Global insurers gather in Colombo

By Nizla Naizer

Insurers from all corners of the globe, gathered in Colombo this week for the Federation of Afro-Asian Insurers and Re-insurers (FAIR) Seminar on Personal Lines Insurance.
With the intention of meeting the challenges of a rapidly changing environment, the seminar aimed at developing such concepts as bancassurance, micro-insurance, alternate distribution channels and the role of actuary in product development in the region.
Bancassurance – The way forward?
While many of the experts at the conference were of the opinion that bancassurance is the way forward, they cautioned that it can only move ahead if a proper understanding and long term relation between the bank and the insurance provider was established.
Bancassurance is the selling of insurance and banking products through the same channel, and in most cases, it is where banks sell insurance products. While the premium for the insurance is obtained by the insurer, the bank charges a referral fee for providing the channel and service.
Aviva Singapore, Head of Business Development Pavan Virmani stated that in the end, bancassurance was all about the customer and his decision to obtain a product. “Align yourself with the interests of the bank,” he told the insurers, “But do not make your insurance products too complicated. The more complicated we make it; the more difficult it will be to convince the bank that selling our product to the customer is worth the while.”
Bancassurance has become a popular venture for many global insurance companies. While credit cards and personal loans create opportunities for banks to sell protection insurance, the knowledge a bank has of its customers’ finances creates opportunities to sell other products. However, insurance sales across the world have also become a major source of profit for the banks in recent years.
“We must prove the sustainability of the model to the banks,” Virmani continued, “It can be done by providing those who deal with the selling of insurance products with knowledge on the basics of insurance, the product, awareness on the brand and culture, sales techniques and reinforcing the model.” He also called on the introduction of modern and technology based methods of operation to facilitate the process. “Apart from the DMTM (Direct Marketing followed up by Tele Marketing) approach, provide online payment facilities and link it to the customer’s credit card so the customer finds it hassle free to deal with insurance.”
Not easy – But an integral part of banking
Standard Chartered Bank Sri Lanka Head of Consumer Banking, Anirban Gosh Dastidar, stated that while the banking industry today has changed and diversified rapidly, bancassurance is not only about selling insurance products. “It’s become an integral part of banking operations.” In Sri Lanka, insurance cover is obtained by only 10% of the population and Gosh explained that the bundling of insurance offers is important to take bancassurance forward.
“As bankers, we like variances,” he claimed, “We also know that the channel we provide is important to the insurers, because the bank manager can convince the customer much more effectively due to the long standing relationship. However, this must not be abused.” He also stated that while bancassurance is not an easy process, it is going to be big in the coming years. “All our staff is IOD certified and banks have now emerged as one stop shops for our customers who are looking for insurance through a convenient channel.”
Micro-Insurance– Business, not charity
Speaking on micro-insuranceDutch Association of Mutual Insurance Companies President Toon Bullens said that while it provides an opportunity to turn ‘cold money’ of the rural dweller to ‘hot money’ a sustainable approach should be to let them decide what they want. “A client forward approach is what we need,” he added.