New LIMRA Study Identifies Best Practices in Bancassurance
LIMRA recently released results from a new multi-regional survey of 124 life insurers to identify the best practices of successful bancassurance lines of business.
Bancassurance is the practice of selling insurance products through banks. Usually a bank (or banks) and an insurance company establish a relationship in which the bank sells products manufactured by one or more insurers.
"Bancassurance is a very effective way to reach lower- and middle-income consumers, who may not have a relationship with an insurance agent," said
The study found that 74 percent of life insurers with a bancassurance program in
Relationship matters
There are three primary relationship types between banks and insurers: joint venture (the bank and insurer establish a jointly owned insurance company or distributor), strategic alliance (the bank sells their own banking products, and sells the individual insurance products of only one insurer) and pure distributor (the bank acts as an intermediary offering products of more than one insurance company). LIMRA found the more mature bancassurance markets in
"Consistent with prior studies, we found that insurers that have strategic and joint venture relationships with banks are more likely to be successful," noted Hartshorn. "These relationships allow banks and insurers to leverage each other's strengths and minimize the upfront investment needed to establish a program."
Training is a priority
The study finds that there is a strong correlation between successful bancassurance practices and sales people trained to sell insurance products in banks. More successful bancassurance programs rely on insurance professionals to train bank staff on product design and sales tactics. In
Simple Products Are More Successful
In
In comparison, the Latin American market is quite different. Accident, home and auto insurance products are more popular than health and life products (chart).
"It is important to note that overall life insurance penetration is considerably lower in
Methodology: LIMRA surveyed 124 insurance companies in 31 markets during the fourth quarter of 2016 and in
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