“Compensation alignment” was chosen as a key success factor for generating leads from banks, according to a bancassurance survey by The Foundation for the Advancement of Life & Insurance Around the world (FALIA) conducted last year, which targeted life insurance companies, life insurance associations and regulators in the Asia Pacific region that have a relationship with FALIA.
However, focusing on commission rates might lead to product-pushing or mis-selling. Therefore, insurers should highlight not only commission rates but also holistic support structures and synergistic effects, and try to set non-sales KPIs, said FALIA.
A “good relationship with an “excellent partner” is also regarded as a critical success factor while “getting back to basics” to seek out an optimal business model by regularly implementing the “Plan-Do-Check-Act (PDCA) cycle” is seen as a vital, yet often overlooked, success factor, said the report.
The other key drivers for the sector include tips that insurers should consider an exit strategy from focussing on heavily on savings-related products; having sales specialists with great skills and deep knowledge as they are essential to delivering good value to customers.
For key challenges, low awareness about life insurance among consumers is the first challenge named. Training the banks’ sales staff appropriately is another. The report said this means insurers need to focus more on customer value rather than market share itself to improve the industry’s reputation as a whole.
“Low margin products,” “Low interest rates,” or “Market competition” were chosen also as key challenges. These answers highlight the fact that insurers are struggling with profitability issues in their bancassurance strategy.
Forging strong relationships with banks is another key challenge. Insurers must continually maintain close communication with banks to share commitment and enhance relationships of trust by understanding one another, FALIA said.
Findings regarding bancassurance operations in the participating countries include the following observations:
- The distribution share of bancassurance in selected countries represents 42.2%, while that of agent channels represents 44.2%. Given the recent growth of bancassurance, the distribution share might converge to 50% bancassurance, 30% agents, and 20% other channels in the future.
- In terms of bancassurance’s market size in each country, China’s is overwhelming compared with that of other countries. The total bancassurance premium income of the top three countries (China, South Korea, and Taiwan) accounts for about 76% of total bancassurance premium income of the selected countries.
The participating countries (regions) of the survey were China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Turkey, Vietnam.