Why Should Insurers Seriously Consider Bancassurance?

The Growing Importance of Banks in Insurance
by Juan Mazzini, November 4, 2014
Global, Latin America

Abstract

Rapidly changing external forces are reshaping the ecosystem for banks and insurers. There is an ongoing pressure to improve financial performance by increasing revenues and decreasing expenses, and new business models and mindsets need to be addressed if financial institutions are to position themselves to thrive over the long term. In this context, bancassurance may provide some answers.

It is necessary to understand the forces in place to create a successful bancassurance strategy, because financial institutions operate in a complex ecosystem. The report discusses how bancassurance can be successful and why are banks better prepared to serve a more demanding consumer in search of improved customer experience. While some of the themes and analysis are global, this report looks first into bancassurance from the Latin American market perspective.

We are facing a more competitive market and better deals as the result of consumers having more information available to compare. In the midst of this change, banks appear as an ideal channel for retail insurance, and with the correct focus could become specialized outlets targeting their high net worth customers and their businesses.

New outlets are arising that are focused on user experience and digital, and are well suited to compete in the distribution of commoditized products. As the industry reshapes itself, banks seem to be the only channel in a position to seriously compete with these new players.

“Successful bancassurance models are possible,” says Juan Mazzini, a senior analyst with Celent’s Insurance practice and author of the report. “Bancassurance partners need to understand the cultural differences between the businesses and take adequate measures to integrate insurance with core banking functions. It is important to consider bancassurance as part of the bank strategy to increase profitability and customer service, thereby ensuring clear segmentation and targeted product marketing.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

The Business Case for Bancassurance

3

Distribution Channels Overview

9

 

Competition from Banks

9

 

Chile

11

 

Brazil

12

Bancassurance in Practice

13

 

Business Models

13

 

IT and Operational Models and Considerations

15

Challenges and Opportunities

20

 

For Insurers and Banks

20

Conclusion

32

Leveraging Celent’s Expertise

33

 

Support for Financial Institutions

33

 

Support for Vendors

33

Related Celent Research

34

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