Transcript Bancassurance Presentation VNM Summit Apr08

Rise of Bancassurance
An Asia experience
International Insurance Society
Taiwan, 13-16 July 2008
David Fried
Group General Manager
Regional Head of Insurance
Hongkong and Shanghai Banking Corporation
1
Contents
 Global Drivers
 Aging population brings in opportunities
 Bancassurance
2
Opportunities in Asia
Insurance markets in Asia are at different stages of development
Saturated
Japan
Developed
Moderately developed
Under penetrated
South Korea
Malaysia
China
Hong Kong
Thailand
India
Taiwan
The Philippines
Vietnam
Singapore
Macau
Indonesia
Bancassurance is the fastest growing channel
3
Why now?
Asia opportunity – paradigm shift in insurance spend as GDP’s hit
threshold
Life premiums/GDP (%)
12
Taiwan
(1978)
Potential
10
South
Korea
Japan
(1976)
8
6
Australia
4
Philippines
India
Current penetration
of emerging markets
2
Malaysia
China
(1982) Thailand
Vietnam
(1996)
Singapore
Indonesia
0
0.1
1.0
* Data series of penetration start from 1970 unless specified. Real per capita GDP in log scale.
Source: Swiss Re Economic Research and Consulting
10.0
Hong Kong
(1990)
100.0
Real per capita
GDP, US$ ‘000
4
Emerging Markets comprise 10% of world premiums –
skewed to Life
Top 10 Countries = 87% of Life Market
US$bn
US$0.33tn
Life
0.22
70
60
50
40
30
20
10
0
15%
10%
5%
0%
South
Korea
China
Taiwan
South
Africa
India
HK
Brazil
Singa- Mexico Russia
pore
GI
0.11
US$bn
Top 10 Countries = 64% of GI Market
30
15%
20
10%
10
5%
0
0%
South
Korea
China Taiwan South
Africa
India
HK
Brazil
Singa- Russia Mexico
pore
5
Evolving customer needs:
a Golden Opportunity for Banks
Older customers have different financial needs
Financial needs map
 Over 50’s possess 70% of all financial
assets
Bank (Credit) Products
 These individuals and their assets need
protection (insurance) and investing – no
longer borrowing
Wealth
High
Insurance investment
needs
Low
Youth
Mature
 Ageing is [accelerating] this shift as old
borrowers de-leverage
 Equally applicable in Developed and
Emerging Markets
 This “sea change” too big an opportunity
to miss and should build on HSBC credit
credentials
Client time
6
Why now?
People are aging
Percentage of total population aged 60 years or over in 2050
 … but will have increased significantly in many countries by
2050
Source: UN Population Ageing 2006
7
Bancassurance - catching on globally..
France:
the largest bancassurance market, 62% of new premiums in 2005 earned through bank
networks (favourable legislation, taxation)*
USA:
1999 legislation allowed insurance sales through banks but the expected revolution
hasn’t materialised (low awareness, low growth)*
UK:
with 20% total premiums collected, bancassurance lags in market penetration
(dominance of IFA sales force)*
China:
>30% of new business from bancassurance (heavily biased by SP products)*
Sth Korea:
since regulatory changes in 2003, bancassurance has exploded. New Business Apr 2006
through Jan 2007 accounted for 46%collected premiums (heavily biased by SP roducts)*
HK:
38% bancassurance weighted penetration in 2007
(legislation, low interest rates, bank expertise)**
Others:
Vietnam circa 0.5% penetration in 2005,
Indonesia circa 20% in 2004 up from 5% in 1998
Malaysia circa 45% in 2005.*
8
•Watson Wyatt Data
Bancassurance – a growing success in Asia
New Premium from bancassurance as a percentage of total New Premium:
New Life Insurance Premium
New Life Insurance Premium
1998
2005/06
Less than 10%
33.9%
15.1%
33.1%
Negligible
4.61% (15.4% in private sector)
S. Korea
Nil
47% (unweighted premium)
Malaysia
6%
48%
Singapore
26%
26%
Taiwan
1%
37.5%
China
Hong Kong
India
Source: various sources, Watson Wyatt and Swiss Re reports
9
Meeting Stakeholders Needs
•
•
A three-way all-win solution
Maximising business performance and
potential
One-stop shop,
holistic solutions
A tool for deepening
banking customer
relationships & driving
NFI
Bank
Customers
A new distribution
channel in addition to
the traditional Agency
& Direct
Insurer
10
Integrated bancassurance defines where customers
are
Global Banking
and Markets
Global
Institutions
Corporate
Private Banking
HNWI
Mass Affluent
Commercial
Banking
Personal
banking
SME
Mass Market
Global product (Credit Cards)
11
Products align with different market segments
The selling model(s) chosen impacts product, distribution channel,
staff selection and training, marketing, sales processes and support
etc
NEEDS BASED
Sales
complexity
increases
2.
2. Co-incidental
Co-incidental
• Whole life
• Endowments
1. Targeted outbound
for simple products
• Accidental Death
• Personal Accident
• Hospital Cash
• Mortgage Reducing
Term (cross sales for Fire
buildings and contents)
5. Advisory
4. Advanced
standalone
3. Simple standalone
/ packaged
TRANSACTIONAL
ADVISORY
• Personal
Accident
• Complex riders
• Home Contents
• Income Protection
• Travel
• Unit Linked Life
• Basic Term
• Annuities
• As per
‘Advanced Standalone’ but formal
recommendations
made
• Critical Illness
• Creditor on Credit Cards
• Motor (with car loans)
12
Key is distribution…. Underwriting automatically follows
Distribution
Manufacturing
Client/insured
1
2
Channel
General Insurance
4
Product
5
U/W
6
Claims
65%
15%
Life, Pensions
& Investments (LPI)
Return on Equity
(ROE)
Brand
3
45%
>20%
Banks
• Develop expertise, understanding and models
• Beauty parades, developing JVs and exclusive
relationships
• Seeking value creation rather than just fee income
• Starting to see the value in manufacturing – and
building their own
Admin
10%
15%
~10%
10%
7
Investments
10%
30%
>30%
Insurers
• Support and relationship building with banks
• Understanding of banks and their needs
• More internal support, blueprints, regional or
global academies within companies
• Benchmarking against the competition
13
Align tasks performed with channel functionality
A bancassurance model leverages ALL distribution channels for different stages of the sales cycle
Lead
generation
Qualify
sale
Diary
management
booking
Close
sale
Post sales
service
Account
management












Telephone






F2F (FPM’s)






Branches
Internet

Good

OK

Poor
14
Different Bancassurance Models
Integrated
Bank
Agents
Insurer
•Agents to place
at bank branches
Non integrated
•No agent at
branches
•Mine on bank’s
client base telemarketing
Bank
Bank
Insurer
Broker’s
model
Bank
•Bank’s RMs to sell
Partnership - Leads
referral from bank on
commercial business;
brokers to recommend
business
Insurer
Broker
15
Thank you
Q&A
16