RGA provides quarterly updates on global product developments, which can be made available upon request. Click here to view the Q3 2019 digital newsletter.
From 2011 through 2017, bancassurance (where insurance products are sold through bank channels) surpassed all other channels in insurance premium growth for both life and non-life products – with a recorded compound annual growth rate (CAGR) of 5.8%. Since then, life products have continued to grow (6% CAGR over the same period), even as non-life product growth has decelerated.
Latin America Leads for Bancassurance Growth
The region with the greatest bancassurance growth was Latin America with 12% premium growth, outpacing other regions. The growth can be attributed to several regional drivers that include: a growing middle class; increased disposable income and appetite for insurance products; favorable tax laws; and financial deregulation.
In Asia, bancassurance premiums grew 9.2% in the same period, with two-thirds of that growth being attributed to China.
A Shift Toward Digitization
The need for digital strategy development appears to be growing more crucial. Online banking and related technologies have reduced the number of consumer transactions in bank branches. This trend has serious implications for the traditional bancassurance sales model, which has been heavily reliant on face-to-face interactions in the branch or telesales marketing.
Digital banking tools has been named the primary factor for choosing a bank, as the percentage citing convenient bank locations is declining. Initially, millennials were targeted as the primary demographic for digital banking, but now additional consumer age groups are demanding simple, seamless digital experiences. A growing number of banks are offering digital channels for an improved customer experience, and many are shifting to end-to-end digital delivery. In the U.S., the big banks – J.P. Morgan, Wells Fargo, and Bank of America – have shut approximately 1,915 branches between 2014 and 2018. South Africa-based Standard Bank announced the closure of 91 branches in 2019 due to the shift in customer behavior.
The Digital Journey
RGA’s Global Bancassurance Products by Profitability survey findings highlight several innovations that are increasing bancassurance sales, including the use of technology and predictive analytics to improve customer engagement, as well as direct-to-consumer marketing, cross-selling, and upselling of complementary products and a simplified underwriting process.
The survey revealed that online channels are utilized for approximately 25% of the purchases of the top five most profitable products reported globally. This can be realized through the digitization, aggregation, and segmentation of customer information sources. Ideally, bancassurers could attain the ability to gain a ”one client view” – or more complete picture – of each customer’s unique financial needs by drawing on banking data spanning multiple product lines and then customizing product offerings accordingly.
The road to a digital future is not without a few obstacles. Increased regulation continues to complicate and restrict the distribution of insurance products through banks around the world. And while RGA research suggests a winning strategy may involve a multi-channel approach to bancassurance sales – specifically, seeking opportunities to deliver greater consumer value by bundling wealth management, financial family planning, and health products – success requires significant investment and tools to create a positive customer experience. Bancassurance growth will ultimately be augmented through digital strategies, automated underwriting and sales, and via targeted customer messaging and improved customer experiences.
Stay tuned for future releases of our quarterly newsletter to see where the next innovations will take us.