Marktanalyse - Bancassurance in Ireland: Life, Non-Life and Creditor Insurance

Marktanalyse - 'Bancassurance in Ireland: Life, Non-Life and Creditor Insurance'

Finaccord’s report titled Bancassurance in Ireland: Life, Non-Life and Creditor Insurance is about the distribution of insurance products through banks and other lending institutions in Ireland. Types of insurance considered are: investment-related life insurance and retirement savings; risk life insurance, critical illness insurance and income protection insurance; accident insurance, medical expenses insurance and health / hospital cash plans; personal motor insurance and household insurance; and creditor insurance for mortgages, consumer finance and credit cards.

Based on a survey of 15 organisations, it identifies 57 bancassurance distribution initiatives across these types of insurance, and highlights the operating models and product providers used in the vast majority of cases. Moreover, it analyses these bancassurance agreements in terms of ‘weighted partnerships’ which take into account the size of the retail customer base of the banking institutions distributing these policies, thereby differentiating between the most important relationships and those that are comparatively minor.

In addition, with the exception of creditor insurance, for which historic, current and forecast market size data is provided for 2007, 2011 and 2015, the report also sizes the market for the various types of insurance investigated in terms of gross written premiums between 2006 and 2010, provides a general introduction to the banking sector, comments upon the general influence of the bank distribution channel for these types of insurance, and presents available data for key bancassurance underwriters, including captives, joint ventures and other dedicated bancassurance underwriters.

You may be able to use this report and the PartnerBASE™ dataset that accompanies it in one or more of the following ways:

- gain access to a source of information that provides a comprehensive overview of the provision of a range of personal insurance products by a majority of significant banking entities in Ireland;

- identify partnership opportunities for these types of insurance that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;

- understand which underwriters and other product providers have been successful in establishing distribution relationships with the most important banking entities in Ireland;

- assess the background to the most significant bancassurance deals, differentiating between those that originate from long-term or strategic objectives and those that are more transient;

- appreciate the magnitude of the opportunity to sell different types of life, non-life and creditor insurance through banks and other lending institutions in Ireland.

Inhaltsverzeichnis Marktanalyse - 'Bancassurance in Ireland: Life, Non-Life and Creditor Insurance'



TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY ... 1

1.0 INTRODUCTION 3

What is this report about? .. 3

Distribution partnerships with banks and other lending institutions constitute the focus of this report ... 3

Rationale 3

Across Europe, over 80% of banking entities surveyed are active in this arena to one extent or another 3

Methodology . 4

Survey of banks and other lending institutions . 4

Market data . 4

Definitions . 6

Investment-related life insurance .. 6

Retirement savings 6

Risk life insurance .. 6

Critical illness insurance . 6

Income protection insurance . 7

Accident insurance . 7

Health / hospital cash plans ... 7

Medical expenses insurance . 7

Personal motor insurance .. 7

Household insurance . 7

Creditor insurance .. 8

Mortgages, consumer finance and credit cards ... 8

Weighted provider share of partnerships .. 8

Operating models ... 9

Abbreviations and exchange rates .. 10

Finaccord 10

2.0 MARKET ANALYSIS ... 12

Banks and other lending institutions covered .. 12

Introduction to the banking sector .. 12

Six major Irish banks have been reduced to three by the financial crisis... ... 12

... with foreign-owned banks making up the field 13

The Irish League of Credit Unions has the largest customer base, but this is spread across 400 entities .. 13

The Central Bank of Ireland has launched an investigation into mis-selling of creditor insurance ... 13

Investment-related life insurance and retirement savings .. 14

Insurance market size and growth .. 14

Ireland’s retirement savings market has been bolstered by sales of pension plans for the self-employed . 14

Distribution share of banks .. 16

Bancassurance provision rates, operating models and partnerships ... 16

Investment-related life insurance 16

Three insurance companies offer investment bonds through the bancassurance channel . 16

Retirement savings .. 18

All full-service banks offer retirement savings... .. 18

... with partnerships distributed across five providers . 18

Performance of key bancassurance underwriters .. 20

Key bancassurance underwriters account for a very significant share of total life and pensions... .. 20

... although this share fell to a four year low in 2009 for life insurance, in particular.. 21

The market share of bancassurers in the pensions sector has been somewhat steadier 21

Protection-related life insurance . 22

Insurance market size and growth .. 22

Ireland’s market for protection-related life insurance is likely to have declined since 2007 .. 22

Distribution share of banks .. 23

Bancassurance provision rates, operating models and partnerships ... 23

Risk life insurance 23

Mortgage specialists do not offer stand-alone risk life insurance... 23

Critical illness insurance ... 24

All banks offering stand-alone risk life insurance also offer stand-alone critical illness cover... 24

Income protection insurance ... 24

EBS distributes income protection cover but not risk life or critical illness insurance 24

Performance of key bancassurance underwriters .. 24

Accident and health insurance 27

Insurance market size and growth .. 27

Gross written premiums for health insurance in Ireland have grown rapidly in recent years 27

Distribution share of banks .. 28

Bancassurance provision rates, operating models and partnerships ... 28

Accident insurance ... 28

Medical expenses insurance ... 28

Only two banking institutions distribute medical expenses insurance... 28

... giving three underwriters a near equal weighted share of partnerships 28

Aviva acquired a 70% stake in Vivas Health in 2008, eventually renaming it Aviva Health . 29

Health / hospital cash plans . 29

Performance of key bancassurance underwriters .. 31

The market share of Aviva Health in Irish health insurance has increased rapidly in recent years . 31

Personal motor and household insurance 32

Ireland’s market for personal motor insurance has declined sharply since 2006 . 32

Distribution share of banks .. 33

Bancassurance provision rates, operating models and partnerships ... 33

Personal motor insurance 33

Three underwriters possess banking sector partnerships for personal motor insurance . 33

Household insurance ... 35

All the main banks and mortgage lenders offer household insurance ... 35

AXA has an opportunity to increase its position if it can win EBS’s business following the merger with AIB .. 35

Performance of key bancassurance underwriters .. 35

Creditor insurance . 37

Consumer lending market size and growth 37

Mortgage lending . 37

Mortgage lending balances fell by almost a quarter in value between their high point in 2007 and 2010... 37

Non-mortgage lending . 38

... with non-mortgage lending also having lost ground in recent years .. 38

Credit and other pay later cards .. 39

Ireland’s market for credit and other pay later cards peaked in 2008 before slipping back in 2009 and 2010 39

Creditor insurance provision rates, operating models and partnerships ... 40

Creditor insurance linked to mortgages .. 40

Hybrid operating models predominate, as life insurance providers differ from short-term insurance providers .. 40

One life insurer and two short-term insurers share the largest partnerships between them 40

Creditor insurance linked to consumer finance .. 43

Creditor insurance for consumer finance is usually offered through one external underwriter . 43

Assurant established its relationship with the Irish League of Credit Unions in 2007 ... 43

Creditor insurance linked to credit cards . 45

Only two credit card providers offer payment protection insurance ... 45

Creditor insurance risk coverage . 47

Credit card policies carried the most comprehensive insurance ... 47

Alternative distribution channels .. 48

Direct underwriters and intermediaries often sell mortgage term life cover, but payment protection is rarer... 48

Creditor insurance market size, growth and forecast . 48

Irish creditor insurance contracted between 2007 and 2011 and is forecast to continue shrinking . 48







Tabellenverzeichnis Marktanalyse - 'Bancassurance in Ireland: Life, Non-Life and Creditor Insurance'



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY ... 1

Overview of bancassurance provision rates for different types of insurance in Ireland, 2011 ... 2

1.0 INTRODUCTION 3

Banks and other lending institutions in Ireland contacted by Finaccord, segmented by type ... 4

2.0 MARKET ANALYSIS ... 12

Gross written premiums for investment-related life insurance and retirement savings in Ireland, 2006-2010 ... 14

Gross written premiums for investment-related life insurance and retirement savings in Ireland, 2006-2010 (data) . 15

Bancassurance provision of investment-related life insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships 17

Bancassurance provision of retirement savings in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships . 19

Market share in total life insurance and pensions of key bancassurance underwriters in Ireland, 2006-2009 (data) ... 20

Market share in total life insurance of key bancassurance underwriters in Ireland, 2006-2009 (data) ... 21

Market share in total pensions of key bancassurance underwriters in Ireland, 2006-2009 (data) .. 21

Gross written premiums for protection-related life insurance in Ireland, 2006-2010 22

Gross written premiums for protection-related life insurance in Ireland, 2006-2010 (data) . 23

Bancassurance provision of risk life and critical illness insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships 25

Bancassurance provision of income protection insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships 26

Gross written premiums for accident and health insurance in Ireland, 2006-2010 .. 27

Gross written premiums for accident and health insurance in Ireland, 2006-2010 (data) ... 28

Bancassurance provision of medical expenses insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships 30

Market share in health insurance of key bancassurance underwriters in Ireland, 2006-2009 (data) .. 31

Gross written premiums for personal motor and household insurance in Ireland, 2006-2010 32

Gross written premiums for personal motor and household insurance in Ireland, 2006-2010 (data) . 33

Bancassurance provision of personal motor insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships . 34

Bancassurance provision of household insurance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships . 36

Residential mortgage lending balances outstanding in Ireland (absolute and per capita), 2006-2010... 37

Consumer non-mortgage lending balances outstanding in Ireland (absolute and per capita), 2006-2010 38

Credit and other pay later cards issued and per capita in Ireland, 2006-2010 . 39

Key data points for the consumer lending market in Ireland, 2006-2010 . 40

Provision of creditor insurance linked to mortgages in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships . 42

Provision of creditor insurance linked to consumer finance in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships 44

Provision of creditor insurance linked to credit cards in Ireland, 2011: provision rate, operating models and weighted provider share of partnerships . 46

Risk coverage of creditor insurance policies in Ireland, segmented by type of underlying product, 2011 .. 47

Creditor insurance gross written premiums in Ireland, segmented by policy type, 2007, 2011 and 2015 (forecast) ... 49

Creditor insurance gross written premiums in Ireland, segmented by cover type, 2007, 2011 and 2015 (forecast) ... 49

Creditor insurance gross written premiums in Ireland, segmented by policy and cover type, 2007, 2011 and 2015 (forecast) (data) ... 49

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