
…with many banks having changed their bancassurance strategies in recent years… 97
…and have set up captive insurance underwriters, mainly in the life insurance segment 97
A number of banks have set up joint venture underwriters with foreign insurance companies… 97
...and competition among underwriters for bancassurance partnerships is fierce 97
Banks are offering a range of sharia-compliant insurance products 98
Regulations divide bancassurance in three different business categories… 98
…and have a strong impact on the structure of the market 99
Market size and growth of protection-related life insurance 99
Protection-related life insurance grew by 21.0% per annum in real terms between 2008 and 2012 99
... albeit a substantial proportion of this is probably due to creditor insurance 99
Distribution share of banks 100
Bancassurance is estimated to account for over 41% of life insurance premiums 100
Bancassurance provision rates, operating models and partnerships 101
Risk life insurance 101
Around one third of banking organisations offer risk life insurance 101
... with BRIngin Life ranked first by weighted share of partnerships 101
AXA Mandiri is the most prominent joint venture underwriter 101
10 banking organisations have established external partnerships in this field 102
Critical illness insurance 104
Relatively few banking institutions in
…and two providers affiliated with banks predominate the market 104
Income protection insurance 104
Income protection insurance is not commonly marketed by banking organisations in
Performance of key bancassurance underwriters 107
The combined market share of key bancassurers peaked in 2009 107
7.0
Banks and other lending institutions covered 108
Economic background 108
The country's economy was hit by the global financial crisis in 2008 and by the earthquake in 2011 109
The service sector accounts for around 75% of the total economy 109
Government debt and negative population growth are the main challenges for the future 109
In the
Introduction to the banking sector 110
The banking sector is dominated by three major groups… 110
…albeit regional banks and
The penetration of foreign-owned banking institutions is very limited 111
The banking sector has seen major structural changes since the early years of the 21st century 111
Introduction to bancassurance 111
The sale of insurance products by banking institutions was fully deregulated only in 2007… 111
…with only a few restrictions now remaining 112
Banks usually act as insurance agencies that collaborate with a large number of underwriters… 112
…some of which are investing strongly to increase their sales via the bancassurance channel 112
The importance of the bancassurance channel is increasing most in the life segment… 113
…and bancassurance is generally less important in the non-life insurance sector 113
Online sales of insurance remain comparatively low in
Market size and growth of protection-related life insurance 114
The market for protection-related life insurance increased in value between 2008 and 2012 114
Risk life policies are often bundled with other forms of protection 114
Cancer insurance is by far the most widespread type of critical illness insurance 114
Distribution share of banks 116
The bancassurance distribution channel is likely to have advanced in recent years 116
Bancassurance provision rates, operating models and partnerships 116
Risk life insurance 116
Around half of
Critical illness insurance 119
Critical illness insurance is often bundled with other types of cover 119
Market leader
MassMutual Life has a sole partnership with
Income protection insurance 121
Income protection insurance is less commonly offered by banking organisations in
In terms of weighted partnerships, NKSJ Himawari Life leads the market 121
Lifenet, which was only launched in 2008, benefits from its ties with credit card issuers 121
AXA has set up Nextia Life to compete in the online insurance market 121Orix Life is the only captive underwriter found to be active in this market segment 121
Performance of key bancassurance underwriters 123
Captive underwriters are not a common feature of the market 123
8.0
Banks and other lending institutions covered 124
Economic background 124
…and has demonstrated a high level of financial resilience in recent years 125
In the
Introduction to the banking sector 125
In terms of number of retail customers
…which is highly concentrated with four predominant financial groups 126
The penetration of foreign banks is relatively low 126
Co-operative banks in
…and insurance companies are also engaged in consumer lending 126
Many of
Introduction to bancassurance 127
Bancassurance in
…and the market features a number of providers that specialise in bancassurance 128
The distribution of insurance products by banks is heavily regulated 128
...aiming to prevent excessively strong ties between banks and insurance providers 128
… meaning that captive and joint venture underwriters are therefore less prominent in the market 128
Market size and growth of protection-related life insurance 129
Protection-related life insurance decreased in value between 2008 and 2012 129
Critical illness cover is often bundled with medical expenses insurance products 129
Distribution share of banks 130
Banks play a significant role in the distribution of protection-related life insurance 130
Bancassurance provision rates, operating models and partnerships 131
Risk life insurance 131
Around one third of
Aviva and
…and
Heungkuk Life specialises in the bancassurance distribution channel 131
30 banking organisations do not distribute risk life insurance 132
Critical illness insurance 134
Over 40% of banking institutions surveyed are distributors of critical illness insurance 134
AIA Life has partnerships in place with nine banking organisations 134
Income protection insurance 134
Performance of key bancassurance underwriters 136
The importance of the bancassurance channel has grown significantly for major insurance companies… 136
… and dedicated bancassurance underwriters have expanded their market share since 2007 136
9.0
Banks and other lending institutions covered 138
Economic background 138
... although economic success is not shared equally across the country 139
In the Ease of Doing Business ranking,
Introduction to the banking sector 140
In terms of its number of retail customers,
Government-owned institutions play an important role in the mortgage lending sector 140
The presence of foreign-owned banks in the market is comparatively limited 140
... with several overseas entities having exited the market in recent years 141
Introduction to bancassurance 141
Bancassurance in is well-developed especially for life insurance products 141
A number of banks have divested stakes in insurance companies in recent years 141
…although
... leaving only two bona fide joint venture insurers in the bancassurance sector 142
Many insurance companies sell through banks as a part of a multi-channel strategy 142
... although those with the most exposure to bancassurance have tended to grow most rapidly 143
The Thai bancassurance market is subject to relatively 'light touch' regulation 143
Market size and growth of protection-related life insurance 143
Protection-related life insurance premiums increased strongly between 2008 and 2012 143
Distribution share of banks 145
Bancassurance accounts for over 35% of total life insurance premiums 145
Bancassurance provision rates, operating models and partnerships 145
Risk life insurance 145
Nearly 40% of
... with partnerships spread across ten different providers 145
26 banking organisations have no visible arrangement in place for risk life insurance 146
Critical illness insurance 148
Only a limited number of institutions surveyed are distributors of critical illness insurance… 148
…with familiar underwriters leading the market in terms of partnership share 148
Income protection insurance 148
Income protection insurance has yet to establish itself as a core bancassurance product 148
Performance of key bancassurance underwriters 151
The combined market share of key bancassurers increased consistently between 2007 and 2011 151
10.0
Banks and other lending institutions covered 152
Economic background 152
Political and economic reforms have transformed
… although state-owned enterprises still produce about 40% of national GDP 153
High inflation is one the country's main economic concerns 153
…although it also faces other structural problems 153
In the Index of Economic Freedom,
Introduction to the banking sector 154
Four of
... with Agribank leading the market by this measure 154
Indigenous banks control around 90% of the retail lending sector 154
... although this market remains very small by international standards 155
Several Japanese banks have displayed an interest in
Introduction to bancassurance 156
Bancassurance in
... given a channel share of between only 3% and 5% of total life insurance premiums 156
... although the available evidence points to a rapid growth rate from this low base 156
Only a limited number of banks have set up captive or joint venture underwriters 156
... with Aviva and
Typically, captive and joint venture insurers use bank distribution as part of a multi-channel strategy 157
Several key factors have delayed the development of bancassurance in
... although the experience of neighbouring countries points to strong future growth potential 158
Market size and growth of protection-related life insurance 158
Premiums for protection-related life insurance moved up consistently from 2010 onwards 158
Distribution share of banks 159
Bancassurance accounts for only a small proportion of total life insurance premiums 159
Bancassurance provision rates, operating models and partnerships 160
Risk life insurance 160
Prudential, Dai-ichi Life and Prévoir Life are ranked among the top five providers 160
... with the former company having established four partnerships for risk life policies 160
Critical illness insurance 160
Critical illness cover is promoted in a stand-alone format by a small minority of Vietnamese banks 160
Income protection insurance 163
Performance of key bancassurance underwriters 163
Although they have huge potential to grow, the market share of VCLI and VietinAviva remains low 163
LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY 1
An average of 91.3% of total premiums can be attributed to non-creditor protection-related life insurance. 3
In
The operating models used by banks to sell risk life insurance vary greatly by country 7
Five international insurance groups are active in five or more of the bancassurance markets covered ... 8
1.0 INTRODUCTION 9
Banks and other lending institutions contacted by Finaccord, segmented by country and type 11
2.0
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Life Bancassurance in the
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