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Bancassurance
Huge Potential for Growth……




                        Strategic
                      Bancassurance
                         Forum
                              April 12-13, 2010
                          Gulf Hotel, Bahrain




                                       Ashish Kaushik
                                       Manager Bancassurance
                                       Bajaj Allianz Life Insurance, India
“There is no stronger force than an idea
         whose time has come.”




                         Victor Hugo
                     (19th Century French Novelist)


Banks & Insurers across the World have realized Bancassurance is
the distribution channel, which would help them achieve
economies of scale and boost their revenues in the 21st Century
Consideration for Banks…
                                   1. Increase in Fee Based Income
    6. Provide integrated
financial services tailored to
                                                                           2. Reduce reliance on
  the life cycle of customers
                                                                       interest spreads as the major
                                               16 2/3 %
                                                  1                           source of income

                                 16 6 %
                                    2/3                          2
                                                            16 2/3 %




                                 16 2/3 %                   16 2/3 %
                                                                3
                                   5
                                                                          3. Leverage extensive
                                                                              customer base
                                               16 2/3 %
5. Reduce risk based capital                      4
  req. for the same level of
            revenue
                                       4. One stop shop for all
                                          Financial Services
BANCASSURANCE

US Market 2008



                                                                                                                            Non Interest Income/ total revenues
                                                                                                                                            (%)
                                                                                      Median Net      Change in net
                             Number Of          Median Net       Number Of Banks     Income with       income with                             Banks with
         Asset Size            Banks           Income ($ m )      with Insurance   Insurance($ m )    insurance (%)        All Banks           Insurance
Over $10 bn                              89              93.37                65              93.37                    0                  32                  32
$1 bn - $ 10 bn                        470                8.73               267               10.7                   23                  20                  22
$ 500 mn- $ 1 bn                       632                3.88               331               4.78                   23                  18                  20
$ 250 mn- $ 500 mn                    1128                2.06               539               2.75                   33                  16                  18
under $ 250 mn                        5343                0.47              2136               0.83                   76                  13                  15
All                                   7563                0.69              3338               1.16                   69                  14                  17


Source: Bank Insurance Market Research Group



                             The median income for banks with insurance selling operations is
                             significantly higher than banks which don’t sell insurance.
Consideration for Insurers…
                              Immediate access to New
                                     Markets

       Improve sales
                                                          Increase in Market
effectiveness & after sales
                                                             Penetration
          service

                                     Insurer

                                                             Reduce reliance on
 Develop new financial                                    traditional distribution
products more efficiently                                         channel

                               Combine Cost Saving &
                                Increased Profitability
Key Success Factors…

                    Commitment
                     of Partners

      Motivation
                                   Selection of
          &
                      Selection     Customer
      Training of
      Bank Staff      of Partner    Segments



           Sales &
                              Product
         Distribution
                              Offerings
            Model
Customer Segmentation

    A good segmentation must be
    realistic, easy to implement,
    simple to explain and, above all …
    insure success in every effort
    made
Bancassurance
                       - Distribution Model
• Integrative / Generalist Model

• Specialist Model

• Financial Planning Model




                                              36
Bancassurance
                       - Distribution Model
• Integrative / Generalist Model
   – Product distribution through existing bank channel


   – Bankers themselves sells the product to customer


   – Process managed by banks and insurer act as only
     product/service provider
     e.g. Telemarketing, direct mail


                                                          37
Bancassurance
                       - Distribution Model
• Specialist Model
  – Distributes insurance product through generally
    employees or representatives of the insurance company
  – Bankers help to identify the prospects who further
    contacted by insurance professionals
  – Requires less training and higher compensation to support
    the referral process
  – It lengthens the process of sale




                                                            38
Bancassurance
                       - Distribution Model
• Specialist Model
  – Distributes insurance product through generally
    employees or representatives of the insurance company
  – Bankers help to identify the prospects who further
    contacted by insurance professionals
  – Requires less training and higher compensation to support
    the referral process
  – It lengthens the process of sale




                                                            39
Bancassurance
                       - Distribution channels
•   Career Agents
•   Special Advisers
•   Salaried Agents
•   Bank Employees / Platform Banking
•   Corporate Agencies and Brokerage Firms
•   Direct Response
•   Internet
•   e-Brokerage
•   Outside Lead Generating Techniques



                                                 40
10 Success Factors
• Leverage Multiple Channels for Distribution
           » Branches, Sales force, Direct Marketing .
           » Employ former Bank Employees.

• Critical to Motivate Branch Staff
           »   Commissions.
           »   Incentive Plans for Employees.
           »   Trips & Awards
           »   Promotional Campaigns to Banks’ Customer

• Create a Strong Retail Mindset
           » Retail Business Know-how .
           » Mass Customer Marketing.
10 Success Factors(Contd..)
• Well Researched Marketing Effort Needed.
           » Use Dominant Brand .
           » Direct Customers Campaign/Quick Start.

• Deep Knowledge of the Customer must be
  starting point.
           » Leverage Customer information .
           » Start with the product that directly appeal to the
             customer.

• Develop 2 to 3 simple savings product esp. for
  the bank.
10 Success Factors(Contd..)
• Invest in the right technology infrastructure.
           » Sale support system in the branches .
           » Tailor Sales IT to the Bank.

• Design operational flows esp. for the bank.
• Develop a robust Contract Agreement for the
  bank.
• Follow a Business Plan.
Case Study : Standard Chartered Bank & BALIC

Ø Standard Chartered Bank – One of the Largest Foreign Bank in India

Ø Catering to the High NetWorth clients and the Mass Affluents’

Ø 83 Branch Offices with presence in 25 cities

Ø Customer Base of 2.50 million

Ø Deposit Base of over Rs. 135 billion (USD 3 bn)

Ø Client Habits : Savvy Customer Base with both high branch traffic and
  Off-Site Banking habits.

Ø Joint operations were rolled out in January 2002 with 25 FSCs covering 30
  Bank Branches.
Case Study : Standard Chartered Bank & BALIC

              Model                                Results
Ø A designated person stationed in     Ø   The Benchmark for the Indian
  each Branch selling Insurance.           Industry for Bancassurance
Ø Selling through multiple Channels    Ø   Bancassurance contributes 20%
  of Distribution :- Branch Banking,       of total income from Retail
  Priority Banking, Outbound Sales         Banking operations
  Team, Mortgages, Credit Cards etc    Ø   Avg Productivity per person is
Ø Over 250 Sales Staff dedicated           over 12-15 policies per month
  selling Insurance in these               and Avg Ticket Size stands at
  Distribution Channels                    USD 1,100.
Ø Dedicated Operation Staff for        Ø   GWP of USD 100 mn for FY 08-
  processing SCB Proposals                 09 & earnings to Bank to be in
Ø Fortnightly Saturday Schools for         range of USD 25-30 mn
  Sales Staff                          Ø   Regular UnitLinked Products fit
                                           in the clients needs of the Bank.
Distributions servicing different Customer Segments



                      Channels of Distributions


    In-Branch                            Dedicated      Relationship
                      Out Bound
   Sales Team                           Relationship     Managers
                      Sales Team
                                         Managers



       Distributions Catering to Different Customer Segments



  Retail                                    High
                  Loan        New
 Walk-in                                  Networth           SMEs
                Customers   Customers     Customers
customers
Channel Distribution : Standard Chartered Bank…




                     15%         1%

             12%



                                                   72%




                Branch Banking   Priority   OBST    SME



Branch Banking / Walk-ins Contribute over 70% of
Insurance Sales
Case Study : Syndicate Bank & BALIC

Ø Syndicate Bank – Nationalised Bank with a dominant holding by the
  Government

Ø Catering to Middle Class and Rural Base

Ø 2000 Branch Offices with presence in 500 cities and town

Ø Customer Base of over 22 million

Ø Deposit Base of over Rs. 462 bn (USD 10.2 bn)

Ø Client Habits : Branch Walk-ins for transactions with advice from the
  Branch Staff / Manager for all financial decisions

Ø Bancassurance tie-up with Bajaj Allianz in October 2003
Case Study : Syndicate Bank & BALIC
                                 MODEL
• Integrated Model Implemented with the Bank Staff being regularly
  trained to directly sell Insurance to its customers.
• Phase wise Roll Out started in Oct’ 03 with 11 Insurance Managers
  covering 40 Branches.
• Lastly over 1500 branches covered, with 250 Bank employees
  selected as Insurance managers & over 175 employees of BALIC, to
  promote insurance sales
• GWP of approx. USD 45 mn for FY 08-09 & Earnings to Bank to be
  in range of USD 7-9 mn
• Traditional endowment, Pension Product and Mortgage Reducing
  Term Assurance are the key products sold.
• Among the most successful Public Sector Bank Distribution tie-up
  in India. Over 50,000 policies sold annually
Bancassurance
Huge Potential for Growth……




                          Thank You




                              Ashish Kaushik
                              Manager Bancassurance
                              Bajaj Allianz Life Insurance, India

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Bancassurance Marketing

  • 1. Bancassurance Huge Potential for Growth…… Strategic Bancassurance Forum April 12-13, 2010 Gulf Hotel, Bahrain Ashish Kaushik Manager Bancassurance Bajaj Allianz Life Insurance, India
  • 2. “There is no stronger force than an idea whose time has come.” Victor Hugo (19th Century French Novelist) Banks & Insurers across the World have realized Bancassurance is the distribution channel, which would help them achieve economies of scale and boost their revenues in the 21st Century
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  • 4. Consideration for Banks… 1. Increase in Fee Based Income 6. Provide integrated financial services tailored to 2. Reduce reliance on the life cycle of customers interest spreads as the major 16 2/3 % 1 source of income 16 6 % 2/3 2 16 2/3 % 16 2/3 % 16 2/3 % 3 5 3. Leverage extensive customer base 16 2/3 % 5. Reduce risk based capital 4 req. for the same level of revenue 4. One stop shop for all Financial Services
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  • 6. BANCASSURANCE US Market 2008 Non Interest Income/ total revenues (%) Median Net Change in net Number Of Median Net Number Of Banks Income with income with Banks with Asset Size Banks Income ($ m ) with Insurance Insurance($ m ) insurance (%) All Banks Insurance Over $10 bn 89 93.37 65 93.37 0 32 32 $1 bn - $ 10 bn 470 8.73 267 10.7 23 20 22 $ 500 mn- $ 1 bn 632 3.88 331 4.78 23 18 20 $ 250 mn- $ 500 mn 1128 2.06 539 2.75 33 16 18 under $ 250 mn 5343 0.47 2136 0.83 76 13 15 All 7563 0.69 3338 1.16 69 14 17 Source: Bank Insurance Market Research Group The median income for banks with insurance selling operations is significantly higher than banks which don’t sell insurance.
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  • 8. Consideration for Insurers… Immediate access to New Markets Improve sales Increase in Market effectiveness & after sales Penetration service Insurer Reduce reliance on Develop new financial traditional distribution products more efficiently channel Combine Cost Saving & Increased Profitability
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  • 12. Key Success Factors… Commitment of Partners Motivation Selection of & Selection Customer Training of Bank Staff of Partner Segments Sales & Product Distribution Offerings Model
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  • 23. Customer Segmentation A good segmentation must be realistic, easy to implement, simple to explain and, above all … insure success in every effort made
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  • 36. Bancassurance - Distribution Model • Integrative / Generalist Model • Specialist Model • Financial Planning Model 36
  • 37. Bancassurance - Distribution Model • Integrative / Generalist Model – Product distribution through existing bank channel – Bankers themselves sells the product to customer – Process managed by banks and insurer act as only product/service provider e.g. Telemarketing, direct mail 37
  • 38. Bancassurance - Distribution Model • Specialist Model – Distributes insurance product through generally employees or representatives of the insurance company – Bankers help to identify the prospects who further contacted by insurance professionals – Requires less training and higher compensation to support the referral process – It lengthens the process of sale 38
  • 39. Bancassurance - Distribution Model • Specialist Model – Distributes insurance product through generally employees or representatives of the insurance company – Bankers help to identify the prospects who further contacted by insurance professionals – Requires less training and higher compensation to support the referral process – It lengthens the process of sale 39
  • 40. Bancassurance - Distribution channels • Career Agents • Special Advisers • Salaried Agents • Bank Employees / Platform Banking • Corporate Agencies and Brokerage Firms • Direct Response • Internet • e-Brokerage • Outside Lead Generating Techniques 40
  • 41. 10 Success Factors • Leverage Multiple Channels for Distribution » Branches, Sales force, Direct Marketing . » Employ former Bank Employees. • Critical to Motivate Branch Staff » Commissions. » Incentive Plans for Employees. » Trips & Awards » Promotional Campaigns to Banks’ Customer • Create a Strong Retail Mindset » Retail Business Know-how . » Mass Customer Marketing.
  • 42. 10 Success Factors(Contd..) • Well Researched Marketing Effort Needed. » Use Dominant Brand . » Direct Customers Campaign/Quick Start. • Deep Knowledge of the Customer must be starting point. » Leverage Customer information . » Start with the product that directly appeal to the customer. • Develop 2 to 3 simple savings product esp. for the bank.
  • 43. 10 Success Factors(Contd..) • Invest in the right technology infrastructure. » Sale support system in the branches . » Tailor Sales IT to the Bank. • Design operational flows esp. for the bank. • Develop a robust Contract Agreement for the bank. • Follow a Business Plan.
  • 44. Case Study : Standard Chartered Bank & BALIC Ø Standard Chartered Bank – One of the Largest Foreign Bank in India Ø Catering to the High NetWorth clients and the Mass Affluents’ Ø 83 Branch Offices with presence in 25 cities Ø Customer Base of 2.50 million Ø Deposit Base of over Rs. 135 billion (USD 3 bn) Ø Client Habits : Savvy Customer Base with both high branch traffic and Off-Site Banking habits. Ø Joint operations were rolled out in January 2002 with 25 FSCs covering 30 Bank Branches.
  • 45. Case Study : Standard Chartered Bank & BALIC Model Results Ø A designated person stationed in Ø The Benchmark for the Indian each Branch selling Insurance. Industry for Bancassurance Ø Selling through multiple Channels Ø Bancassurance contributes 20% of Distribution :- Branch Banking, of total income from Retail Priority Banking, Outbound Sales Banking operations Team, Mortgages, Credit Cards etc Ø Avg Productivity per person is Ø Over 250 Sales Staff dedicated over 12-15 policies per month selling Insurance in these and Avg Ticket Size stands at Distribution Channels USD 1,100. Ø Dedicated Operation Staff for Ø GWP of USD 100 mn for FY 08- processing SCB Proposals 09 & earnings to Bank to be in Ø Fortnightly Saturday Schools for range of USD 25-30 mn Sales Staff Ø Regular UnitLinked Products fit in the clients needs of the Bank.
  • 46. Distributions servicing different Customer Segments Channels of Distributions In-Branch Dedicated Relationship Out Bound Sales Team Relationship Managers Sales Team Managers Distributions Catering to Different Customer Segments Retail High Loan New Walk-in Networth SMEs Customers Customers Customers customers
  • 47. Channel Distribution : Standard Chartered Bank… 15% 1% 12% 72% Branch Banking Priority OBST SME Branch Banking / Walk-ins Contribute over 70% of Insurance Sales
  • 48. Case Study : Syndicate Bank & BALIC Ø Syndicate Bank – Nationalised Bank with a dominant holding by the Government Ø Catering to Middle Class and Rural Base Ø 2000 Branch Offices with presence in 500 cities and town Ø Customer Base of over 22 million Ø Deposit Base of over Rs. 462 bn (USD 10.2 bn) Ø Client Habits : Branch Walk-ins for transactions with advice from the Branch Staff / Manager for all financial decisions Ø Bancassurance tie-up with Bajaj Allianz in October 2003
  • 49. Case Study : Syndicate Bank & BALIC MODEL • Integrated Model Implemented with the Bank Staff being regularly trained to directly sell Insurance to its customers. • Phase wise Roll Out started in Oct’ 03 with 11 Insurance Managers covering 40 Branches. • Lastly over 1500 branches covered, with 250 Bank employees selected as Insurance managers & over 175 employees of BALIC, to promote insurance sales • GWP of approx. USD 45 mn for FY 08-09 & Earnings to Bank to be in range of USD 7-9 mn • Traditional endowment, Pension Product and Mortgage Reducing Term Assurance are the key products sold. • Among the most successful Public Sector Bank Distribution tie-up in India. Over 50,000 policies sold annually
  • 50. Bancassurance Huge Potential for Growth…… Thank You Ashish Kaushik Manager Bancassurance Bajaj Allianz Life Insurance, India