Bancassurance in ASEAN Market | Growth, Trends, and Forecas(2022 - 2027)

Bancassurance - combined banks and insurance companies - is a business model for the distribution of a wide variety of insurance products. The prominence of this model lies in the ease of doing the sales part as the bancassurers can provide a full range of financial products as a bundled offering - from traditional banking, through mutual funds to insurance products - in one-stop shopping model.

There are different business models in bancassurance. There seems to be a tendency to move towards exclusive partnerships in recent years, yet a pure distributor model is still more commonly seen. Bank staff plays a primary role in selling products among the responding companies, followed by insurer specialists. Most responders use more than two methods. Generally speaking, unit-linked products are more popular, followed by endowments in selected institutions. Especially in those countries where bancassurance is dominant, there is clear customer demand for savings-type products rather than protection products.

With an internet and social media penetration of 65% and 63% respectively, combined with mobile connectivity of 132%, consumers expect to have transparence in information and immediate gratification in all possible manners. Given the customer preferences, digitization of the existing value chain is crucial to prepare themselves for the digital future. But platform and channel integration can be a major challenge for insurers those who want to deliver a true omni-channel experience.

Key Market Trends

Significance of bancassurance as a distribution channel in ASEAN region

Multinational and domestic insurers are forming bancassurance agreements. In Singapore, Chubb insurance formed a bancassurance agreement with local bank DBS to gain access to the local distribution networks as well as to develop and test microinsurance products. Regulators in some markets are facilitating the shift to digital and direct. In Singapore, the approval of a full direct life insurance license to a well-capitalized InsurTech in 2017 was the first local insurer to win approval in nearly 50 years.

Despite the increasing importance of digitization, the majority of the players have been spending 1 to 2% of their gross premiums annually towards the digital front (in addition to the general IT spending) and this share is expected to increase in the future in a more strategic manner. Hybrid strategies are gaining popularity which is combining proprietary concerns with some sort of external collaboration. The main short-term attraction for digitization is cost-saving because the cost of acquisition i.e., commission fees can reach up to 20% of gross premiums in some ASEAN countries. In the case of bancassurance, which is more prevalent in life than non-life, no insurer offers customized products, which limits their opportunities to increase penetration.

Impact of life insurance on the insurance value chain of the region

ASEAN region’s three largest insurance markets - Singapore, Thailand, and Indonesia account for almost 3/4th of the total ASEAN premiums written (both life and non-life) in 2018. Bancassurance has seen sound development in the region. In Thailand, Singapore, The Philippines, Malaysia and Indonesia, the bancassurance market share is the second-largest and competes with agents’ market share.

At a share of 71% in total premiums, Life insurance plays a prominent role in the ASEAN region. In life insurance, the traditional channels remain dominant distribution channels in mature markets like Singapore, but in developing markets like Malaysia and Indonesia, digital channels are becoming more prominent. With a considerably lower growth rate than the worldwide average in terms of premiums written, non-life insurance players tread very carefully when going ahead with a distribution channel in the region.

There is no doubt to say that agents remained as the main distribution channel in the region, but some market sources indicate the distribution share might converge at 50% bancassurance, 30% agents and 20% other channels in the future. Despite the digital wave, hybrid strategies may likely defend this distribution model and help the insurers provide an omni-channel experience to the customers.

Competitive Landscape

The report includes an overview of the largest insurance providers and a few financial conglomerates operating in the market studied. Currently, some of the major players dominating the market studied, in terms of market share.

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• The market estimate (ME) sheet in Excel format
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