Digital Bancassurance - How to fix the gap between strategy & execution

How to get a win-win-win situation for banks, insurers, and consumers

For more than 20 years, everyone in the financial sector has been hearing about the magical wonderland/partnership model known as Bancassurance. It’s a model under which insurance companies and banks partner together to sell insurance products to the bank’s customers. Now, the partnership model is on the rise again, with a digital spin this time.

In theory, it’s a partnership that should result in a win-win-win situation for banks, insurers, and consumers. But the degree of success varies from country to country. Many have attempted it, and some have even managed to lay a substantial foundation for it and converted their business models. Yet very few have managed to unwrap and get to the core of the financial Kinder Egg.

Just what is inside that Egg? Let’s have a quick look at what bancassurance promises for banks and insurers that can make a (digital) partnership work:

  1. Lower customer acquisition and marketing cost (for banks and insurers)
  2. Higher penetration via convenience (for banks and insurers)
  3. Higher loyalty and retention (for banks and insurers)
  4. Better Combined Ratio (better data for risk calculation) (for insurers)
  5. Higher perceived trust (for banks and insurers)
  6. Operational efficiency (for insurers)
  7. More relevant offers (for customers )
  8. In general Improved profitability (for banks and insurers)

These are the major benefits, and they apply whether we’re talking about commercial insurance products, personal insurance, life insurance, or other types of coverage.

With all the benefits at stake, who wouldn’t want to make the partnership work? This is especially so when you consider that Axis Bank saw a 30% increase in fee-based income in 2011 after teaming up with Max Life insurance, or that the State Bank of India increased almost all of its customer lifetime value metrics after it started offering insurance products under a bancassurance model.
In more recent examples, the value of bancassurance is very much present in the investment Allianz is rumoured to make to land a deal with BBVA. Or in one of the most ambitious —at least on paper — partnerships between ING and AXA.

The big question is how to ensure a bancassurance program can succeed.

If you want a rundown of the latest trends and developments in bancassurance, we just put together a brief from the Global Bancassurance Summit in Berlin. Click here to read it.

Starting with All the Right Intentions

Bancassurance promises increased profit and success for insurers and banks while easing the burden of insurance purchases for consumers by giving them a simple digital one-stop shop for all the financial products they need.

Companies don’t go into this haphazardly. Whenever banks and insurers decide to collaborate, they create a strategy based around:

  • Collective use of data and insight
  • R&D and business development
  • Test-learn-adapt cycles
  • Harnessing each company’s competences
  • Moving from a reactive to a proactive approach

Once the strategy is laid out, the new bank and insurer begin brainstorming ways to cross-sell and up-sell insurance products.

Things sometimes fall apart at this stage. We have witnessed Private Wealth C-level people come up with a cross-selling strategy for customers who want to buy a helicopter. Makes sense. I mean, where would you go for your helicopter insurance needs otherwise, right?

After this ideation process, it’s time to put the strategy into action. This is when everything that was laid out on paper, discussed in meetings, and spelt out in detail will crystalize into something that can be executed. The thing with crystallization, though, is that it’s pretty unpredictable. When it comes to bancassurance, putting a partnership into action usually ends up one of two ways (or somewhere in between):

Outcome Number 1:

The financial advisers and bankers end up having to sell insurance with their banking products, as well as offer advice on that insurance. This puts these advisers and bankers in a difficult position because they simply don’t have a strong background in insurance. It would be like deciding to be a hairdresser when you’ve barely ever used any scissors. The most effective way to deal with this is by giving these employees thorough training, but that can be quite costly. Hereby above-mentioned benefits 1- 6 and 8 fails.

This tendency has increased with IDD, where there now are examples of banks who due to IDD requirements do not wish to carry the consultancy process for insurance and instead for selling directly are now generating leads.

Outcome Number 2:

The financial advisers and bankers don’t directly sell insurance products, but instead, send leads to the insurance company/agency. Then, the customer will be called to set up a meeting to go over their insurance options. Well, so much for the convenience factor. This makes no significant difference to the way the consumer purchases insurance — there’s just a different name on the policy. Hereby above mentioned benefits 1–6–7 fail.

Neither outcome is satisfying, and both of them fail to deliver on the great benefits promised of the bancassurance model.

Execution Is King

Ambitions are often not met in the execution stage, but it should be easy to implement ideas as basic as these. The problem is they seldom get expressed in the ideation phase for fear that they sound too conservative.

When I request an offer for a car loan with my bank, there should be a simple checkbox asking me whether I want to throw auto insurance into the mix. That’s it. Simple. Also taking into account that data related to the car loan hold 80–90% of the risk variables of a micro tariffed insurance price, a price can be generated merely by the customer giving consent to use their data to calculate the price.

Insurance is just a means to an end (in this case, owning and protecting the car). So, anyone who offers a way to fix the means by a simple click is going to be a winner in the eyes of the customer.

Yet, execution often falters. There are three major reasons for this gap between strategy and execution:

  • Legal compliance
  • Shortage/prioritization of IT resources
  • Focus on short-term gains

And it really doesn’t help that ideas produced early on in the process often end up falling short because the digital infrastructure required to support their needs to be developed from scratch.

Taking Digital Infrastructure Seriously

Developing a digital infrastructure for a bancassurance partnership is more affordable than the cost of training employees and maintaining an analogue sales process. Although it’s costlier, the latter is usually the fallback strategy because it is more familiar to both partners.

Successful digital transformations don’t happen unless the businesses involved view the digital framework as a new infrastructure. Moving to digital infrastructure is a fundamental change that reflects back on the business processes, products, and even the whole distribution of power, opportunities, and revenue streams. (For a simple example of this, just think about how a doubling of offers exposed without raising the cost of sales, could affect a price/risk strategy.)

Legal compliance can sometimes hinder digital development, but the implementation of the Insurance Distribution Directive (IDD) should drive digitization forward, not hold it back. Think about it: who is the weakest link when it comes to insurance mediation? Humans, of course. Even if you spend years and years training them, you can’t guarantee, predict, or control what an agent will say to the customer. Going digital gives you the benefit of automated documentation of the mediation process, in case you ever need to use it.

When it comes to bancassurance, so many good intentions end up falling short in the execution. That’s one of the reasons we started delivering digital capabilities as a Software as a Service platform.

We don’t want good intentions to get lost in translation. From now on, every new bancassurance partnership can start with their product, their customers, and the digital infrastructure they need.

Get a full understanding of what Embedded Insurance is.


About enables insurers and their distribution partners to embed insurance solutions, anywhere.
Their vision is to fundamentally change the way people engage with insurance. is dedicated to creating great online customer journeys with the ambition to become the leading platform for digital distribution of insurance solutions. Their white-label solution, called Penni Connect, enables insurers to sell any insurance products online through any distribution channel.