The rise of bancassurance
There has been an increase in the sale of insurance products via banks after 2010 when the regulator cut commissions for agents 70%
In September 2010, the sector regulator cut commissions for insurance agents by 70%, leading naturally to a decline in their number because the job became more challenging. In the first few years of an agent’s career, earnings are low because only new business contributes to them. A side effect, Espirito Santo Investment Bank shows, is the increase in sales through banks. The share of such sales has nearly doubled since 2010. Still, agency growth is more vital for growth in the industry, which is seeing falling premium collections. Although banks can be effective in distributing products that are a substitute for fixed deposits, they fail “to deliver risk-based and need-based products, which require personalized service (and) can lead to mis-selling," Espirito Santo says.
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