Have You Heard About Bancassurance?
By Olushola Okunlade
Bancassurance, a partnership between Access Bank and Coronation Insurance that provides you access to an exciting array of products and services designed to suit your lifestyle. This means you get to enjoy all your usual banking services while also enjoying dependable insurance solutions endorsed by a financial partner you know and trust. It’s the best of both worlds.
Advantages Of Life Assurance: Life Assurance enjoys favorable tax treatment, unlike any other financial instrument. Some benefits are generally income-tax-free to the beneficiary. Death benefits may be estate-tax-free if the policy is owned properly. Cash values grow tax-deferred during the assured’s lifetime. Many life assurance policies are exceptionally flexible in terms of adjusting to the policyholder’s needs. The benefit may be decreased at any time and the premiums may be easily reduced, skipped, or increased. A cash value life assurance policy may be thought of as a tax-favored repository of easily accessible funds if the need arises; yet, the assets backing these funds are generally held in longer-term investments, thereby earning a higher return.
What are the benefits of Life Assurance? Typically, lower cost simpler to understand-it’s purely an insurance product. It may be convertible to whole life – but find out before you buy. If you no longer need it or can’t afford it, you can walk away without losing anything more than the premiums already paid.
Permanent life insurance Contains an important savings element known as cash value that you can take out or borrow against and can provide tax-advantaged estate planning benefits
Do I Need Insurance/ Life Assurance: Yes, more importantly, everybody needs Properties Insurance and Life Assurance, it is a contract between an insurer and a policy owner. A life assurance policy guarantees the insurer pays a sum of money to named beneficiaries for a particular scheme targeted education, or when the insured dies in exchange for the premiums paid by the policyholder during their lifetime.
Why Bancassurance And What Do I Stand To Gain? Bancassurance, a leading provider of insurance services committed to delivering best-in-class solutions to its customers. Over the years, Coronation Insurance has built a trustworthy reputation on a culture of integrity. 60 years of experience providing life assurance and protecting the assets of customers in Nigeria. A reputation of integrity and prompt claim payments within 48 hours. A robust online platform that provides end-to-end digital support. Our customers can buy and manage their policies virtually. Similar corporate culture and long-standing relationship with Access Bank ensures that services are delivered seamlessly.
How Can Bancassurance Help? Yes, Bancassurance will help your saving culture, gives loans when necessary. It has property insurance and life assurance solutions that are designed to help you save or achieve a certain life goal to hit the refresh button whenever those pesky perils show up to disrupt life’s flow.
Life Assurance Policy: Protect the livelihood of the insured individual’s dependents in the event of his/her demise.
Flexible Investment Policy: Provides you the opportunity to save funds towards specific goals with an embedded insurance cover.
Home Insurance: Covers damage caused by flood, fire as well as injury to visitors on your property.
Travel Insurance: Protects you from unforeseen situations when temporarily traveling abroad.
Motor Insurance: Takes care of any damage to your car as well as to other people’s vehicles. Whatever your lifestyle need is, there’s a policy for you.
How do Bancassurance Emerge and What are Stakeholders Verdict?
In 2020 Access Bank, one of the leading deposit money banks in Nigeria announced it plans to restructure into a holding company with four subsidiaries: Access Bank Group, Payment Business, Consumer Lending, and Agency Banking, after it received approval in principle from the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC). This has further spurred other interests within the financial services industry with the banking group revealing its proposed plan to venture into insurance brokerage and the strengthening of an existing relationship and partnership with Coronation Insurance that will help it deliver a Bancassurance suite of products and services. Coronation Insurance is one of the most capitalized insurers in the country.
Prior to this time, Access Bank has had a longstanding link with Wapic (now Coronation) Insurance, which has led analysts and experts to offer the view that the partnership would make some clear and noticeable contribution to the entire financial services industry when it begins to blend in.
The bancassurance insurance/life assurance will open opportunities for not only the insurance companies but for banks, as well as customers. While the bank could earn profitable income, opportunities such as the ability to expand consumer base without investing in sales agents or incurring broker commissions; the use of banks as a distribution channel to improving financial product portfolio while offering a high return on equity amongst others have been highlighted as key benefits accruable on the part of the insurance company.
Herbert Wigwe, group managing director and CEO of Access Bank, while speaking on the partnership in a recent analysts’ call monitored by Business A.M., noted that the partnership was a pursuit directed at making customers have good claims experience which could be achieved through bancassurance. Hence, he described the deal as one that is of great significance to the ecosystem.
Highlighting the importance of risk management in the business operations of an insurance company, he explained that the bank chose Coronation Insurance because of its good standing amongst other insurance companies who are often challenged in meeting the various claims made by their customers.
Mutiu Sunmonu, chairman of Coronation Insurance, who holds a similar view with Wigwe, said the partnership will improve insurance and banking services to corporate customers, marking the level of growth recorded in the banking sector over the last two decades only.
“The partnership would expand service delivery pipeline with Access Bank through the coming together of both organizations,” Sunmonu said.
Experts and analysts have submitted that having more bancassurance in Nigeria would help to reposition the insurance industry, especially at a time when the insurance sector is faced with meeting up recapitalization deadline, cultural barriers to insurance, amongst other factors which contribute to low insurance penetration level in the country.
In the view of Emmanuel Abolo, who holds a doctorate in economics, a risk expert and banker, and the director-general of the Economic Thinktank Centre Limited: “This will shape the financial services industry significantly even though this is not the origin of Bancassurance in Nigeria. It will create perturbations in the insurance industry, no doubt.”
In the view of Francis Ewherido, managing director of Titan Insurance Brokers Limited, customers would benefit more from bank and insurance partnerships.
“The major beneficiaries of bancassurance are customers, who can now do their insurance and bank transactions and some other financial transactions under one roof. It is supposed to be a symbiotic relationship between banks and insurance companies, where they leverage each other’s strengths and clientele to grow their income and profit.”
Similarly, Ekerete Ola Gam-Ikon, a consultant in management, strategist, and insurance, highlighted an increase in the volume of transactions, income growth, and more market share and enhanced brand mileage as benefits open to the bank and insurance companies.
“There are a large number of opportunities for both parties, but more so for insurance. There will be an opportunity for product development, customer loyalty, and trust to a large extent,” he added
Empirical evidence on rising of bancassurance market
Following a report by IMARC showing that the global bancassurance market size reached $1.2 billion in 2019 and the market is projected to reach a value of $1.8 billion by 2025, recent times has seen global bancassurance market size soar with the prospect to further increase in the near future with factors such as the aging population (necessitating the need for health and life insurance and retirement product plans; increasing economic growth in developing countries, along with rising internet penetration and technological advancements.
Accordingly, Research and Markets reported that the global bancassurance market size reached around $1.17 billion in 2018. The market is further projected to reach a value of $1.7 billion by 2024, growing at a CAGR of 6.1 percent during 2019-2024.
However, in Nigeria, NAICOM approved 18 out of 20 applications seeking the bancassurance model after the implementation of the referral model of the bancassurance model approved in 2017 between the National Insurance Commission (NAICOM) and the Central Bank of Nigeria (CBN). But what lies ahead? Should the decision by Access Bank be seen as a mirage to the market or an opportunity for expansion?
Ewherido, in his comments, said: “There’s no threat anywhere. Insurance penetration in Nigeria is 0.3 percent, so there’s basically 99.7 percent that’s unexplored. There are opportunities in telecoms, agric, and marine and motor, where we have more fake insurance certificates than genuine ones. There are insurance opportunities among low-income earners where insurance penetration is very low. There’s a huge market out there. The industry needs more daring and innovative players, who think out of the box.”
In the view of Abolo: “Competition is the name of the game. Insurance companies that have challenges meeting capital adequacy requirements should go into mergers and acquisitions.”
In addition, Gam-Ikon added, “Coronation Insurance getting into partnership with Access Bank Plc to distribute its products is the taste of what we desire to see into the future especially as we leverage the National Financial Inclusion Strategy in Nigeria and elsewhere. Besides insurance brokers, the relationship between the insurers and banks (better known as bancassurance) is the strongest distribution channel for insurance sales in Nigeria. So, getting it at this time puts Coronation Insurance on the path to compete strongly and win more market share. Good thing, Access Bank is also emerging as a dominant player with Holdco structure amongst its peers.”
Speculating the banking group’s reach in the nearest future, Abolo noted that considering Access Bank’s plans to widen its reach, the bank’s links with Coronation Insurance may soon lead to acquiring insurance firm(s) as a way to expand their reach and offering a robust insurance service, considering their exploits within the banking space in recent times.