NRI Papers
No.85 January 1, 2005
  Prospects for Bancassurance : Trends towards Integration of Banking Services and Insurance Sales  
Akira YASUOKA
      We have now entered the fourth year since April 2001 when insurance sales by banks started. During the initial stage, these sales activities were limited to credit life insurance and long-term fire insurance, which are closely related to banking operations. However, as is seen in the individual financial markets in Europe and the United States, "Bancassurance " that combines banking services and insurance sales services also started in Japan. In October 2002, individual annuity insurance and asset-building insurance were added to the products handled as over-the-counter (OTC) sales at banks. Plans call for the start of OTC sales of all insurance products at banks in April 2007. Current trends in the OTC sales of annuity insurance at banks indicate good sales of single premium payment annuity insurance, in particular, foreign currency-denominated fixed annuity insurance with a relatively high guaranteed yield. This is considered to be due to its similarity to time deposits.
      One of major characteristics of OTC sales in banks is their stability and reliability as sales channels. From the perspective of OTC sales performance of investment trusts, this characteristic is represented in stable sales strength without the influence of market conditions such as the stock market and extremely few mid-term cancellations before maturity.
      In the United States as well, insurance sales by banks have grown rapidly since 2000, reaching the stage where the bank share among total sales of fixed annuity insurance was 35 percent in 2002. Bank OTC sales activities in the United States are characterized by their channel strategies, focusing on consulting functions by principally using registered salespersons specialized in insurance sales, financial consultants, etc., rather than bank employees.
      In preparation for the full-scale evolution of Bancassurance in April 2007, there are many issues that both banks and insurance companies must overcome. In addition to the efficient sales of insurance products that are life-design-proposal-type products, what is essential for banks is the enhancement of consulting functions that help create good, long-term relationships with customers. The pressing need for insurance companies is to rebuild the sales commission structure to fully use diversified sales channels and to develop products that make the best use of bank OTC sales channels.
Contents
I Start of OTC Sales of Annuities at Banks
  1 Past Trends of OTC Sales at Banks
  2 Product Lineups of Major Banks
II Life Insurance Market and Sales at Banks
  1 Rapid Increase in the Number of Registered Insurance Salespersons
  2 Impact on Life Insurance Sales Channels
  3 Characteristics of Bank Sales
III Insurance Sales by Banks in the United States
  1 Trends in Insurance Sales
  2 Diversified Sales Channels of Banks
IV Prospects for Bancassurance in Japan
  1 Characteristics of Insurance Products
  2 Three Issues Facing Banks
  3 Four Issues Facing Insurance Companies

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