Bancassurance in Europe

In most European countries, the share of banks in the distribution of both life and non-life insurance is continuing to grow: but which groups are best-placed to take advantage of this? 

London, 16 January 2012 – According to a new series of research reports published by Finaccord, the involvement of banks and other lending institutions in the distribution of insurance (i.e. bancassurance) continues to vary greatly from product to product and from country to country.

In addition to creditor (payment protection) insurance, for which banking entities are the dominant distributors in all countries other than the UK, bancassurers tend to be strongest in the areas of investment-related life, risk (term) life and household insurance but are generally less effective in the other product types analysed namely, accident, critical illness, health, income protection and motor insurance, plus retirement savings.

Across a majority of forms of insurance covered by the research, there are grounds for arguing that banks are most important as distributors in Portugal, Spain and Turkey, and generally weakest in Germany, Switzerland and the UK. As might be expected, due to the prominence of the country’s combined banking and insurance groups, bancassurance also continues to thrive in France although banks’ distribution share in certain markets is limited by the strength of other types of provider, such as health mutuals and provident institutions.

“Analysed simultaneously by product and country, there are some interesting anomalies”, comments Alan Leach, Director at Finaccord. “For example, Norwegian banks perform well in both investment-related and protection-related life insurance whereas their counterparts in Russia exert limited influence in both sectors. Moreover, banking institutions in Italy have struggled to make headway in household insurance although in motor insurance, Russian banks are significant, due to packaging of motor damage (fire and theft) insurance with car finance loans.”

In addition to looking generally at the role of bancassurers across 20 European countries, Finaccord’s studies also log the distribution deals with underwriters and other product providers of all significant banking entities in these territories. This facilitates an analysis of these relationships in terms of ‘weighted group shares of bancassurance partnerships’ which take into account both the number of retail customers of banks with which relationships have been forged and, also, the expenditure on different insurance products in the various markets.

On the basis of this analysis, a partnership with a small bank for an insurance product generating a very large market size in a particular country where bancassurers are influential for this product (e.g. investment-related life insurance in France) may be accorded a higher weighting than a relationship with a large bank for a policy type producing only a limited market value in another country and where bancassurers are not strong for that form of insurance (e.g. investment-related life insurance in Russia).

Using this approach, the table overleaf lists the three groups in each of four broad areas that, according to Finaccord’s research, have been most successful in forging significant (or potentially significant) bancassurance deals on a pan-European basis. For investment-related life insurance and retirement savings plus protection-related life insurance, it is perhaps no surprise that French bancassurance groups (BNP Paribas, CNP Assurances, Crédit Agricole, Crédit Mutuel) are most prominent given both the size of their domestic market and the degree to which they have expanded outside of France.

Munich Re heads the ranking for bancassurance deals in accident and health insurance thanks to various bank distribution relationships established by businesses belonging to its ERGO subsidiary. Meanwhile, Allianz is top for bank partnerships for motor and household insurance, complementing its second ranking for accident and health insurance.

Concludes Alan Leach: “Generally speaking, insurance groups originating from the UK do not have a particularly strong presence in the European bancassurance sector. This is a consequence both of the relative weakness of banks and other lending institutions as a distribution channel in the UK itself and the fact that most insurers have not made the creation of partnerships with European banks an especially high strategic or business priority. On the one hand, this is a shortcoming as bancassurance continues to outgrow other distribution channels in most countries. On the other, it may throw up opportunities in the future as some parts of Europe’s banking sector are subject to re-organisation in the wake of the financial market crises that have persisted since 2008.”

 

finaccord.com