The Bancassurance Model

As markets mature, companies seek alternative distribution channels — such as banks — to increase their distribution capacity. LIMRA’s Bancassurance Model depicts the six factors that need to be aligned to drive productivity and generate premium revenue in the bank channel.

Strategic Relationships

Forming a strategic relationship with a bank may be somewhat abstract, but it is critical in practice to the success of the partnership between a bank and an insurance company. Some of the factors that contribute to a strong strategic relationship are:

• Mutually beneficial business model
  • Sustainable
  • Equitable
• Shared strategic objectives
• Synergistic skills and strengths
• Complementary customer value proposition

Integration

Profitably selling insurance in the bank channel requires the integration of:

• Product: the insurance product with the bank product.
• Distribution: insurance distribution with the bank's existing distribution outlets to achieve cost savings.
• Administration: Integration of insurance administrative functions with existing bank IT platform results in reduced administrative costs.

Compatibility

Aligning the products offered to the target market through bank distribution is critical to generating premium revenue in this channel.

Multi-Channel Distribution

Research indicates that premium volume can be enhanced through the use of multiple distribution methods; delivery methods greatly increase customer penetration within the bank channel.

Three Pillars of Distribution Success

Institutional Commitment to Insurance

• Clear and strong message from management
• Insurance goals as component of branch goals
• Insurance coordinator for each branch
• Constant review of the numbers

Training and More Training

• Adequate time and money must be invested in training
• Define and impart value proposition of program 
• Two pieces: how to make referrals and how to sell

Compensation

• Complex issue because of competing interests of bank and insurer
• Balance bank’s compensation strategy with insurance incentives
• Small changes can have major impact

Technology

Primary technology-related issues for bancassurance include data privacy, quality, and usage, as well as the degree of integration bank/insurer systems – systems integration that can provide significant cost savings.

• How may we help you?