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Bancassurance: How digital solutions solve critical factors in successful cooperation between insurers and banks.

In today’s complex, rapidly-changing, and competitive environment, the traditional insurance business models are disrupted by new technologies, evolving customer expectations, new regulations, and competitive pressures. To adapt to the change and seize new growth opportunities, insurers need fast innovation processes that require new ideas and skills, as well as an evolution of the corporate culture. Most of the executives in the insurance industry are aware that only a portion of the change can be catalyzed from within; for a radical change, insurers need alliances with external partnerships to close the gap. Banks are still the most desirable partners for the insurers, and possible cooperation could bring mutual benefits for both sides. That hasn’t changed despite the popularity of cooperations with fintech companies that have been very common in recent years.

Bancassurance: a recipe for a mutual success

“Bancassurance drives an opportunity for banks to offer a deeper variety of products to their customers while capturing commissions, fees, and upfront contract payments from the insurer.”

For a long time, bancassurance has been a fruitful area for partnerships as the synergies between banks and insurers are often very clear. Introduced in Europe in the late 1970s, the relationship between banks and insurers – widely known as bancassurance – is often an attractive proposition for both insurers and their banking partners. Banks bring many important success-ingredients to the partnership; in general, banks are more trusted by customers, the level of customer engagement is significantly higher, the quality of the customer data is better, etc. Insurers, on the other hand, bring specialized skills in areas such as insurance product development, claims management, and sales support. The benefits are clear for both sides.

“Insurers benefit from a quick enhancement of their distribution reach while taking advantage of increased economies of scale.”

In the face of shrinking net interest margins due to the record-low interest rates, many banks see the potential in non-interest income that bancassurance can offer.  Banks have also been seriously considering their bancassurance partnerships. Such cooperation is an opportunity for them to offer a deeper variety of products to their customers while capturing commissions, fees, and upfront contract payments from the insurer. The benefits for insurers are more than obvious since they quickly enhance their distribution reach while taking advantage of increased economies of scale.

Looking beyond here and now. Bancassurance transformation

The number of bancassurance agreements in place around the world has grown dramatically since its inception, attracting the most prominent players in the insurance and banking marketplaces. Not surprisingly, its share in the total sales volume has been continuously rising, even reaching a dominant position in some markets. For example, in France, the bancassurance contributes more than 60% in total Life&Health premium volume.

“The global bancassurance market is projected to reach the value of US$ 1,665 Billion by 2024, growing at a CAGR of 6.1% between 2019 and 2024.”

According to the ResearchAndMarkets.com the global bancassurance market size reached around US$ 1,166 Billion in 2018. The market is further projected to reach the value of US$ 1,665 Billion by 2024, growing at a CAGR of 6.1% between 2019 and 2024. From 2011 to 2017, the growth of the bancassurance channel (circa 6%) outpaced other channels in both life and non-life products. Relatively low European penetration rates (share of the banks’ total customer base) of 37 per cent in life and 8 per cent in non-life products suggest that there is plenty of room for bancassurance sales to grow. The bancassurance model has not developed consistently around the world; it depends on several external factors such as tax, regulation, banking penetration, and often even local custom.

A check-list for a successful bancassurance partnership

“To ensure successful operations, Bancassurers need simple, fully automated, and end-to-end processes that open up sales opportunities on digital channels and enable relationship managers.”

But, establishing successful bancassurance cooperation has never been an easy task due to complex sales processes for insurance products, as well as competing priorities with other banking products. Bancassurers need simple, fully automated, and end-to-end processes that open up sales opportunities on digital channels and enable relationship managers. There is no single winning formula for successful bancassurance relationships. Still, according to the best practices collected over the last four decades, there are a few critical factors in developing successful bancassurance cooperation. The insurers must proactively push for a coordinated portfolio of projects and activities in the following areas:

  • Strategic partnership and coordination.

To accomplish such a complex portfolio of projects and initiatives needed for establishing bancassurance cooperation, very strong commitment and focus must exist on both sides. It requires creating a joint team of both bank and insurer employees empowered to bring together all the deliverables included in the plan.

  • Specific product portfolio management.

Efforts to implement traditional insurance products (developed for internal sales network) mostly failed. By creating a new portfolio of bancassurance products tailored to the bank, significant complexity reduction in product development is necessary and making bundles with bank products whenever possible. The process should concentrate on broader financial objectives of targeted customer segments, e.g. wealth management, pensions schemes, health programs, etc.

  • Integrated operations and IT.

Intuitive IT solutions and straight-through processing need to be implemented, with minimized back-office involvement on the insurance side. These processes should employ digitally enabled, real-time quoting and contracting that eliminate over-reliance on paper and reduce manual underwriting.

  • Efficient support and training capabilities.

Extensive training in insurance products for bankers is a must in the regular bank’s training program. The bankers must be provided permanent support by an insurance team on-field or via digital channels.

  • Establishing performance management and incentive programs.

Insurers must implement analytical support that continuously measures the results on all levels and suggests corrective actions. A set of incentives must be in place for the bank, the management, and the bankers.

  • Implementation of aligned data management.

To create customized and timely offers for customers, the partners need to analyze the rich banking data available to them and differentiate pricing that can make proposals more competitive.

Strategic partnership and coordination between bank and insurance

Why digital channels are key

“Bancassurers can increase sales by providing customers with omnichannel engagement and leveraging all channels in a coordinated way. “

The digital era has already changed business models on both sides of the bancassurance partnership. Consequently, bancassurance is also heavily affected, and Covid19 has only fueled the effect. Fewer people are visiting bank premises, and yet customers still want to have an opportunity to be served by highly competent bankers. Bancassurers can increase sales by providing customers with omnichannel engagement and leveraging all channels in a coordinated way.

Bancassurers five strategic capabilities

According to the Finalta’s survey, from 2016 to 2017, when much of Europe experienced stagnating growth, new business sales by digital champions grew by 17 per cent, significantly outpacing sales growth of all other players. Asseco, a leading IT company in the CEE region, enables bancassurance partners to achieve this with the LIVE product family. LIVE is an integration of both insurer’s and bank’s resources to establish state-of-the-art omnichannel customer experience.

Live by Asseco features

Strong analytical capabilities of the LIVE family enable partners to overcome possible compliance and data privacy restrictions, as well as tensions regarding customer data ownership. Rich customer insights based on a bank’s interactions with customers are combined with insurer’s data to support creating and delivering tailored and relevant offerings to the customer. Also, LIVE’s communication capabilities enable omnichannel support for bankers to be delivered promptly. The same is provided to the customers when insurance is provided by a bank’s digital channels (e-banking, m-banking).


For more information on how ASEE and LIVE product family can support implementation of successful and fruitful bancassurance cooperation, please contact us on the link https://live.asseco.com/contact/.