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Keys to Bancassurance Success

Innovation and Alignment

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The global bancassurance market is a sizable and increasingly important channel for protection products, predicted to expand at a compound annual growth rate (CAGR) of 5.98% from 2014 to 2018.1 But with increased opportunity comes increased competition.

In order to separate themselves, bancassurers in both emerging and mature markets must deliver innovative products aligned with target consumers via efficient distribution channels.   

Innovation

Traditionally, bancassurance has targeted the mass market – but today players are finely segmenting the market, creating tailor-made products for specific groups of consumers. Banks must analyze customer preferences, and insurers must manufacture products in tandem with their bank partner’s recommendations and requirements.

In Mexico, RGA developed a surgical cash product targeting middle class consumers sold through telemarketing and bancassurance. We identified a need for a streamlined solution for the middle market and designed a standalone product requiring only two yes/no screening questions. It is now a critical component of a total protection portfolio for consumers in the region.

The product’s success required a deep understanding of the socioeconomic segment, which was developed through significant consumer survey support and accurate data base information. RGA surveys reveal most markets rely on distribution feedback for product development, while some markets are driven by competitor offerings and customer research.

Alignment

By segmenting the customer base by income, age, occupation, gender, or other variables, and then analyzing customer buying behavior and preferences for products, insurers can create multiple opportunities to serve untapped populations via bancassurance. The key is to translate that analysis into a multi-channel, multi-product bancassurance strategy with all components – product, channel, and customer – in alignment.

In Italy, an RGA client sought to enlarge their product portfolio with an individual health product to be sold via bancassurance. Together we developed a product covering surgical cash, outpatient benefits, and dental. We also identified the ideal banking partners through which to sell the product, aligning bank and insurer’s incentives.

Deep integration and synergy between the bank and insurer is vital to success. This includes operational integration (shared technology, marketing, forms, administration, etc.), cultural integration (sales strategies and success targets), and channel integration (in-branch sales, online/direct channels, mobile apps, ATMs, retail shops, etc.). Bank advice and product sales are becoming an increasingly regulated environment, elevating the importance of building mutually beneficial bancassurance partnerships.

Needs-based selling and effective cross-selling and marketing of customized products are essential in today’s competitive marketplace. Banks’ significant data advantage over other insurance distribution channels offers unique opportunities to use these approaches to generate new business. A bancassurance strategy based on innovative products targeted to specific consumers can allow insurers to capitalize on existing opportunities and expand into new market segments.


1 TechNavio Report 2013.

The Author

  • Leigh Allen
    Director
    Global Surveys and Distribution Research
    RGA
  • protection gap
  • predictive modeling
  • big data
  • middle market
  • alternative distribution
  • innovation