Selling insurance through banks is nothing new. Adapting processes to ongoing digitization in a world adjusting to the many lasting impacts of a global pandemic, however, requires taking a closer look at this proven distribution channel.
From October to November 2022, RGA conducted an online survey around the future trends, challenges, and opportunities of bancassurers in the South Africa market. Six of the largest bancassurers in South Africa participated, representing a majority of the bancassurance market share.
RGA has conducted the survey since 2010, and although many 2022 results remained relatively consistent with the 2021 survey, the latest survey had new questions around digital acceleration and customer journeys, product and distribution channel development, bancassurance penetration, and partnerships. The results were revealing.
Digitization fuels evolving landscape
As the world has become increasingly digital, insurance distribution has largely followed suit. Yet, while digital channels continue to gain traction, the long-term financial nature of insurance has sustained the ongoing relevance and importance of in-person bancassurance transactions. Survey respondents reported that they plan to focus on a combination of online sales and branch sales, now that COVID-19 restrictions have eased. In other words, bancassurers are eager to engage consumers where they are, whether online, over the phone, at a physical bank, or a combination of all of these.
Though traditional channels remain vital, the COVID-19 pandemic has accelerated the shift towards digital distribution, and bancassurers have invested in online sales platforms to improve the digital customer experience.
Online applications are now standard, with four of six respondents implementing digital application solutions in 2021-2022 and the other two carriers having already done so. Additional online tools and functions that have become commonplace include digital claims (five of six respondents), e-signatures (four of six), and e-underwriting (four of six).
While all insurers surveyed offer online sales, they also note several challenges to driving digital sales growth. Low straight-through processing (STP) rates were identified within the top three customer journey challenges by three of the six respondents, including two mentions as the top-ranked challenge. Other key customer journey challenges identified include low application start and completion rates (each mentioned by three of the six respondents, as the top- or second- ranked challenges), followed by low customer traffic to online channels (mentioned by two of the six respondents, in the top or third ranks). Despite these obstacles, progress continues. For closing sales originated online, four out of the six respondents cited end-to-end online transactions as their most used option, while the remaining two respondents rely more on outbound telephone engagement to complete the sale.
Growth opportunities spur innovation
Bancassurance remains a dominant distribution channel in South Africa – with more growth potential. Survey respondents reported that among their existing customers an average of 19% own a life or health insurance product, with that number ranging from 10% to 30% across five respondents. Customer segments currently targeted include middle/mass market (five of six respondents), low income (five of six), high net worth (two of six), corporate/small and medium-sized enterprises (two of six), and professionals (one of six). Half of the respondents also acknowledged a focus on capturing other insurers’ customers to drive future growth, a potential indicator of intensifying competition as bancassurers look for ways to gain further market share. Additional customer growth segments identified include Millennials (three of six), the middle/mass market (two of six), high net worth (two of six), low income (one of six), corporate/small and medium-sized enterprises (one of six), professionals (one of six), retirees/seniors (one of six) and impaired lives (one of six).