|Title:||Indonesia annual estimated banks' insurance business premiums in rupiah and percent growth for 2007 to 2011|
|Source:||Indonesian Commercial Newsletter|
Start of full article - but without data
Estimate of the value of bancassurance premium
Year Value Growth (Rp trillion) (percent)
2007 XX,X -- 2008 XX,X XXX,X 2009 XX,X XX,X 2010 XX,X XX,X 2011 XX,X XX,X Average growth XX,X
Source: ICN processed
Business in bankassurance is growing fast in the country to follow the growth of insurance industry. An insurance company could increase its premium income through cooperation with banks in marketing its insurance products. The bank concerned also gains from the cooperation in fee based income. Bancassurance is a type of business which promote various insurance products combined with investment product and sold through distribution facilities of banks. Almost all insurance products could be offered through bankassurance including, education insurance, time insurance, hospital treatment insurance, unit linked, etc.
Currently competition is sharp in selling the products of bancassurance. A number of banks sell not only insurance products of their insurance sister companies but also those of other insurance companies outside their company groups. Bancassurance is no longer only as a side business but has become a strategic part of banking business in attracting customers to increase fee based income.
Bank Indonesia as the national banking authority has tightened supervision over banks serving as selling agents for insurance products. In addition to bancassurance, control over banks serving as selling agents for mutual funds is also to be made closer.
Bancassurance was first introduced and developed in mid 1990s by Bank Lippo. At that time Bank Lippo cooperated with its sister company Lippo Life in marketing the latter's life insurance product known as Warisan. The marketing of Warisan was a success and the success attracted other banks to adopt the same business strategy. Then there appeared new insurance products such as Tabungan Pendidikan Bank Niaga-Cigna, and various other products of health insurance sold through banking marketing facilities such as those of Bank Danamon and other major banks.
According to the Indonesian Association of Life Insurance Companies (AAJI), currently in Indonesia bancassurance accounts for XX.XX percent of the total premium income of life insurance companies in Indonesia. Premium income from bancassurance totaled around Rp XX.X trillion in 2011, up XX percent from Rp XX.X trillion in 2010.
In order to boost sales of bancassurance, insurance companies are more aggressive in seeking cooperation with banks. Among the insurance companies having succeeded in developing such cooperation with banks include Asuransi Manulife, AIG Life, Asuransi Jasindo, Asuransi Jiwasraya, AXA, Sun Life Financial Indonesia, Alliance and Asuransi Jiwa Mega.
Currently almost all state banks and private banks already have business in bancassurance, both major banks with assets of more than RpXX trillion and medium banks with assets ranging from RpX trillion to Rp XX trillion. Among banks having developed business in bancssurance include Bank Bimuputera, Bank UOB Buana and Bank Danamon as well as state banks including Bank Mandiri, Bank BRI and Bank BNI . Business in bancassurance has also attracted foreign banks including Citibank, HSBC, ABN Amro and CIMB Niaga.
Premium Income From Bancassurance Total Rp XX.X Trillion
According to AAJI, bancassurance premium is around XX.XX percent of the total premium income of life insurance. Bancassurance premium income was estimated to grow XX percent to RpXX.X trillion in 2011 from RpXX.X trillion in 2010.
In 2012, premium income from bancassurance is estimated to rise to around Rp XX trillion or up XX percent from the previous year.
Insurance companies are optimistic that sales of bancassurance would grow XX percent--XX percent annually in the coming years. The growth follows the expansion of insurance companies.
Manulife for example, sets target for the growth in the sale of bancassurance at XX percent--XX percent in 2012.
Premium income recorded by Manulife from bancassurance has leapfrogged from the first time it launched the product in 2005. In 2011 its premium income from bancassurance business already reached Rp X.X trillion.
Axa Mandiri Financial Services recorded bancassurance premium income at Rp X.XX trillion in 2011 or a surge of XX percent from RpX.XX trillion in 2020. In 2012, the income target from bancassurance is set at RpX.X trillion or an increase of XX percent from the previous year.
Allianz Life recorded Rp X,X trillion in bancassurance premium in 2012 or XX percent of its total premium income of RpX.X trillion in the first half of 2011.
Until now Cigna has established cooperation with XX banks, Manulife Indonesia with XX banks, Prudential with X banks. Allianz has cooperated with not only large banks but also a number of Regional Development Banks which is owned by regional administrations.
Banks Show Growing Interest
According to AAJI until 2010, there were XX banks having business in bancassurance and X,XXX bancassurance marketing officers received AAJI certificate.
Bancassurance grows with sales of unit-linked products which have also shown significant growth from year to year. It is also easier for bancassurance marketing officers to sell unit linked products than protection, the conventional products of life insurance.
Saving investment product is easier to be sold. It is different from conventional products as it is not easy to convince the market about the synergy between the role of banks and insurance company with its role of protection.
Indonesia has recorded a significant growth in premium income from bancassurance in the past two years. Currently there are more insurance companies and banks have signed cooperation than X or X years ago. The growth is relatively fast compared with in other countries.
In addition to joint venture banks and private banks, AAJI also recorded two Regional Development Banks (BPD) opening business in bancassurance. This shows the business has expanded to regional areas.
In a number of other countries banks are allowed to have insurance business unit. Banks and insurance companies may share information about customers, distribution through bancassurance is allowed and foreign insurance companies are free to enter the market.
On the other hand, there are a number of Asian countries which still adopt tight regulation on this sector. In Japan and South Korea the types of products sold through this distribution channel are limited. In India banks are allowed only to sell the life insurance products of a company. In that country, consumers generally prefer to buy insurance products from a bank. In Shanghai, XX percent of bank consumers expressed satisfaction buying life insurance products from banks. Meanwhile around XX percent of policy holders in Malaysia choose to buy life insurance products from banks. Similarly, in Singapore, XX percent of the people chose to use the distribution channel.
In order to expand sales of bancassurance, insurance companies are more aggressive in seeking cooperation with banks to offer the product.
Asuransi Jiwa Manulife has established such cooperation with a number of major banks including Citibank, DBS, Bank Mandiri, Bank Danamon, Bank CIMB Niaga, ABN Amro, Bank UOB Buana, GE Money, Bank Bumiputera, Bank HSBC, Bank Permata and Standard Chartered Bank. Around XX percent of its total sales are from the bancassurance business.
Asuransi Jiwa Mega or Mega Life, which has established cooperation with seven banks, hopes to expand the cooperation with three more bank this year. Currently XX percent of its premium income is from bancassuarcne with sales agent accounting for the remaining XX percent.
Asuransi Central Asia Raya (CAR) has established cooperation with BNI, Bukopin, BCA and Bank Artos in marketing life insurance, accident insurance, travel and education insurance.
AIG Life has cooperation with CIMB Niaga, BII, RBS (formerly ABN Amro), Bank Commonwealth, Bank Bumiputera, Bank Jabar and Bank Ekonomi. The insurance company hopes to gain from the tens of millions of bank customers that reach tens of millions. Bancassurance accounts for more than XX percent of the premium income of AIG-life.
Currently CIMB Niaga has cooperated with XX general insurance companies and five life insurance firms such as Sun Life.
Bank Bumiputera and AIG Life launched the product of insurance plus investment for the customers of Bumiputera. The product is called Bung Spekta, investment in which is at least RpX million. There are a number of benefits from Bung Spekat. First, the product is free from acquisition fee since the first year; second, the customers could determine the type of investment, third, additional investment is allowed such as protection against critical disease and allowance for hospitalized patients; fourth investment could be in rupiah or US dollar; fifth investment could be increased any time. (top up).
Permata Bank cooperates with PT. Prudential Indonesia in launching bancassurance for unit link product called PrestigeLink Assurance Account. Prudential Indonesia will be the provider of life insurance products exclusive for the customers of Permata Bank. For Permata Bank, the new product increased by X percent the contribution of bancassurance income in 2010. Earlier Prudential Indonesia already cooperated with other banks including Bank Rakyat Indonesia (specially for priority customers), Bank Danamon, Citibank and Standard Chartered Bank.
Bank UOB Buana cooperate with PT Prudential Indonesia in launching bancassurance service, allowing the marketing of the insurance products of Prudential, especially unit link products through the networks of UOB Buana. The cooperation contract is for XX years. For UOB, bancasurance was still a small contributor of around X percent in 2009. The products marketed through UOB Buana are Builder Assurance Account and Builder Investor Account and Serta Credit Prottection, which is specially for UOB to cover life protection for UOB Buana credit card holders. In addition there are other products called Extra Care Plus, sold through telemarketing to UOB Buana customers, and a Mortgage Reducing Term Assurance for housing credit borrowers.
PT Bank DBS Indonesia cooperates with PT Asuransi Jiwa Generali Indonesia in launching bancassurance product called Dare, which was expected to turn out up to RpXXX billion in premium income in 2010.
Bank Ekonomi recently lunched X products of bancassurance, Dream CareInvest and Care Protection.
Bank OCBC NISP and PT. Great Eastern Life Indonesia (GELIndo) have launched bancassurance product called MaxTerm Payback, which is a time life insurance product protecting the customers and their family members.
ANZ Panin Bank and Asuransi Jiwasraya launched bancassurance product called Saving Plan, a life insurance product similar to saving as it could be withdrawn after certain time and could be extended as requested by the policy holders.
Cooperation between banks and insurance companies provides synergy mutually beneficially. Both sides gain from the cooperation. The strength of bancassurance lies in the distribution channels. The more the bank branches, the more opportunities to draw policy holders. Bank will gain from the fee.
Bank as a financial agency could serve as a provider of financial services as well as a sales channel for insurance products. Various financial services could be covered by bank in a single transaction. Customers could have product services both bank products and insurance products at the same place. In addition, customers will have greater convenience and facility as banks generally cooperate with selected insurance companies.
Insurance companies hope to gain larger premium income through the cooperation and banks will have fee for the distribution of the products of the insurance companies.
Other benefits banks hope to gain from the cooperation is that they could make cross selling of bank product for a customer such as credit card, house ownership credit (KPR), and car ownership credit (KPM), or deposits, giro and savings. Bancassurance system tends to be more efficient and effective in increasing premium income and it is more effective in drawing more policy holders.