Internet Sales Make Inroads in Conservative French Life Market

Two-thirds of life insurance in France is sold in banks, making banks key to the success of life insurance companies. Meanwhile, Internet sales are making some headway after a slow start in a conservative market.

According to Nicolas Michellod, consultancy Celent's senior analyst for Insurance Europe, the traditional appeal of bancassurance has been that many people prefer to get financial advice face-to-face. Over the past few years some life insurers have begun to sell their products online in hopes of capturing the interest of young professionals.

"The French market is quite conservative when it comes to adoption of online insurance," Michellod said. "More insurance companies are trying to see how they can take advantage of the different technologies to offer online insurance but also to make sure it will not cannibalize their other distribution channels."

Young adults in the 20- to 25-age range may also start saving for their retirement, said Jean Malhomme, who leads the individual life and savings product management team at Axa France, adding that they qualify for lower premiums, 50 euros per month for example, and it is they who are more likely to purchase that product online.

In June 2009, Generali first launched its Italian direct life insurer, www.genertellife.it, which it said is "showing very interesting developments."

"In France, we operate mainly under a white label, business-to-business-to-consumer approach embedding our offer of unit and traditional life products into various financial portals like Boursorama and ING Direct," Generali said, noting the turnover was more than 1 billion euro in 2009.

Boursorama is a European online financial services company providing stock brokering, direct banking and financial information. The Boursorama group is present in France, Germany, the United Kingdom and Spain.

Generali France's website for life insurance, www.e-novline.fr, allows visitors to calculate the amount of their monthly payments based on their savings goals. Generali also has a similar application for smart phones. "They are trying to leverage that and use it to communicate with agents as well... and it is a way to show the market you are innovative," Michellod said.

Traditional life insurance remains the preferred vehicle for individual retirement savings. More than half of France's 12 million life insurance customers use their individual policies to save for retirement. The combined life and savings accounts are specific to the French market. The accounts are flexible enough to be drawn down whenever the customer needs the money, but there are tax advantages if the accounts are held for at least eight years, making them attractive for retirement savings, Malhomme said. Mutual funds and unit-linked securities, as well as general account, are among the investment options offered.

A specific annuity scheme was created in 1994 for nonsalaried people and about 60% of those eligible participate. In this popular individual retirement scheme, policyholders get the tax advantage up front, then pay taxes on the annuity payout in retirement.