1 HAKAN SEZİK July 2015 - BAKU Evolution of Bancassurance ; BAKU July 2015 RESTRICTED.

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Evolution of Bancassurance

HAKAN SEZİKJuly 2015 - BAKU

Evolution of Bancassurance ; BAKU July 2015RESTRICTED

Index• History of Bancassurance

• How Did Customer Become a Topic ?

• Former and Today/The way Forward Model

• Benefits of Bancassurance

• Bancasssurance in Turkish Market

• Highlights during set up

• Conclusion

• Citation / References

2RESTRICTEDEvolution of Bancassurance ; BAKU July 2015

History of Bancassurance

Ancient World - Chinese and Babylonian traders

- Rhodes created the 'general average‘

Medieval Era - First insurance contract in Genoa in 1347

- The first printed book on insurance was written in 1488

Modern Insurance - Developed in London in 17th century

- Property insurance can be traced to the Great Fire of London - First life insurance policies in the early 18th century

In the early 70s,-The real pioneers were the British with the creation of Barclays Life in September 1965

- France ACM (Assurances du Crédit Mutuel) and Vie et IARD (life and general insurance) partnership

In the early 80s,- BANCO DE BILBAO Group acquired a majority stake in EUROSEGUROS SA, an Insurance and Reinsurance company

In Europe, Germany and Italy took much longer to get involved, as did Asia

In 2003,- Bancassurance began to attract existing Korean banks after government authorization

In 2004,- Fortis signed a contract in Thailand with Muang Thai Group for life and non-life policies


Insurance Bancassurance Expansion of Bancassurance

Start 1975-1985

• External partnerships• Creation of subsidiaries

Maturity 1985-2000

• Takeovers driven growth• Acquisition driven growth

Diversification 2000 - 2005

Concentration 2005 -

• Alliances Partnerships • Collaboration• Customer Centricity

Historical Development

Capturing Bank’s interest with low cost investments

and revenue oppurtunities

Exploding revenues and

drawing attention of continental

major manufacturers

Acquisitions of local companies

together with distribution

facilities

Leveraging alternative channels, restructuring further

to regulatory requirements

* The major gap, in the first three interval phases was «Customer Centricity»


How Did Customer Become a Topic of Insurers

Revenue pressure, ambition on growth with lack of satisfactory control brought several major events in Europe ;

• PPI ( Payment Protection Insurance) mis-selling became a watershed in UK

• The wave effect of PPI to Europe was as same as UK .

• Turkish market had suffered due to sales without customer consent and negative option based proposition strategies


BancAssurance Model

Roles RESPONSIBILITY

Former Today & The way Forward

Product

Sales

Process

Performance

• Banks sold out their subsidiaries or minor shares to Top Insurers together with 10-15 years distribution agreement

• Regulators required to establish governance structure in the bank for core products

• Dedicated insurance product teams were established in the banks

• Collaboration had level up all part of the relation

• Today, Insurer do not have the sole responsibility as they used to have

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Former Today & The Way Forward

RESTRICTEDEvolution of Bancassurance ; BAKU July 2015

Customers

One point for financial service, competive price

Simplified, lean and compatible to banking

products

Brand Awarness

Banks

Topping up financial proposition, by protection and wealth management

facilities

Enpowering customer engagement

Alternative revenue without capital allocation

Insurance Companies

Leveraging the bank’s brand , getting closer with

customer

Qualified Customer Data

Ability to distribute innovative product

What are the benefits to Customers/Banks/Insurance Companies in the new model ?


Bancasssurance – Life & Pension Insurance in Turkey

• Bancassurance has captured 80% market share in life with a sustainable growth since 2006

• Credit Life has 67% share in total life portfolio, 83% on new policies (as end of 2013)

• Due to strong incentives provided by Turkish Goverment pension is more attrctive than Life and Investment portfolio

• Bancassurance is dominating the Pension industry as well

Growth


Market Share of bancassurance in Life

Pension Contribution per channelAs end of 2013

• Bancassurance market share is 14% and has a tiny increase since 2006

• Growth line, since 2006, is similar with the market

• Personal Accident, Property Damage are the driver products of the Bancassurance revenue.

• Financial Lines and Trade Credit Insurance had grown significantly faster than market during the last three years

Bancasssurance – Non-Life Insurance in Turkish Market

Growth Rate


Bancassurance – Non Life Market Share

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Partnership

•Insurer

• Establish a dedicated product team for bancassurance

• Understand and digest bank’s products and services

• Dedicate coaching team for branch • Be solution oriented and cascade it to

dedicated team accordingly

•Bank

• Establish a dedicated insurance product team

• Position the product as a core product such as Deposit, Lending, Asset Management, Cash Management, Trade etc

• Leverage channels ability

Product

•Insurer

• Differentiate your product• Make it simple and lean• Prefer risk selection instead of uw• Try to launch loan protection at the

beginning • Organise a powerful launch program • Highlight customer satisfaction

• Bank

• Do listen customer’s and relation manager’s insights

• Do not act with bias • Communicate insurance as same as

other products • Develop qualified leads for higher

take up rates • Establish a product vs channel matrix

Process

•Insurer

• Try to establish STP process • Do not be traditional• Set up the customer complaint

management

• Bank

• Leverage the payment methodolgy • Use direct channels and differentiate

your service • Leverage technology to manage the

operational cost

Highlights during set up


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Conclusion

Develop your model together with Bank

Put customer centricity on top of the agenda

Utilise bank database during the product development and execute accordingly

Leverage channels, not just for sell

Use take up rate as a KPI and modify the process further to results regularly


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Citation / References

- https://en.wikipedia.org/wiki/Bancassurance

- http://www.scor.com/images/stories/pdf/library/focus/Life_Focus_102005_EN.pdf

- http://www.tsb.org.tr/resmi-istatistikler.aspx?pageID=909

For Further Questions :[email protected]@gmail.com


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1 HAKAN SEZİK July 2015 - BAKU Evolution of Bancassurance ; BAKU July 2015 RESTRICTED.

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