By Pratap John
DOHA: Bancassurance – selling of insurance (assurance) products and services by a bank through its own channel – is gradually gaining pace in Qatar.
While the projected growth potential of Qatar’s insurance industry is a motivating factor, some participating local banks say they wish to get into bancassurance to be one-stop financial solution providers.
With Qatar announcing mega projects worth $130bn in sectors such as energy, industry, utility, infrastructure, tourism, hospitality and sports (most of which will be implemented within five years), the volume of insurance premiums in the country is expected to rise to $4bn by 2013 compared with just $461mn in 2006.
Doha Bank, which pioneered bancassurance in the country, has already set up a 100% general insurance subsidiary. Doha Bank Assurance Company is authorised by the QFC Regulatory Authority.
Other local banks are also in the process of getting into bancassurance. Standard Chartered Qatar recently joined hands with Alico AIG Life to offer bancassurance products with medium to long term investment and savings options.
But sceptics say the “already crowded” insurance market in the country will find the going tough with more players entering the fray.
The general manager of a national insurer said, “Already there are 10 insurance companies in the country including five Qatari firms as well as QP’s captive arm Al Koot. The market is not big enough to sustain so many players. We are already hit by low margins.”
But Doha Bank Group CEO, R Seetharaman said, “There is plenty of room for everyone to grow. One only needs to be professional in what one is doing. In the last four years we have been offering bancassurance products as a professional intermediary. Now Doha Bank Assurance Company is functioning as an insurance brokerage.”
‘Why should banks offer insurance?’ Gulf Times recently asked the chief executive officer of a Qatari bank.
Pat came his reply. “As markets open up and competition escalates, banks have to look beyond traditional activities to remain competitive. Bancassurance allows banks to diversify their product base and become a one-stop financial centre where customers can obtain banking and insurance products as well as other financial products such as unit trusts and will-writing services.
He said, “A customer who has several products with the same bank will not likely want to move his account to another financial institution as he has already established a relationship with the bank and it is convenient for him to carry out all his financial transactions at the same place. Banks which have a large customer base can cross-sell insurance products to their banking customers.”
For example, he said, fire insurance could be sold to housing loan customers whereas cargo insurance can be marketed to corporate customers with trade financing facilities.
“By synergising the marketing activities of their banking and insurance products, banks may be able to offer insurance products to their customers at competitive prices due to their reduced cost per sales lead,” he said.
Proponents of bancassurance say it gives an individual the convenience of obtaining both banking and insurance products from the bank at the same time. For those who prefer the “brick-and-mortar” approach, they can easily walk into any of their bank’s network of branches and receive personal advice from the sales staff. Some banks also offer more than one insurer’s products, which mean customers will have more choices.
According to Alico regional vice-president (bancassurance) Bernard Camaret, his firm’s tie-up with Standard Chartered Qatar will facilitate multiple delivery channels, thereby increasing the penetration of insurance products.
Alico looks to offer retirement, child education, wealth creation, protection and savings products, which are available to non-SCB customers also.
B Chandrasekhar, Standard Chartered regional head (consumer banking, Northern Gulf, Levant and Oman) recently told Gulf Times: “Our strategic partnership with Alico will strengthen our bancassurance proposition allowing customers to manage their investment portfolio more cost effectively.” |
