Bancassurance: captives thrive

New research from Finaccord into the state of global bancassurance strategies has found that both the captive and joint venture models are ‘thriving’ – in fact, in 2016, premiums written by captive and joint venture underwriters affiliated with leading global banking institutions reached total values of more than US$450 billion.

Finaccord undertook an investigation into the consumer banking practices of the top 500 retail banking groups around the world, covering institutions from over 100 different countries, and found that 32 per cent own a captive underwriter (though no joint ventures) in at least one territory, 11.6 per cent own at least one joint venture underwriter (though no captives) and 6.4 per cent operate both. However, says Finaccord, the market is fluid and since 2016 some of those researched have divested from their captive insurance operations, either for strategic reasons or as a response to regulatory circumstances.

“The importance of bancassurance as a distribution channel for a range of different insurance product types means that it remains an important element of strategy for both retail banking and insurance groups,” said David Parry, Managing Consultant at Finaccord. “Banks have to decide whether they wish to own or co-own the underwriters that they use to sell insurance while opportunities exist for insurers not only to distribute policies through banks on an ad hoc basis but also to enter into long-term strategic partnerships with them or even to buy in part or in full the insurance subsidiaries set up by banks. Making the right choices in this context can be key to asserting competitive advantage and creating shareholder value.”