Insurers, banks win in bancassurance
HIGHER yielding investments in stocks and government securities easily trump interests gained from bank savings.
These days, more and more insurance companies are offering investment-linked insurance products to attract those who want their hard-earned money to grow even more.
Insurance firms realized they need not compete with banks for the people’s money—they can partner and both gain from bancassurance.
In the Philippines, the Amended Insurance Code under Republic Act No. 10607 signed into law in 2013 institutionalized bancassurance, which involves cross-selling insurance products within Bangko Sentral ng Pilipinas (BSP)-licensed banks.
Years before the government recognized and regulated bancassurance, French insurance giant AXA and local banking heavyweight Metropolitan Bank and Trust Co. already forayed into the business in 2005.
Metrobank/PSBank-AXA
“The partnership between AXA and Metrobank is the pioneering bancassurance operations in the Philippines, and is one that has lasted the longest. Bancassurance has been very crucial to the growth of AXA Philippines, contributing to majority of the business year in and year out,” said Marie B. Raymundo, AXA Philippines’ chief bancassurance officer.
“What has been very crucial in our bancassurance partnership is that it has been mutually beneficial for both parties, and especially to Metrobank customers. The model has proven to be very strong and effective [such] that we added a new bancassurance partner last year: PSBank,” she said.
She said the partnership with PSBank, which also belongs to the Metrobank Group, would allow the insurance firm to have access to a broader market while also providing the thrift bank’s customers with a one-stop shop for short- to long-term needs—from protection, health, retirement, and investment that have a life insurance component.
In the first quarter of the year, 68 percent of AXA Philippines’ sales came from its bancassurance channel.
PSBank president Vicente R. Cuna Jr. said “[t]his partnership allows us to advocate financial wellness to our clients as we offer them suitable alternatives to save and grow their finances.”
“We know that they work hard to earn their money and we also know that the financial security of their family is very important to them.”
Bancassurance ventures are on a roll as more and more Filipinos become more aware of the need to save and invest.
The latest Insurance Commission (IC) data showed AXA Philippines ranked second in terms of insurance premiums sold in the first half, just behind Sun Life of Canada (Philippines).
BPI-Philam Life
BPI-Philam Life Assurance Corp., the partnership of Bank of the Philippine Islands (BPI) with Philippine American Life and General Insurance Company (Philam Life), ranked third and even eclipsed the sales of its parent insurance company.
In a briefing with Filipino reporters at the Hong Kong headquarters of AIAGroup Ltd. last February, Philam Life chief executive Estelito G. Madrid said the company expected to maintain its solid performance throughout the year. He said the booming economy would bolster not only its bancassurance business, but also its traditional channels offering life protection and health needs.
“Our bancassurance channel performed well in the second half of 2014. We worked closely with our joint venture partner, BPI, to focus on expanding the footprint of our in-branch insurance specialists and improving their capabilities,” AIA said in its 2014 report.
The partnership with BPI gave Philam Life access to the bank’s network of more than 800 branches. The number of active specialists in bancassurance rose by 49 percent last year, AIA added.
RCBC, SunLife Grepa
Canada’s giant insurers are also benefiting from their local bancassurance arms. SunLife Grepa Financial, the Canadian insurer’s venture with the Yuchengco group’s Rizal Commercial Banking Corp. (RCBC), was in seventh place in the IC ranking. Manulife China Bank Life Assurance Corp., a partnership between Canadian-led firm Manulife Philippines and China Bank, was 11th.
PNB Life, led by taipan Lucio Tan’s Philippine National Bank (PNB), was in ninth place.
Other banks are also boosting their bancassurance businesses.
Last June, Sy-led BDO Unibank Inc. concluded an agreement to terminate its joint bancassurance venture with Italy’s Generali Group to take full control of Generali Pilipinas Holdings Co. Inc., the parent company of life insurer Generali Pilipinas Life Assurance Co.
A statement released by BDOsaid it is “re-focusing its insurance strategy to align with its thrust to solidify its presence in the broadbased middle-income market.”
“BDO intends to embark on a new journey of diversifying into the life insurance sector via this new wholly owned unit to maximize cross-selling of products to its extensive retail customer base,” BDO president and chief executive Nestor V. Tan said.
The holdings firm and its insurance unit will be renamed BDO Assurance Holdings Corp. and BDO Life Assurance Co. Inc., respectively. Generali Pilipinas ranked 10th among life in-