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According to the statistics released by the Life Insurance Association of the Republic of China (LIARC), in 2009 bancassurance has formally exceeded the traditional sales agency channel as the number one business volume contributor, with a percentage of 63.15% of all life insurance industry’s first year premium. It shows how increasingly important a role bancassurance plays, and why this insurance distribution channel should not be underestimated
With individual in-depth interviews, top executives from four representative life insurers were invited to express their opinions on the challenges and prospects of bancassurance. Topics of interviews include life insurers’ product strategies, division of responsibilities, laws and regulations, distribution costs, and management risks. This thesis is the presentation of the study and its analysis.
It is the findings of this study that banks are still in a stronger position in the local bancassurance market because they provide a channel that produces certain quality business, which results in price competition among life insurers as they strive to enter the market. And since innovative products are always imitated very soon by the counterparts, life insurers are no longer willing to spend the expense for product innovation. Furthermore, the current bancassurance market is virtually a red-sea market, so there are no different product strategies at all. When insurance disputes occur, banks will try to solve them internally as the first step, and a second step will only be taken by transferring to life insurers when banks cannot reach the solution. As for the existing regulations of Personal Information Protection Act, its influence to bancassurance is comparatively small because its scope includes the whole financial industries.
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