BANCASSURANCE TRENDS IN ROMANIA

SORIN MITITELUCEO BCR ASIGURARI DE VIATA

FIAR – BRASOV – 20.05.2015

CONTENT

1. OVERVIEW - INSURANCE IN CENTRAL EUROPE (ROLAND BERGER & EFMA MARKET STUDY)

2. BANCASSURANCE - MORE THAN A SIMPLE DISTRIBUTION CHANNEL?

3. BANCASSURANCE - SWOT ANALYSIS

4. CHALLENGES FOR BANCASSURANCE - PRIIPs & KID

5. CHALLENGES FOR BANCASSURANCE - MiFID- SALES/ADVISORY

2

3

1. OVERVIEW - INSURANCE IN CENTRAL EUROPE (ROLAND BERGER & EFMA MARKET STUDY) (1/2)

Strategic options for general channel focus Relative importance of channels and planned shifts in priorities

4

1. OVERVIEW - INSURANCE IN CENTRAL EUROPE (ROLAND BERGER & EFMA MARKET STUDY) (2/2)

5

2. BANCASSURANCE - MORE THAN A SIMPLE DISTRIBUTION CHANNEL?

Strategic Partnership

Governance Structures

Multi-Level Execution

Vision; Strategic Objectives; Business/Operational Model; Performance Evaluation

Permanent Steering of the business aligned with partners management systems

External and Internal Communication

Customer Value Proposition;

Product/Sales/Process Management;

Budgeting, etc.

TOP LEVEL

MIDDLE LEVEL

BASICLEVEL

6

3. BANCASSURANCE - SWOT ANALYSIS

• Large client database translate into high cross sell rate

• Low insurance penetration rate • Wide insurance product offer for bank

clients• Special prices on insurance products

for clients

• Not so well trained sales network in insurance

• Shrinking the banking network

• Distribution channel development • Opportunity to grow on both life and

general insurance • Cards and micro insurance with very

high potential• To grow on regular paid premium

• Changes in insurance legislation (including certification of people who sell insurance)

• Changes in fiscal environment (currently gains from life insurance are not taxed)

7

4. CHALLENGES FOR BANCASSURANCE -PRIIPs & KID (1/2)

Regulation on key information documents for packaged retail and insurance-basedinvestment products (PRIIPs) applicable from December 31st, 2016

applicable to PRIIP manufacturers and persons advising on/selling, PRIIPs not applicable to:

non-life products; contracts where benefits are only payable on death or in respect of

incapacity specific pension products, certain occupational pension schemes

Scope

Subject to

PRIIPs

traditional life insurance with fluctuating profits hybrid products (traditional life insurance combined with unit-linked life

insurance) unit-linked and index-linked life insurance

Definition

insurance-based investment product: an insurance product which offers amaturity or surrender value that are totally or partially exposed, directly orindirectly, to market fluctuations

KID (Key Info

Document)

KIDs are short, plainly-worded documents – no more than a few pages long– that will provide investors with answers to the key questions they haveabout the features, risks, and costs of investment products

8

4. CHALLENGES FOR BANCASSURANCE -PRIIPs & KID (2/2)

9

4. CHALLENGES FOR BANCASSURANCE -MiFID- SALES/ADVISORY (1/2)

Socio -Demograp

hics

Financial education

Financial Assets

Financial Behavior

Customer Investment Risk Profile

Pricing

Volatility

Documentation

Complexity

Sales Support

Investment Product

Risk Profile

High Product

Risk; Low Customer

Risk

High Product

Risk; High Customer

Risk

Low Product Risk; Low Customer

Risk

Low Product Risk; High Customer

Risk

10

Product 1

• Sales New Volume

•Commission

Product 2

• Sales Number of Contracts

•Commission

Product 3

•Outstanding Balance

•Bonus

CURRENTLY: Individual Commission -Product Based Schemes

FUTURE:Individual or Team Commission / Bonus -Customer Portfolio BasedSchemes

Bonus / Commission based on Products Portfolio Overall Performance

Product 3

Product 1

Product 2

Bonus / Commission based on Customers Portfolio Overall Performance

Customer 3

Customer 2

Customer 1

4. CHALLENGES FOR BANCASSURANCE -MiFID- SALES/ADVISORY (2/2)