Bancassurance in Southeast Asia: is the model viable?
When it comes to bancassurance, consumers in Southeast Asia value quality of service, and also that bank representatives have good knowledge of the products they are selling.
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Earlier this year we conducted a survey of: 1) consumers, to assess their preferences with respect to buying insurance from a traditional agent versus a bank (ie, via bancassurance); 2) and of bank representatives tasked with selling insurance, to assess their “mood” with respect to selling insurance products. The survey was conducted in Singapore, Thailand and Vietnam.
Some key takeaways
The findings are mixed but telling. The survey participants in the three markets expressed a clear preference for insurance agents over banks when purchasing Life & Health cover. Respondents cited that agents have better knowledge of the products on offer and provide better quality service than bank representatives. Another advantage that agents were indicated as having is that typically, they can offer a wider range of products than available from bancassurance. The preference for agents is strongest with respect to buying medical/hospitalisation insurance.
Purchase channel by insurance type
Very satisfied
So, is the bancassurance business model still viable? In our view yes, it is, because even with the preference for agents, 81% of survey respondents said they were "satisfied" or "very satisfied" with the service provided when buying insurance from a bank, indication that there is a future for the bancassurance mode of distribution.
Consumer satisfaction wit bancassurance services
Viable, with some remediation actions
The survey responses also point to possible remediation actions in certain areas to improve sales. For instance, the bank representative respondents indicated that the main challenges they face in selling insurance are in the handling of underwriting processes, a lack of tailored products, and insufficient guidance with respect to the products on offer. This suggests that bank representatives need more assistance in these areas, and more simple underwriting and onboarding processes.
A related finding is that more consumers said they have bought savings-type insurance products via bancassurance than from agents. This could reflect a supply-side dynamic at play: savings solutions are similar to the deposit and wealth-management products that banks offer. It could be that bank staff better understand the products they are trying to sell, meaning they can offer better advice and guidance and be more confident in their selling of insurance savings products.
Insights like these can inform strategy decisions to boost bancassurance outcomes. Read the full report for more such key takeaways.