IC urges insurers to explore alternative distribution channel

The Insurance Commission (IC) is encouraging the industry to explore expansions, partnerships and arrangements with other sectors in order to improve their business operations.

Citing the emergence of bancassurance, Insurance Commissioner Dennis B. Funa said the combined expertise and resources of both the banking and insurance institutions enabled the public to achieve financial success and security.

The partnership between the banks and the insurance firms also boosted the profitability of the financial institutions, Funa said. Bancassurance is a distribution channel that allows the presentation and sale of insurance products to bank customers within the premises of the bank.

“Bancassurance allows strategic alliance between pillars of the economy founded by financial strength and stability in order to afford the public an access to comprehensive financial protection,” Funa said.

“Bancassurance provides the general public with convenient access to insurance products, along with other financial products, which translates to increase in insurance penetration,” he added.

“It cannot be doubted that bancassurance is a key channel to the increase in insurance penetration as banking institutions cater to a robust client from the mass market, mass affluent, highnet-worth and corporate customers, the accessibility of insurance products,” the official said.

According to Funa, with the changes and advances in technological environment, the possibilities and expansions of bancassurance and other alternative distribution channels are endless.

“By collaborating with innovators and by integrating new technologies, the growth of bancassurance will be sustained and would lead to its transformation. With the dawn of virtual banking, we are expecting to see the digital transformation of bancassurance,” Funa said.

Funa likewise emphasized on the value and importance of advanced analytics which are now considered as strategic assets. “Going forward, the effective use of analysed data would unlock a lot of opportunities for the insurance industry. An illustration of this is the development of simplified and speedy yet logical underwriting process by using available data,” Funa said. “The effective use of data within the parameters allowed by law will provide for solutions to improve underwriting, pricing, product innovation, and claims settlement,” he added.

As of end of 2016, bancassurance contributed 31.31 percent or R57.7 billion out of the R184.40 billion in premiums earned by the life insurance sector.

Meanwhile, under the non-life insurance sector, bancassurance channel of distribution contributed 12 percent or R5.04 billion out of the total R42.1 billion of the total net premiums written by the non-life insurance sector.