IIR Middle East conducted a qualitative study with leading bancassurance providers, on key issues facing the market and also to gain insight into, how they have built successful bancassurance businesses as well as what advice they would give to others looking to establish themselves in the market. for more information please visit www.iirme.com/bancassurance

1. TRENDS IN MENA Bancassurance
PERSPECTIVES FROM THE REGION’S
LEADING ORGANISATIONS
A STUDY BY
BANCASSURANCE EXPANSION TRENDS IN MENA:
INSIGHT, CHALLENGES AND DIFFERENTIATORS
In the GCC, insurance products are gaining in popularity, but the region is still lagging when it comes to
insurance penetration. Consequently there are many opportunities in the market, and one of the most
significant of these is the opportunity offered by bancassurance.
Insurance really does provide banks with a great opportunity to grow their business
and diversify their product range.
Jamie McNish, Regional Director – Partnership Distribution, Friends Provident International
First Gulf Bank figures indicate that insurance penetration in the region is currently at just 1.4 percent,
compared to 7.9 percent in the US and 7.1 percent in Europe. They believe that factors such as a young
population and high disposable incomes, combined with low penetration make bancassurance an
attractive proposition.
IIR Middle East conducted this qualitative study with leading bancassurance
providers, to gain insight into the key issues facing the market, how they
see the industry developing, how they have built their businesses and what
advice would this give to banks looking to enter the market.
© IIR MIDDLE EAST. All rights reserved
1

2. Q1. Why Is Bancassurance Particularly Attractive To Banks In MENA?
There was a general consensus amongst the survey
respondents that bancassurance is attractive because
banks are able to leverage their existing customer
bases and build on their product offerings, providing a
wide range of financial products which will contribute
to customer retention. Bancassurance, which offers a
stable profit stream, is also a way for banks to diversify
their product ranges in a non capital intensive manner.
OPPORTUNITIES ABOUND
The survey respondents pointed to what they see as
considerable opportunity for bancassurance products
in the GCC market. They mentioned both the low
penetration levels of insurance products, and the scope
that bancassurance products provides for banks to become
comprehensive financial service providers which will help
build customer loyalty and retention.
Ashish Sood, Deputy CEO, Retail & Private Banking, Ahli
Bank, highlights the large foreign workforce in the region
and the lack of a government linked insurance or savings
plan available to this workforce post-retirement as key
factors that make bancassurace attractive. The transitional
nature of much of the population, high disposable income
levels and low penetration of insurance products are also
cited by Amol Shah, Business Head Bancassurance, First Gulf
Bank, as factors which contribute to the attractiveness of
bancassurance.
LEVERAGE NETWORKS
Another major reason that bancassurance is regarded
as being so attractive is because banks already have an
established distribution network, via their branches. Banks
that have already invested in building customer loyalty will
be able to leverage this loyalty by offering a wider range of
products and services in a way that Ahmed Ali Al Mamari,
Director, Financial & Technical Regulations of Oman’s
Capital Market Authority, believes will introduce ‘choice,
competition and convenience’.
On the business banking side, J G Shields, Head
Bancassurance, Absa Business Banking , states that, ‘A proper
bancassurance model in business banking, where insurance
products are applied through innovative concepts, should
improve the bank’s ability to advance money to customers.’
© IIR MIDDLE EAST. All rights reserved
A SOURCE OF ADDITIONAL AND
RECURRING INCOME
There is widespread agreement that introducing insurance
products will provide banks with a strong source of
additional and recurring income. It is regarded as
comparatively risk-free and provides a fee-based income.
Such diversification is seen as positive by the banks,
particularly as the introduction of bancassurance is seen as
requiring very little additional investment.
Introduce customers to other
products
An additional reason for bancassurance’s attractiveness
is that it creates opportunities to offer a wider range of
financial products to existing and new customers. This is
seen as a way to:
•
Build customer loyalty
•
Increase the ‘stickiness’ of the customer to the bank
•
Helps increasing the wallet share of the customer
•
Offer customers convenience in the form of a ‘one stop
banking solution’.
•
Provide opportunities for cross-selling
Jitender (Kumar) Nangia, Vice President & Cluster
Head, HDFC Bank, India, suggests that the provision of
bancassurance can be a factor in the market’s perception of
the bank as a ‘more reliable entity.’
Globally, banks increasingly see
insurance products as a way to offer a more
comprehensive range of additional products
and service.
Ahmed Ali Al Mamari, Director, Financial & Technical
Regulations, Capital Market Authority, Oman
[Bancassurance offers] potential to
on board customers for other products and
services (stickiness of customers increase if
they purchase more than one product).
Ashish Sood, Deputy CEO, Retail & Private Banking,
Ahli Bank, Oman
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3. Q2. What Top Tips Would You Give To Banks Looking To Penetrate The
MENA Bancassurance Market?
When it comes to penetrating the MENA bancassurance
market, banks can focus on a range of issues to help
them make the most of the available opportunities.
UNDERSTAND THE MARKET AND
YOUR ROLE IN IT
Understanding the market was cited by many respondents
as one of the most important things that a bank can do as
it prepares to introduce bancassurance offerings. This is not
just about the demographics, but also about regulatory
frameworks.
In a July 2013 report, Alpen Capital states, ‘Bancassurance,
which is a popular medium of selling insurance products in
several mature insurance markets across the globe, has so
far seen restricted progress in the GCC due to insufficient
training, improper incentives structure, and regulatory
issues.’ (http://www.alpencapital.com/downloads/GCC%20
Insurance%20Industry%20Report%202013_1%20July.pdf
accessed 4 Jan 2014).
Clyde and Co, in a September 2013 statement, said that,
‘Bancassurance undoubtedly represents a great potential
opportunity for the insurance industry. However care needs
to be taken to ensure that the arrangements are properly
drafted in order to reflect the parties’ expectations and to
adequately define their respective roles, duties and the
service standards to be maintained. As and when the Draft
Circular is implemented insurers, and their bank partners
will need to obtain approval from the UAE Central Bank and
the Insurance Authority for their arrangements. Accordingly,
they should be seeking to ensure that their arrangements
are compliant with the requirements of the Bancassurance
Regulations.’ (http://www.clydeco.com/insight/updates/
banking-on-bancassurance accessed 4 Jan 2014)
Preparation is the key. Before making a decision to diversify
into bancassurance, banks need to conduct in-depth
research into the government policies and the regulations
in each market. It is also important for them to have a clear
understanding of their competitors. Other tips relating to
the understanding of the market provided by the survey
respondents included:
Look at medium to long term goals,
forget about the short term ones.
Emad Louis, Vice President, Head of Barclays Direct Business, Barclays, Egypt
Bancassurance doesn’t start giving results
immediately … you need to invest time and effort
and, more importantly, have the patience to see the
opportunity giving the desired results. Banks fail because
they give up too easily and too early..
Gautam Duggal, Regional Head: Wealth Management, Priority & International
Banking - Africa,
Standard Chartered Bank, UAE
Don’t look at short term gains.
Sreenath Manghat, Head, Bancassurance Products & Services - Consumer
Banking, Bank Muscat, Oman
Focus on the customer
Focusing on the customer is seen as a key factor when
looking to further realise the potential in the bancassurance
business. Customer-centricity was a constant theme in the
survey responses, and survey respondents emphasised
the importance of having the right data, that will give you
valuable insights into your market if you are going to be
successful. It is also seen as vital to consider bancassurance
as part of the Customer Value Proposition and not as
‘just another product’. Jamie McNish, Regional Director –
Partnership Distribution, Friends Provident International
says, ‘Focus on the customer – intimately understand their
attitudes, needs and behaviors.’
Colin Harrison of HSBC Bank Middle East suggests that banks
should start by determining what their customers need,
rather than deciding what they want to sell them.
•
Identify what you want to get out of bancassurance
Adopt a customer centric focus with a clear
priority on delivering exceptional levels of sales
and service throughout the customer journey.
•
Make sure that your bancassurance and retail banking
strategies are congruent
Ahmed Ali Al Mamari, Director, Financial & Technical Regulations,
Capital Market Authority, Oman
•
Understand the local socio-economic challenges
•
Consider who your competitors will be in a few years
time. Amol Shah of First Gulf Bank suggests that the
competition may not be limited to banks, but might also
include technology companies, telecom companies,
broking firms and the like.
Think long term
Bancassurance does not lead to immediate results is the
general consensus among survey respondents. They advised
that as well as investing time and effort, banks need to be
patient because the gains are ones that will be achieved over
the medium to long term.
© IIR MIDDLE EAST. All rights reserved
Place customer centricity above income
opportunity within the bank’s vision and strategic
approach. Income will look after itself in a proper
Bancassurance model.
JG Shields, Head, Bancassurance, Absa Business Banking, South Africa
Understand your customer needs and adopt
a customer centric focus with an aim to offer
products throughout the customer life cycle.
Sreenath Manghat, Head, Bancassurance Products & Services Consumer Banking, Bank Muscat, Oman
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4. Innovate
Another tip offered by survey respondents was to be
innovative. This involved creating innovative propositions
and products that were designed to meet the customer
needs in each local market. Amol Shah of First Gulf Bank
also emphasises the need to ‘keep it simple, actionable and
relevant for each local market’.
Innovative products should also be designed to outpace
inflation according to Jitendar (Kumar) Nagia of India’s HDFC
Bank, while Ashish Sood of Oman’s Ahli Bank suggested the
need to link savings schemes to customers’ end goals, such
as children’s education.
Work with the right partner
Of course having the right partnership in place is going
to be important for the success of any bancassurance
business. Sreeenath Manghat of Bank Muscat mentions the
importance of ensuring ‘strategic alignment between the
insurance provider and the bank with an agreed approach
to distribution, products, technology and operating models’.
Other tips included:
Think carefully about
distribution
Clearly one of the principal advantages of bancassurance
is the ability of the business to take advantage of existing
distribution networks such as branches. It is important that
banks carefully consider the behavior of the customers such
as which channels they prefer to interact with as well as
offer services through multiple channels such as face-toface, telephone and online.
Amol Shah of the UAE’s First Gulf Bank suggests, ‘Think
about your distribution like Unilever, sell like McDonald's
and service your customer like the Ritz-Carlton’.
Support the business unit
appropriately
As well as collaborating with the right partner and
developing a robust multi-channel distribution network, it is
vital that the bancassurance business unit be appropriately
supported. A strong back office processing capability and
a dedicated, experienced sales force will help ensure that
the customer experience is positive and contributes to
customer retention.
•
Select your partner based on where you would like the
business to be in the next five years
•
Request transparency, with joint business models, sales
and marketing plans as well as a single governance
structure
Many business problems are really customer
experience problems. Set up a strong backend
processing capability and invest in a Retention Unit.
•
Get the right insurance partner who also believes in
the opportunity. If you fail in this, the pace of the two
organisations might be different leading to frustrations
down the track
Amol Shah, Business Head Bancassurance, First Gulf Bank, UAE
Adopt a customer centric focus with a clear
priority on delivering exceptional levels of sales and
service throughout the customer journey.
Ahmed Ali Al Mamari, Director, Financial & Technical Regulations, Capital
Market Authority, Oman
© IIR MIDDLE EAST. All rights reserved
4

5. Q3. What Are The Key Factors Of Creating A Strong Partnership In
Bancassurance?
Creating a strong partnership is not the result of simply
choosing the right partner. The survey respondents
also identified the need to select the right product (or
products), the importance of having a strong, committed
management team and the right operational support,
as important factors in the development of a strong
bancassurance partnership.
The right partner
When it came to partner selection the emphasis was on the
fit between the two organisations in terms of shared goals,
subject matter expertise and investment. But top of the list
was the issue of trust.
•
Developing a good relationship, based on understanding
each other’s strengths and weaknesses, and promoting
excellent team work between bank and the product
provider
•
A long term commitment from both parties to stay in the
game
The right products
Selecting the ‘right’ products was cited as an important
component of the partnership. Key tips included:
Gautam Duggal, Regional Head: Wealth Management,
Priority & International Banking,
Africa, Standard Chartered Bank, UAE
Mutual Trust – First and foremost,
like-minded professionals, on both the bank
and the insurance company’s side,
who trust each other.
Amol Shah, Business Head Bancassurance,
First Gulf Bank, UAE
Other important components of the partnership
included:
•
•
Creating a partnership where both the insurance
company and the bank focused on creating the best
customer proposition, rather than focusing on the model
Developing a relationship where both parties share
services and develop products together where possible,
sharing expertise across all functions
•
Contributing both financial and non-financial investment
from both parties
•
Agreeing jointly on the strategic partnership objectives
and developing detailed Service Level Agreements and
Key Performance Indicators, designed for long term
sustainable growth and to protect customers and the
investments made by both partners
Keep it simple – products , sales and service
•
Build propositions rather than products, because
propositions will help you differentiate yourself from the
competition
The right team and management
With any partnership between organisations it is imperative
that the management and teams suit each other, and have
shared values. To be successful in the bancassurance market
requires engagement of the management team from the
top down. The senior managers of the bank need to be
completely committed to bancassurance and treat it with the
same respect as the rest of the bank’s products. In the words
of Gautam Duggal of Standard Chartered Bank, ‘ownership’
is important. ‘The message has to come right from the top
of the organisation that this is an opportunity that merits
investment.’
Joint governance is also important with high quality, accurate,
timely management information reviewed regularly by the
two parties.
Get your operations right
While a good strategic fit between the partners, and the
selection of the right products, are important, the venture can
fail if the operational aspects of the program are not in place.
Survey respondents suggested:
•
Create a single, scalable platform and operating model
which drives synergies in IT, operations and customer
service
•
Focus on ease of application process, payment, clear
and concise policies as well as putting in place a simple
method of claims’ payment
•
Keep the products, sales and service as simple as possible
•
Embed a sales culture in the organisation. Make sure the
sales force can deliver what the customer wants through
all of your distribution channels
Developing shared goals
•
Select products that suit major customer segments and
not just the ones that you like
•
TRUST – insurance companies are
not here to take the bank’s customers away
and the banks are not here to sell only
insurance products. Both parties need to
understand and accept this.
•
•
Choosing a partner with a similar business vision and
approach to customers
© IIR MIDDLE EAST. All rights reserved
5

6. Q4. Life, non-life and corporate? Which products are the most attractive for Banks?
The consensus on the question of which products are most attractive comes down firmly as ‘it depends’, with each product
category having its own advantages and challenges. According to Oman’s Capital Market Authority, ‘Within MENA, the most
successful insurance products have traditionally been related to compulsory insurance requirements, such as auto and, in some
jurisdictions, medical and mortgage. Non-mandatory insurance classes, such as personal property, individual life and SME have
also been introduced and are gaining traction.’
Offering products which complement the bank’s core products is seen as a strategy which is likely to ensure good returns and
allow the bank to leverage its existing customer base effectively.
Again the survey respondents emphasise the importance of focusing on the customers and accurately identifying their needs
to identify key customer segments. They also state that it is vital that products be offered through appropriate distribution
channels.
Life
Non-life
•
Life insurance is a much bigger ticket item, but it needs
a significant investment in the sales force development,
management and oversight
•
Non-life insurance is less complex than life insurance,
but it is highly transactional and needs significant
volumes to generate returns
•
Volumes are generally small, but with high margins
•
•
Life insurance is mandated by all regulators for all
lending products (for example, personal loans)
Volumes are fairly high, and non-life products are
relatively easy to sell, so require less investment in the
development of the sales force
•
Insurance-linked saving schemes are fast becoming
attractive in terms of both customer benefits and fee
income for banks
•
They help increase customer loyalty and retention
Corporate
•
The corporate market is complex, and access to it is
made challenging by a strong and highly competitive
broker market
•
Offering corporate products would help the bank be
a one-stop shop for a customer’s complete financial
needs
Q5. Are some distribution channels progressing better than others for
certain products? Which ones and why?
Within MENA, multiple and integrated distribution is key to the future of successful bancassurance models and, depending
on the product, the channel preference will alter over time, and at different speeds of consumer adoption. Banks are ideally
situated to take advantage of their existing channels and relationships to sell bancassurance products.
Put simply, those products which require considerable knowledge on the part of the sales force, and which require a
substantial investment, have traditionally been sold through direct selling and wealth management services, and this is
likely to continue. On the other hand, sales of auto, travel and home insurance, which were traditionally sold face-to-face
and by brokers, are shifting more towards online, phone and ATM channels.
Customers generally appreciate the opportunity to switch between channels as part of their bank relationship and it is
likely that they will appreciate being able to do this when it comes to bancassurance as well. Simple, template products are
perfect for distribution through branches or by telemarketing, but are also highly suitable for online channels.
... the opportunity or next wave is technology driven.
Gautam Duggal, Regional Head: Wealth Management, Priority & International Banking - Africa,
Standard Chartered Bank, UAE
Customers require the convenience of choosing
which channel to adopt. This will develop as a
requirement to switch between channels as part of
their bank relationship.
Wealth management is widely acknowledged as
the best channel for distributing insurance products;
one of the major drivers for this is the significant
revenue opportunity it provides.
Ahmed Ali Al Mamari, Director, Financial & Technical Regulations,
Capital Market Authority, Oman
Sreenath Manghat, Head, Bancassurance Products & Services Consumer Banking, Bank Muscat, Oman
© IIR MIDDLE EAST. All rights reserved
6

7. Q6. How can you go about creating a more customer centric approach in
Bancassurance?
Friends Provident International sum up the approach
that organisations need to take perfectly. ‘We need to
understand the customers’ needs, attitudes and behaviors.
The bank has a wealth of information on their customers
which, if used correctly, can greatly assist in building a
customer centric approach and proposition focused on the
needs of the customer rather than the bank or insurer.’
It is all about understanding the customer and putting the
customer at the center of the process. Some key aspects of
customer behavior that banks need to understand include:
•
Expectations of customer experience are evolving – speed,
convenience and low effort are increasingly important
•
Customers are adopting digital technologies which is
shifting control from organisations to customers
•
Customers interact with the bank across multiple channels
and expect integrated experiences
•
Customer relationships are becoming more complex, with
customers becoming less loyal
Build relationships
Ahmed Ali Al Mamari, of Oman’s Capital Market Authority,
states, ‘Continued advances in technology, communications,
data capture and analytics have given rise to a more
empowered global consumer which is forcing insurers to
dramatically change their operating model.’
Consumers have more choices than ever, meaning that the
customer relationship is more important than ever. As the
industry landscape changes, product remains important. But
customers are willing to buy more from companies that they
trust, and from companies that make the experience easy and
convenient.
‘This means that every employee, whether they deal directly
with a customer or not, should understand how his or her
actions every day, affect everyone who purchases and uses
the company’s products or services’, states Amol Shah of First
Gulf Bank. ‘Customer centricity is everyone’s job…it begins at
the top and permeates through the entire organisation.’ Shah
continues by suggesting that there are three critical areas
involved:
Profiling and segmentation
Segmentation is absolutely essential when it comes to
customer centricity. The survey responses indicate that
profiling helps ensure that the product is suitable for the
customer and that the customers will gain real benefits from
the products. By profiling your customer base you will develop
a deep understanding of their product needs and will be
able to match them. This helps organisations select the best
products for their existing customers, and also allows them to
focus staff training efforts on a few well-targeted products that
will meet the needs of the most valuable customers.
1. Experience design - review the portfolio of products and
services, understand the customer journey and align your
insurance proposition from the customers’ perspectives
2. Understand the voice of the customer, regarding all of your
services, not just insurance, using information gleaned
from social media, online reviews and call center data
3. Bring the customer experience to life – help employees
understand the impact their roles have on the customer
experience
Other suggestions for developing a customer-centric
approach included:
Jamie McNish, Regional Director – Partnership Distribution,
Friends Provident International
Employees should take clear ownership for customer
problems and manage issues through to resolution
•
We need to understand the customers’
needs, attitudes and behaviors. The bank has
a wealth of information on their customers
which, if used correctly, can greatly assist in
building a customer centric approach and
proposition focused on the needs of the
customer rather on than the bank or insurer.
•
Design true integrated Customer Value Propositions
including the correct sales channels, sales tools, pricing
benefits etc
•
Approach the model design from a customer needs
perspective and not from an income perspective
Banks should work with a mantra of acquiring,
retaining and up-selling to customers and should move
away from selling/pushing insurance products.
Sreenath Manghat, Head, Bancassurance Products & Services - Consumer
Banking, Bank Muscat, Oman
Profiling is a must and ensures product
suitability to the customer.
Emad Louis, Vice President, Head of Barclays Direct Business,
Barclays, Egypt
Make sure through phone banking that customers
have understood each and every aspect of the policies
they have bought.
Jitender (Kumar) Nangia, Vice President & Cluster Head, HDFC Bank, India
Segmentation is a key factor – knowing
the profile of the customer will always help in
choosing the right product for them.
Break down organisational silos and structure
incentives to promote a customer-centric culture.
Ashish Sood, Deputy CEO, Retail & Private Banking,
Ahli Bank, Oman
Amol Shah, Business Head Bancassurance,
First Gulf Bank, UAE
© IIR MIDDLE EAST. All rights reserved
7

8. CONCLUSION
Our study suggests that bancassurance truly is an attractive area for growth and
diversification in the financial services sector. The survey respondents agree that the
customer should be at the center of the process, and that by profiling their existing
customers, they will be well placed to make insurance offerings that are carefully
designed to meet the customers’ needs.
Whilst bancassurance is seen as a relatively low-risk business, with high growth
potential, the survey respondents offer some cautionary notes. They emphasise the
importance of selecting the right partner and working within a framework of trust,
where each side of the partnership, banking and insurance, are equal. They also
highlight the necessity to select the appropriate channel for each product and the
importance of a multichannel distribution strategy.
As the population becomes increasingly familiar with the products, and as technology
develops, it is likely that customers will change channels, and will look for simpler
ways to purchase bancassurance products. Providers need to keep abreast, even
ahead, of these developments if they are going to maintain and grow market share.
Perhaps the strongest message coming through from the responses is the need to
know and deeply understand the market – to know the customers, the products,
the regulatory framework, as well as the competition.
© IIR MIDDLE EAST. All rights reserved
8

9. ABOUT
The Bancassurance Mena Summit, taking place at The Address Hotel, Dubai Mall, Dubai, on 17 – 19 February 2014.
For more information, please visit:
www.iirme.com/bancassurance/brochure
THANKS
IIR Middle East would like to thank all the Bancassurance MENA speakers for their
contributions to this report, with special thanks to:
Headline Sponsor
Respondents
Ahmed Ali Al Mamari, Director, Financial & Technical Regulations, Capital Market
Authority, Oman
Jamie McNish, Regional Director, Partnership Distribution, Friends Provident
International, UAE
Silver Sponsor
Emad Louis, Vice President, Head of Barclays Direct Business, Barclays, Egypt
Gautam Duggal, Regional Head, Wealth Management, Priority & International Banking
Africa, Standard Chartered Bank, UAE
Colin Harrison, Regional Insurance, Retail Banking & Wealth Management, HSBC Bank
Middle East, UAE
Official Media Partner
Ashish Sood, Deputy CEO, Retail & Private Banking, Ahli Bank, Oman
Amol Shah, Business Head Bancassurance, First Gulf Bank, UAE
Media Partners
Sreenath Manghat, Head, Bancassurance Products & Services, Consumer Banking,
Bank Muscat, Oman
Nur Ain Ramli, Vice President & Head of Wealth Management Department, Bank
Muamalat Malaysia Berhad, Malaysia
Jitender (Kumar) Nangia, Vice President & Cluster Head, HDFC Bank, India
JG Shields, Head, Bancassurance, Absa Business Banking, South Africa
© IIR MIDDLE EAST. All rights reserved
Organised By
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