Why Should Insurers Seriously Consider Bancassurance?
The Growing Importance of Banks in Insurance
Rapidly changing external forces are reshaping the ecosystem for banks and insurers. There is an ongoing pressure to improve financial performance by increasing revenues and decreasing expenses, and new business models and mindsets need to be addressed if financial institutions are to position themselves to thrive over the long term. In this context, bancassurance may provide some answers.
It is necessary to understand the forces in place to create a successful bancassurance strategy, because financial institutions operate in a complex ecosystem. The report discusses how bancassurance can be successful and why are banks better prepared to serve a more demanding consumer in search of improved customer experience. While some of the themes and analysis are global, this report looks first into bancassurance from the Latin American market perspective.
We are facing a more competitive market and better deals as the result of consumers having more information available to compare. In the midst of this change, banks appear as an ideal channel for retail insurance, and with the correct focus could become specialized outlets targeting their high net worth customers and their businesses.
New outlets are arising that are focused on user experience and digital, and are well suited to compete in the distribution of commoditized products. As the industry reshapes itself, banks seem to be the only channel in a position to seriously compete with these new players.
“Successful bancassurance models are possible,” says Juan Mazzini, a senior analyst with Celent’s Insurance practice and author of the report. “Bancassurance partners need to understand the cultural differences between the businesses and take adequate measures to integrate insurance with core banking functions. It is important to consider bancassurance as part of the bank strategy to increase profitability and customer service, thereby ensuring clear segmentation and targeted product marketing.”