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Bancassurance in Germany: Life, Non-Life and Creditor Insurance
Finaccord, November 2011
PUBLICATION OVERVIEW
Finaccord’s report titled Bancassurance in Germany: Life, Non-Life and Creditor Insurance is about the distribution of insurance products through banks and other lending institutions in Germany. Types of insurance considered are: investment-related life insurance and retirement savings; risk life insurance, critical illness insurance and income protection insurance; accident insurance, medical expenses insurance and health / hospital cash plans; personal motor insurance and household insurance; and creditor insurance for mortgages, consumer finance and credit cards.
Based on a survey of 173 organisations, it identifies 889 bancassurance distribution initiatives across these types of insurance, and highlights the operating models and product providers used in the vast majority of cases. Moreover, it analyses these bancassurance agreements in terms of ‘weighted partnerships’ which take into account the size of the retail customer base of the banking institutions distributing these policies, thereby differentiating between the most important relationships and those that are comparatively minor.
In addition, with the exception of creditor insurance, for which historic, current and forecast market size data is provided for 2007, 2011 and 2015, the report also sizes the market for the various types of insurance investigated in terms of gross written premiums between 2006 and 2010, provides a general introduction to the banking sector, comments upon the general influence of the bank distribution channel for these types of insurance, and presents available data for key bancassurance underwriters, including captives, joint ventures and other dedicated bancassurance underwriters.
KEY BENEFITS
You may be able to use this report and the PartnerBASE™ dataset that accompanies it in one or more of the following ways:
- gain access to a source of information that provides a comprehensive overview of the provision of a range of personal insurance products by a majority of significant banking entities in Germany;
- identify partnership opportunities for these types of insurance that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;
- understand which underwriters and other product providers have been successful in establishing distribution relationships with the most important banking entities in Germany;
- assess the background to the most significant bancassurance deals, differentiating between those that originate from long-term or strategic objectives and those that are more transient;
- appreciate the magnitude of the opportunity to sell different types of life, non-life and creditor insurance through banks and other lending institutions in Germany.
0.0 EXECUTIVE SUMMARY
1.0 INTRODUCTION
What is this report about?
Distribution partnerships with banks and other lending institutions constitute the focus of this report
Rationale
Across Europe, over 80% of banking entities surveyed are active in this arena to one extent or another
Methodology
Survey of banks and other lending institutions
Market data
Definitions
Investment-related life insurance
Retirement savings
Risk life insurance
Critical illness insurance
Income protection insurance
Accident insurance
Health / hospital cash plans
Medical expenses insurance
Personal motor insurance
Household insurance
Creditor insurance
Mortgages, consumer finance and credit cards
Weighted provider share of partnerships
Operating models
Abbreviations and exchange rates
Finaccord
2.0 MARKET ANALYSIS
Banks and other lending institutions covered
Introduction to the banking sector
In spite of some consolidation, Germany’s banking sector remains comparatively fragmented
Many of the regional public sector banks have suffered during the financial crisis...
... although the savings banks are largely perceived by consumers to be safe institutions
Taken as a whole, the co-operative banks possess the most retail branches in Germany
Investment-related life insurance and retirement savings
Insurance market size and growth
Riester and basic pension contracts fuel strong growth in the market for retirement savings products
‘Kapitalversicherung’ policies constitute a popular form of saving for many households
Rürup pension contracts are targeted most of all at self-employed customers
Distribution share of banks
Recent evidence suggests that the distribution share of banks in investment and pension policies is rising
Bancassurance provision rates, operating models and partnerships
Investment-related life insurance
Investment-related life insurance policies are offered quite widely by banking institutions in Germany
Talanx bought out Postbank’s equity holding in PB Lebensversicherung in 2007
Commerzbank switched its bancassurance partner after buying Dresdner Bank from Allianz in 2008
Deutsche Bank and Santander Consumer Bank both took steps to extend their deals during 2011
Including all types of provider, over 30 competitors hold relationships with banks in this sector...
... and several significant banking institutions are not distributors of investment-related life insurance
Retirement savings
Retirement savings products of one sort or another are available from over 50% of banks investigated
Partnerships with major banks determine the ranking by weighted share of product providers
Thanks to a previous deal with SEB, AXA is used as one of two providers by Santander Consumer Bank
Some links in place for retirement savings replicate those verified for investment-related life insurance
Performance of key bancassurance underwriters
The bancassurance-focused subsidiaries of Talanx ceded market share between 2006 and 2010
Protection-related life insurance
Insurance market size and growth
Protection-related life insurance is composed primarily of the risk life and work incapacity segments
Reforms to the pension system have resulted in growing demand for work incapacity insurance
Distribution share of banks
The most recent evidence suggests the distribution share of banks in protection-related policies is rising
Bancassurance provision rates, operating models and partnerships
Risk life insurance
Around a half of banking institutions researched in Germany are distributors of risk life insurance
Zurich’s strategic partnership with Deutsche Bank has been running for over ten years
Rheinland Versicherungen extended its relationship with Santander Consumer Bank in early 2011
Several private sector insurers have established partnerships with public sector savings banks
ERGO DIrekt (formerly KarstadtQuelle Versicherungen) is used by Valovis Bank
Building societies generally distribute the policies of their parent insurance companies
Six banks utilise captive brokers for risk life insurance
Several significant banking institutions are not distributors of stand-alone risk life insurance
Critical illness insurance
Critical illness insurance is not widely marketed by banking institutions in Germany
Income protection insurance
Provision rates and partnerships largely resemble those for risk life insurance...
... although some are unique to this form of cover...
... including relationships involving American Express and National Bank
Performance of key bancassurance underwriters
Accident and health insurance
Insurance market size and growth
Germany’s large and growing health insurance market itself breaks down into six main product categories
Around 9 million German consumers possess private medical insurance policies...
... which sometimes incorporate hospital cash benefits but rarely health cash benefits
Distribution share of banks
The most recent evidence suggests the distribution share of banks in accident and health insurance is rising
Bancassurance provision rates, operating models and partnerships
Accident insurance
Accident insurance is widely available from banking institutons in Germany
PB Versicherung, owned by Talanx, holds a partnership with much unrealised potential
Talanx is also active in this bancassurance segment via neue leben and TARGO Versicherung
16 banks with more than one million retail clients have no scheme for accident insurance
Medical expenses insurance
By means of four key banacassurance partnerships, DKV holds the highest weighted share
Union Krankenversicherung is the main health insurance provider used by public sector banks...
... although HanseMerkur has established relationships with several ‘sparkassen’
Many quite sizeable banking institutions in Germany do not distribute medical expenses insurance
Health / hospital cash plans
ACE European Group holds the partnership with by far the highest latent potential in this arena
Other relationships are limited to medium-sized and small banking entities
Performance of key bancassurance underwriters
TARGO Versicherung has improved its market share in Germany’s accident insurance sector
Personal motor and household insurance
Gross written premiums for personal motor insurance increase in 2010 for the first time in four years
Distribution share of banks
The most recent evidence suggests the distribution share of banks in motor and household policies is rising
Bancassurance provision rates, operating models and partnerships
Personal motor insurance
Around a half of German banks surveyed have an arrangement in place for personal motor insurance
HUK24, Allianz and DA Direkt lay claim to the partnerships with the most apparent potential
Several insurers distribute personal motor policies through subsidiary banks or building societies
ERGO Direkt’s partnership with Valovis Bank originates from a previous joint venture
19 banks with more than 1 million retail clients have no scheme for personal motor insurance
Household insurance
The provision rate for household insurance is somewhat higher than that for personal motor cover
By weighted share of partnerships, ERGO is ranked fourth thanks to its deal with HypoVereinsbank
DEVK holds five partnerships but all with relatively small banking institutions
Household insurance is absent from the product portfolio of several significant retail banks
Performance of key bancassurance underwriters
Creditor insurance
Consumer lending market size and growth
Mortgage lending
The value of the German mortgage market has remained virtually static in recent years
Non-mortgage lending
... while non-mortgage lending to consumers grew quite quickly in 2009 and 2010
Credit and other pay later cards
Credit and other pay later cards issued in Germany exceeded 25 million for the first time in 2010
Creditor insurance provision rates, operating models and partnerships
Creditor insurance linked to mortgages
External underwriters are normally used to source mortgage-related creditor insurance in Germany
PB Leben, owned by Talanx, has access to a large number of potential customers through Postbank
Deutsche Bank and Zurich have a relatively long-established bancassurance partnership
In total, there are around 45 product providers active in this segment of German creditor insurance
Only one bank was found to work with a joint venture underwriter
Creditor insurance linked to consumer finance
Out of 144 providers of consumer finance, 128 have an arrangement for related creditor insurance
Cardif has a large number of partnerships with medium-sized lenders in Germany
Eight institutions were making use of a captive underwriter for loan payment protection insurance
Lending institutions with no scheme in this field include several sizeable organisations
APRIL Financial Services achieved revenues of EUR 8 million in Germany in 2010
In conjunction with PROCHECK24, Cardif introduced an innovative new policy in 2011
Since January 2011, Talanx has been a co-owner of Credit Life International
ProTect Versicherung is a public sector insurer with a specific focus on creditor insurance
Swiss Life Solutions utilises its ‘NextGen’ software platform across eight European markets
Creditor insurance linked to credit cards
Relatively few credit card issuers have an arrangement for related payment protection insurance
Creditor insurance risk coverage
The vast majority of creditor insurance policies potentially offer comprehensive cover
Alternative distribution channels
Creditor insurance can also be acquired through various insurance and loan brokers
Creditor insurance market size, growth and forecast
Total gross written premiums are likely to be close to EUR 7 billion in 2012 or 2013
LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY
Overview of bancassurance provision rates for different types of insurance in Germany, 2011
1.0 INTRODUCTION
Banks and other lending institutions in Germany contacted by Finaccord, segmented by type
2.0 MARKET ANALYSIS
Gross written premiums for investment-related life insurance and retirement savings in Germany, 2006-2010
Gross written premiums for investment-related life insurance and retirement savings in Germany, 2006-2010 (data)
Bancassurance provision of investment-related life insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of retirement savings in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Market share in total life insurance of key bancassurance underwriters in Germany, 2006-2010 (data)
Gross written premiums for protection-related life insurance in Germany, 2006-2010
Gross written premiums for protection-related life insurance in Germany, 2006-2010 (data)
Bancassurance provision of risk life insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of critical illness insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of income protection insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Gross written premiums for accident and health insurance in Germany, 2006-2010
Gross written premiums for accident and health insurance in Germany, 2006-2010 (data)
Bancassurance provision of accident insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of medical expenses insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of health / hospital cash plans in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Market share in accident insurance of key bancassurance underwriters in Germany, 2006-2010 (data)
Gross written premiums for personal motor and household insurance in Germany, 2006-2010
Gross written premiums for personal motor and household insurance in Germany, 2006-2010 (data)
Bancassurance provision of personal motor insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Bancassurance provision of household insurance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Residential mortgage lending balances outstanding in Germany (absolute and per capita), 2006-2010
Consumer non-mortgage lending balances outstanding in Germany (absolute and per capita), 2006-2010
Credit and other pay later cards issued and per capita in Germany, 2006-2010
Key data points for the consumer lending market in Germany, 2006-2010
Provision of creditor insurance linked to mortgages in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Provision of creditor insurance linked to consumer finance in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Provision of creditor insurance linked to credit cards in Germany, 2011: provision rate, operating models and weighted provider share of partnerships
Risk coverage of creditor insurance policies in Germany, segmented by type of underlying product, 2011
Creditor insurance gross written premiums in Germany, segmented by policy type, 2007, 2011 and 2015 (forecast)
Creditor insurance gross written premiums in Germany, segmented by cover type, 2007, 2011 and 2015 (forecast)
Creditor insurance gross written premiums in Germany segmented by policy and cover type, 2007, 2011 and 2015 (forecast) (data)
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