It is essential for insurers to help banks understand the evolving insurance landscape of Southeast Asia for the continued success of bancassurance, a recent survey by the Swiss Re Institute has revealed.
Among its highlights, the survey found that bancassurance accounts for an average of 36% of Life and Health (L&H) insurance premiums across six Southeast Asian markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The SRI also surveyed Singapore, Thailand, and Vietnam markets, where 67% of consumers showed strong preference for insurance agents over banks, particularly for medical and hospitalisation insurance.
Other challenges for bancassurance according to the survey include the decline in in-person visits to bank branches (accelerated during the pandemic), coupled with the rise of digital apps providing services like embedded insurance, and increasing bank interest rates – which are also present different challenges for the bancassurance channel.
More than a third of consumers also expressed their main concerns regarding banks as sales representatives having weaker product knowledge and occasionally recommending products not suiting the customers’ needs.
At the same time, while 89% of the bank sales staff surveyed are confident in their insurance product knowledge, many find underwriting as well as the complex and technical nature of the onboarding processes most challenging when it comes to selling insurance.
Despite these challenges, 81% of consumers who purchased insurance from a bank expressed satisfaction in service quality. Additionally, 52% of consumers preferred buying savings products from banks over agents, likely due to the similarity between insurers’ and banks’ offerings.
The prominence of bancassurance as a distribution channel for insurance in Southeast Asia highlights its importance to the sector, Swiss Re stated. However, analysts warned, it is essential for insurers to enable banks to understand the evolving insurance landscape and adapt accordingly.
The survey revealed that consumers are still buying more savings-type insurance products through bancassurance than protection products, which indicates an area for remediation.
And to enhance bancassurance’s role in the region’s L&H growth, analysts recommend insurers to improve bank sales staff training, simplify underwriting, use alternative data for underwriting, offer tailored products, and utilise digital channels.
Daisy Ning, Head of Life & Health Reinsurance Asia Pacific ex. China, said: “Bancassurance has significantly contributed to the growth of insurance markets in Southeast Asia. For the continued success of bancassurance, it’s crucial for insurers to support banks in deepening their understanding of insurance products.
“The evolving landscape, with rising interest rates and popularity of digital platforms, also calls for banks to explore more innovative strategies and partnerships, such as integrating AI solutions to guide customers or bundling insurance with other bank offerings.”
