Bancassurance in India: Life, Non-Life and Creditor Insurance

Jan, 2013   |   74  Pages   |   Finaccord Ltd   |   Format : PDF + Excel database

Bancassurance in India: Life, Non-Life and Creditor Insurance is a study and related PartnerBASE dataset examining the provision of life, non-life and creditor insurance by banks and other lending institutions in India.

Drawing on the results of a survey of 72 banking entities in India, the study verifies the percentage of organisations investigated that distribute each of the following 13 types of insurance: accident insurance, creditor insurance related to consumer finance, creditor insurance related to credit cards, creditor insurance related to mortgages, critical illness insurance, health / hospital cash plans, household insurance, income protection insurance, investment-related life insurance, medical expenses insurance, personal motor insurance, retirement savings, and risk life insurance.

For those banking entities that are active in one or more of these fields, the reports ascertain the operating models that they use to source the type of insurance in question (e.g. external, joint venture or captive underwriters) and the identity of the specific providers used. This information is then displayed in terms of the weighted share of partnerships of these providers, which takes into account the number of retail customers of the partner banking entities, thus highlighting those insurance companies that hold the distribution relationships that offer the most potential.

You may be able to use this report, plus the PartnerBASE dataset and market data annexes that accompany it, in one or more of the following ways:

- gain access to a source of information that provides a comprehensive overview of the provision of personal insurance products by all significant banking entities in India;

- identify partnership opportunities for the same personal insurance products that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;

- understand which underwriters and other product providers have been successful in establishing distribution relationships with the most important banking entities in India;

- assess how the evolving regulatory environment may open up or block opportunities for your organisation to sell through the bank distribution channel;

- appreciate the magnitude of the opportunity to sell personal insurance products through banks and other lending institutions in India.

Overall, in a market characterised by the involvement of over 20 joint venture underwriters, across the 72 banks and other lending institutions researched in India, Finaccords research identified over 500 bancassurance distribution initiatives for the various types of insurance investigated.

0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION
What is this report about?
Distribution partnerships with banks and other lending institutions constitute the focus of this report
Rationale
Bancassurance is the most rapidly growing distribution channel in India
Methodology
Survey of banks and other lending institutions
Market data
Definitions
Investment-related life insurance
Retirement savings
Risk life insurance
Critical illness insurance
Income protection insurance
Accident insurance
Health / hospital cash plans
Medical expenses insurance
Personal motor insurance
Household insurance
Creditor insurance
Mortgages, consumer finance and credit cards
Weighted provider share of partnerships
Operating models
Abbreviations and exchange rates
PartnerBASE and market data annexe
Finaccord

2.0 MARKET BACKGROUND
Banks and other lending institutions covered
Economic background
India's economy has performed very strongly in recent years...
... and was relatively unaffected by the global financial crisis...
... although it still faces many significant problems
In the World Bank's Ease of Doing Business Index, India is ranked only 132nd in the world
Introduction to the banking sector
In terms of its total number of retail customers State Bank of India leads the market...
... in a sector in which government-owned banks account for a majority of branches
Substantial swathes of the Indian population remain unbanked
The RBI follows a policy that generally encourages banking sector consolidation...
... with a number of mergers and acquisitions in evidence in recent years
Introduction to bancassurance
India's insurance market has been subject to deregulation since 2000
Unusually, the distribution share of banks is higher in non-life insurance than in life insurance...
... although is growing in both fields as the traditional agency model comes under pressure
Most insurance companies use bank distribution as a part of a multi-channel strategy
State Bank of India has maintained a joint venture with BNP Paribas Cardif since 2000...
with over 20 other joint ventures having been established since then
The bancassurance channel is characterised by relatively strict regulation in India
with banks not being permitted to tie up with any more than one life and one non-life insurer
Regulations governing bancassurance partnerships are likely to change in the near future

3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS
Insurance market size and growth
The total market grew by 8.0% in nominal terms between 2008 and 2012
Banks commonly offer a wide range of investment-related life insurance products
Distribution share of banks
Bancassurers accounted for around 12% of the total life insurance market in 2012
Bancassurance provision rates, operating models and partnerships
Investment-related life insurance
Investment-related life insurance is promoted by three quarters of banking organisations researched
SBI Life is the leading provider by weighted share of partnerships...
... followed by the government-owned LIC through relationships with 10 different banks
Star Union Dai-ichi Life benefits from its joint venture partnerships with two banks...
... albeit many other joint ventures are also active in this field
17 of the banking organisations investigated do not distribute investment-related life insurance
Retirement savings
The provision rate for retirement savings products is similar to that for investment-related life insurance
...and the partnerships in place are also very comparable
Performance of key bancassurance underwriters
Around one quarter of the Indian life insurance market is controlled by joint ventures

4.0 PROTECTION-RELATED LIFE INSURANCE
Insurance market size and growth
The market for protection-related life insurance declined in value between 2008 and 2012
Critical illness insurance is often offered as a rider rather than as a stand-alone product
A small proportion of protection-related life insurance is due to creditor insurance
Distribution share of banks
Bancassurance provision rates, operating models and partnerships
Risk life insurance
Over three quarters of banking organisations researched offer risk life insurance
... with SBI Life and LIC again ranked most highly by weighted share of partnerships
MetLife India benefits from a key partnership with Punjab National Bank
Critical illness insurance
Relatively few banking institutions in India sell critical illness insurance as a stand-alone policy
Thanks to two partnerships, Reliance General is ranked first by weighted share of partnerships...
... followed by HDFC ERGO...
... and ICICI Lombard
Eight banking organisations utilise external underwriters of critical illness cover
Income protection insurance
Income protection insurance is rarely marketed by banking organisations in India
Performance of key bancassurance underwriters

5.0 ACCIDENT AND HEALTH INSURANCE
Insurance market size and growth
The market for accident and health insurance grew to a value of USD 3.1 billion in 2012
Accident and health insurance policies are underwritten by both life and non-life insurance companies
Distribution share of banks
Bancassurance provision rates, operating models and partnerships
Accident insurance
Stand-alone accident insurance is quite commonly sold by banking organisations in India
Government-owned underwriters lead the market by weighted share of partnerships
Universal Sompo is a joint venture underwriter co-owned by four different companies
35 banking institutions have no apparent arrangement for selling stand-alone accident insurance
Medical expenses insurance
Medical expenses insurance is also commonly sold by banking organisations in India
Three government-owned underwriters are ranked most highly by weighted share of partnerships...
... although Bajaj Allianz lays claims to a total of 11 partnerships in this field
26 of the banking organisations investigated do not distribute medical expenses insurance
Health / hospital cash plans
23 bancassurance initiatives are identifiable in the field of health and hospital cash plans
Tata AIG is ranked fourth by weighted share of partnerships thanks to its link with Axis Bank
Performance of key bancassurance underwriters
Joint venture underwriters enjoy a strong position in the (non-life) accident insurance market...
but have fallen back somewhat in the (non-life) health insurance sector

6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE
Insurance market size and growth
Personal motor insurance premiums increased by over 15% per year in real terms between 2008 and 2012
Distribution share of banks
Bancassurance provision rates, operating models and partnerships
Personal motor insurance
Most banking organisations surveyed have an arrangement for selling personal motor insurance
By weighted share of partnerships SBI General and Oriental Insurance lead the market
Third-ranked Bajaj Allianz has established a total of 13 distribution agreements in this field
Household insurance
Provision rates for household insurance are even higher than those for personal motor cover...
and the two providers ranked first and second are exactly the same
Performance of key bancassurance underwriters
Bank-affiliated joint venture underwriters control close to 45% of the total motor insurance market...
... and over 30% of the total fire insurance sector

7.0 CREDITOR INSURANCE
Consumer lending market size and growth
Mortgage lending
Residential mortgages in India grew at a real compound annual rate of only 3.9% between 2008 and 2012
Non-mortgage lending
The value of non-mortgage consumer lending balances is slightly below that of mortgage balances
Credit and other pay later cards
The credit card market peaked in 2008 and has since slipped by almost 30%
Creditor insurance provision rates, operating models and partnerships
Creditor insurance linked to mortgages
All mortgage lenders in India sell related creditor insurance...
... with SBI Life emerging as the leader by weighted share of partnerships
Once again, joint ventures involving overseas insurance groups have a strong position in the market
Max Life is a non-bank joint venture involving Max and Japan's Mitsui Sumitomo
Creditor insurance linked to consumer finance
Over 80% of entities offering consumer credit have a scheme in place for loan payment protection cover
The main partnerships in this field are identical to those for mortgage-related creditor insurance
12 lending institutions have no apparent scheme for in place for this type of creditor insurance
Creditor insurance linked to credit cards
Over 20 schemes for card-related creditor insurance are up and running in India
Once again, joint venture underwriters affiliated with banks dominate the market
Creditor insurance risk coverage
Some policies offer cover for temporary incapacity but none incorporate cover for unemployment
Creditor insurance market size, growth and forecast
The overall market for all forms of creditor insurance in India is advancing rapidly...
... with demand for policies linked to mortgages and consumer credit likely to be most robust

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