Faced with fierce competition, and low interest rates globally, many life insurers are exploring novel ways to reach potential customers. In this aggressive search for growth, it is easy to overlook the untapped potential of more traditional channels such as bancassurance.
Bancassurers today not only have access to an immense pool of customer data, but many are also building the technology and analytical capabilities needed to unlock the value of those assets, whether in-house or through partnerships. They are:
- Adjusting their offerings in response to the current interest rate environment and evolving consumer expectations
- Exploring new ways of connecting with clients and delivering advice
- Integrating insurance propositions into the banking customer’s journey across channels, including digital banking platforms
This article provides a brief overview of these developments, and highlights seven global trends shaping the evolution of bancassurance today:
1. Data-Driven Innovation: Harnessing the Power of Banking Customer Data to Fuel Life Insurance Growth
When people hear about advanced data analytics, bancassurance is likely not the first thing that comes to mind. Yet, banks possess mountains of data about their clients, which can help to better understand insurance needs, improve risk assessment, streamline underwriting, and offer a better overall customer experience, when used appropriately and in respect of data privacy.
In a case in point, a multinational insurer teamed up with a bank in Southeast Asia to deploy a risk assessment model that uses predictors in the bank’s customer dataset, including general demographic, lifestyle, and financial variables, to create more targeted offers with simpler underwriting requirements. As a result, the bank has been able to achieve higher conversion rates on its life insurance offers than with previous marketing campaigns.
In South Africa, a recent RGA pulse survey of five major bancassurers highlighted the use of bank data and analytics to support insurance sales and customer retention. Notably, four out of five respondents reported leveraging bank consumer data to provide customers with tailored product propositions. They indicated using data analytics to:
- upsell or cross-sell insurance products to those bank consumers more likely to need and buy them
- simplify underwriting to improve the purchasing experience
- offer additional benefits or reduced prices to lower-risk customers
- assess and manage lapse risk
2. Leap Forward: More Streamlined, Digital, and Integrated Customer Journeys
Banks may still dominate city skylines, but people now conduct less and less business within their walls. Faced with declining foot traffic and rising customer expectations, bancassurers are increasingly focusing on online journeys to better compete.
As a result, more seamless and integrated bancassurance customer experiences have emerged, including the ability to purchase and manage insurance policies via the bank’s digital platform, as well as more unified customer engagement, loyalty, and rewards programs.
In Brazil, a major carrier has partnered with one of Latin America’s largest neobanks to launch a fully digital life insurance offering, accessible via the bank’s mobile app. Similarly, a major French insurer worked with a Swiss bank to integrate various insurance products directly on the bank’s digital platform, including a mortgage protection offering. In Asia, one major insurer embedded a stand-alone digital cancer product on the bank’s website and mobile app, offering a seamless purchasing experience by pre-populating relevant information from customer bank accounts and simplifying the application to only one question.
As a result, more seamless and integrated bancassurance customer experiences have emerged ... as well as more unified customer engagement, loyalty, and rewards programs.
3. Near Zero: A Shift from Savings to Protection
Globally, real interest rates have been trending downward since the 1980s, and insurers around the world have faced pressure to diversify portfolios away from savings products as a result. Add in aging populations and a global pandemic, and it is no surprise that banks see insurance as a potential source of growth. Many are starting to shift the focus of their insurance product portfolios from savings to protection. For example, a Hong Kong digital bank launched a cost-effective pure life protection product earlier this year. Similarly, a major Southeast Asian institution recently launched a product predominantly focused on risk protection, combining critical illness and life insurance benefits, with a minimal savings component.
4. The Personal is Protective: Appealing to Specific Customer Segments
The ongoing global health crisis has created an opening for bancassurers to demonstrate the value of protection at every stage of life. And yet, the current crisis also proves there is no one-size-fits-all solution. Communities and customers are coping with a wide variety of challenges, from economic uncertainty to worries about health issues.
Bancassurers are responding by personalizing product development. This requires keeping a careful pulse on changing customer preferences and rapidly (re)designing products and sales journeys to resonate with specific customer segments.
In Singapore, a bank and an insurer partnered to launch a multi-generational critical illness plan targeting the needs of young parents, allowing them to secure coverage for themselves, their children, and their elder parents at the same time. Another bancassurer launched a product targeting expectant parents specifically, with a lifelong critical illness protection plan covering the new baby from day one after birth.
Bancassurers are personalizing product development. This requires keeping a careful pulse on changing customer preferences and rapidly (re)designing products and sales journeys to resonate with specific customer segments.
Bancassurance solutions catering to the needs of seniors are being developed in various regions, including Asian and European markets. Examples include new dementia protection products, as well as critical illness protection plans for older customers with pre-existing conditions, such as diabetes and high blood pressure, blood sugar or cholesterol.
Bancassurers are also paying attention to the growing non-salaried segment of the workforce, including gig economy workers, freelancers, and entrepreneurs. In Switzerland, a major bank teamed up with an insurer to launch a platform targeting new business founders and offering a “one-stop shop” for banking and insurance services, as well as advice tailored to the needs of early-stage startups.
5. Doing Well by Being Well: Bancassurers Integrate Wellness into Product Offerings
Insurance-linked wellness offerings allow bancassurers to increase engagement and better meet the needs of health-conscious customers. Not incidentally, they also provide opportunities to improve risk underwriting, cross-selling, customer satisfaction, and retention.
RGA and RGAX surveyed 107 life and health insurers from around the world and found that 70% were creating insurance-linked wellness products. More than two-thirds were pursuing digital platforms, tools, and apps designed to empower healthier living through information and engagement.
This growth is built on previous successes: In the United Arab Emirates, for example, a large bank has been offering a wellness-linked savings account for several years, including free basic life cover and the opportunity to earn higher interest rates based on the number of daily steps taken. Similar wellness insurance programs are becoming increasingly common, as adoption of fitness wearables continues to increase, and digital wellness platforms become more sophisticated. Earlier this year, a leading bank in Mexico launched their first wellness-linked insurance product, and a major global banking and insurance group announced plans to integrate an insurtech’s digital health engagement platform into its offerings, leveraging advances in machine learning, behavioral science, and gamification.
RGA and RGAX surveyed 107 life and health insurers from around the world and found that 70% were creating insurance-linked wellness products.
6. Hybrid Advice: A Shift from Pure Face-to-Face Sales to Hybrid Models
Lockdowns have not been kind to in-person banking, but the shift towards online and mobile banking started long before social distancing. As a result, banks and insurers have increasingly turned to hybrid financial advice models. These systems marry personalized financial guidance from human advisors with digital tools and data analytics, empowering bancassurers to stay better connected with customers when meeting in person is not an option.
For example, an Asian bank has deployed a financial robo-advisor providing tailored insurance and investment insights to customers based on their personal situation. The service takes into account banking activity, as well as financial assets and obligations, and can connect to external accounts at other financial institutions for a more comprehensive assessment.
Bancassurers are partnering with technology vendors to augment their hybrid advice capabilities. A European company launched a service that makes it easier for banks to offer personalized insurance advice in-branch or online, by offering remote access to a pool of specially trained insurance advisors.
Another technology startup from Europe has developed a solution that can augment both human advisors and online insurance journeys, by surfacing relevant insights and recommendations at the right time. The solution uses machine learning models to analyze structured and unstructured data, including real-time voice conversations or previously collected customer data, in order to identify actionable information about the customer’s situation, such as new life events, and translate it into insurance coverage recommendations and selling points.
Lockdowns have not been kind to in-person banking ... As a result, banks and insurers have increasingly turned to hybrid financial advice models.
7. Partnering for Reach: Ecosystems are Growing in Importance
Many financial institutions, including bancassurers, are placing bets on ecosystems, either by building their own or offering their products and services through others’ marketplaces. Ecosystem builders hope to attract partners capable of generating new fee revenue streams, while improving the satisfaction and retention of their own customer base, in turn enticing new customers and partners to join. For example, a neobank in the U.K. launched its own digital marketplace and invites various external partners to cross-sell a range of complementary services to its customers, including life insurance. The marketplace goes beyond providing partners access to the bank’s customers, offering APIs that enable data sharing (subject to customer consent) and customization of partner offers, such as personalized insurance coverage recommendations based on individual needs and risk profile.
Bancassurers are at a crossroads. Amid rapid evolution in customer expectations, business models and technology, banks, and insurers must determine how best to take advantage of change. After all, innovation without purpose is futile. Those bancassurers with a clear view of the opportunities, as well as the capabilities needed to seize them, are best positioned to succeed.
At RGA, we are eager to speak with clients about any support needed as the industry evolves. Contact us to learn more about the resources, solutions, and services available or to discuss our market and product research.