Acknowledgements
Many thanks to my wife Ettab for her
continued support and patience whilst I have spent many hours researching,
analysing and writing up this project. Without her, I would not have been able
to even contemplate completion of the dissertation and I am eternally indebted
to her. I also thank my three children for being so understanding when I needed
to be locked away in a room to complete another section of this dissertation.
I would like to thank all those that
who took part in the research. A number of very senior personnel people gave up
their time to take part and for that, I am very grateful.
In addition, I would like to thank my
friends Zaki Salami, Basil Laboucharder, Jeremy Lewis, Maurice O’ Neill, Samir
Mufti, Riyadh Al Shubail and Mohammed Al Fadli for their belief in me. I could not make it without them.
Finally, I would like to thank Mr.
Philippe Riewer from Stafford Associates, Mr. J.P. Brewis and his colleagues of
the University of Leicester, who via the university Web Board offered much
advice from the initial research objectives and the dissertation layout.
Executive Summary
Bancassurance is defined as the selling of insurance products
through a bank distribution network. The business of Bancassurance, the convergence of a bank’s distribution
system with the value chain of an insurance company, has the potential of
providing significant advantages to both. Chief among them is the broadening of
the revenue base of the bank and the creation of a new channel for the
insurance company. Even within this welcoming environment, however, success is
not automatic. This dissertation has focused on specific areas of Bancassurance
business model, which are the Driving Factors of Bancassurance, Bancassurance
Model, Bancassurance Disadvantages, and The Bancassurance Success Factors. The
view of this research project is to understand how a Bank and an Insurer under
the partnership business model in KSA are viewing these areas. The aim
therefore has been to answer four questions that will explore the view of this
research project. These areas may appear to be independent of each other;
however, the research finding shows that they are intrinsically linked in many
ways. A number of Bancassurance managers from a Bank and an Insurance
company, who adopted the Bancassurance partnership business model, were
interviewed to understand their views to the specific areas of this research project. This
research project shows throughout the interviews
that there is a lack of understanding for the definition of the Bancassurance,
a limited knowledge for the diriving factors of Bancassurance, short term
vision for the strategic relation and unclear awareness of the key succsse factors. Banks and Insurance companies in KSA
need to move beyond the early stage toward a more integrated business
model. The model chosen has to be
consistent to the overriding strategy for Bancassurance and objectives for this
particular business. Execution excellence is the key to success. Banks and
insurers should focus on what is important and adopt a relentless ambition to
build a leading Bancassurance business. To have a sucessful implemintation of the Bancassurance
strategic relation, both parteies need to have a clear understanding of the
definition of Bancassurance. After that, they both need to identify their
driving factors for forming this strategic relation. The best way of entering Bancassurance
depends on the strengths and weaknesses of the organization and on the
availability of a suitable partner if the organization decides to involve a
partner. I have recommend the a roadmap
for both banks and insurer to creat a sucssful strategic relation via
Bancassurance. However, There is no one magic formula to Bancassurance.
Chapter – 1 –
Introduction
Increasing competition and changing nature of customers'
needs are stimulating the drive for sound marketing strategies in financial
services,(Cooper and Edgett, 1996). Being able to develop marketing strategies
that achieve sustainable competitive advantage has been a managerial challenge
in financial services sector. The market for insurance products continues to
grow in the light of the accession of Saudi Arabia (KSA) to being a full member
of the World Trade Organisation (WTO). The government strives to attract foreign investors to partake
in a number of industries to the
Kingdom. The introduction of new regulations in the Saudi insurance market have
created a new and increasingly competitive business environment. The Bancassurance market in KSA has its beginnings in
the provision of personal financial savings plans starting in late 1998. Since
then the Saudi Arabian Monetary Agency (SAMA) had encouraged local banks to
collaborate with insurance companies in the field through Bancassurance. The
production levels of Bancassurance in KSA kept expanding and are expected to
account for 30% of the market by 2010, (Nadkarni, 2006). The expansions of
banks’ offering in addition to general insurance products such as motor
insurance occurred only in the year 2002/3.
However, the absence of an impact study on the competitive advantage of Bancassurance for both the bank and insurer
coupled with personal interest as an employee within the industry, led to this
study. It is hoped that the findings of this study would highlight the competitive advantage of such business model for
a bank and an insurer in KSA while dually facilitating the growth of the
financial service industry.
1.1 Bancassurance Overview
Bancassurance
is the evolution of the traditional financial sector by utilizing alternative
distribution channels to push a particular financial product onto customers.
Naturally, as the financial sector has struggled globally to sustain any real
growth, corporations have not only looked into alternative distribution
channels but also developed new, or bundled, financial products. Insurance is a
key component of the concept ‘Bancassurance’, as the word implies, but it is
also a unique financial product. A bank
can add insurance to its range of services to make the bank a one-stop
financial shop. Insurance is an obvious diversification for banks to
enhance revenues and profitability. Bancassurance is a good fit for the
KSA market because insurers in KSA are seeking other methods of distribution as
more insurance companies join the market
and the competition escalates The close
relationship with customers will make it easy for the bank staff to present
insurance as part of the financial planning and wealth management strategies of
customers. The marginal cost of using bank personnel to promote insurance
products may be much less than the costs of having agents prospecting for new
clients. Additionally the banks can then earn commission from insurance sales
and this can provide a good return for a relatively low amount of additional
work.
Unlike
common financial commodities such as loans or credit cards, insurance is an
unsought product and is ‘sold’ rather than ‘bought’, so the personal-selling
support and advertising appear comparatively important, (Kotler, 2003). Bank staff
dealing with customers should be encouraged to identify potentially interested
customers. The emphasis on Bancassurance for retail bank branches is
retail products, attractively packaged and sold in volume. Based on the above,
it is noted that through the Bancassurance strategy, the traditionally separate
banking and insurance services are combined to deliver bundles of financial
services to the customer base.
1.2 Dissertation Objectives
Bancassurance has continued to be widely discussed, being presented
either as a new paradigm for the financial services industry or as unsuccessful
business model, mixing two kinds of activities that is structurally different. Each announcement of a merger, acquisition or
partnership involving a bank and an insurer offers an opportunity for each
lobby to reaffirm its own view, (Fitch Ratings, 2006). Bancassurance aim
is to develop strategic relationships between a bank and an insurer that should
help both parties to achieve a competitive advantage over their competitors. Most recent literature and research on Bancassurance
has built upon the Bancassurance business
models and the source of wealth gain on the
international level. However, the objective of this study is to provide an analysis
for the Banccassurance partnership business model in Saudi Arabia , with the
aim of evaluating its implemention and examining the value added to banks and
insurers by adopting such business models.
1.3 Research Question
Through
the literature review a number of interesting areas of the Bancassurance
business model were identified, which are:
1.
The Development of Bancassurance
2.
The Driving Factors of Bancassurance
3.
The Bancassurance Model
4.
Bancassurance Disadvantages
5.
The Bancassurance Success Factors
Based on
the above, the research has been broken down into modules that give rise to the
following sub-questions:
·
Why do Saudi banks develop a strategic business
relationship with insurers via Bancassurance?
·
What are the disadvantages of this relationship, for
both insurers and banks?
·
Can Bancassurance increase the competitive advantage
for a bank and insurer in KSA through value added?
·
What are the key elements to make Bancassurance
partnership model successful?
1.4 Personal Interest
This area is of personal interest to me as I am
currently employed as a Bancassurance Manager for an insurance company in KSA.
In addition, I was the Bancassurance manager for two different banks in KSA
over the last 9 years. Therefore I have a personal interest to investigate the
future of Bancassurance in KSA and to define how this model could add value to
the financial services idustry. Therefore as an insider familiar with both banks and insurance companies that constitue
Bancassurance, I would relish the opportunity to investigate and question their
application from a more objective viewpoint.
1.5 Dissertation Structure
During the course of this dissertation, the research
questions will be answered through a series of steps aimed at providing a
methodological process of research. Chapter two is a thorough review of the
history of the financial
service industry in KSA and where its now stands. This is necessary to give a
contextual understanding of this dissertation.
Chapter three is a thorough review of the literature on the Bancassurance
business model. Through this review, a number of themes are identified which
form the basis of the research upon which the analysis and conclusions are
based. Chapter four describes in detail the type of research to be undertaken,
in this case a semi-structured of interviews, and why and how these were
employed. Chapter five presents the findings from this research under each of
the themes identified via the literature review. Chapter six analyses the
research findings and makes comparisons against those of the literature review.
Chapter seven summarises the outcomes of the research and makes recommendations
for possible changes in adopting the bankassurance business model in the KSA
finaincial service indurstry and the direction for further research.
Chapter – 2 –
Financial Service Industry in KSA
To understand more about the context in which this
dissertation exists, I feel it is appropriate to discuss the financial service
industry of KSA.
2.1 Commercial Bank in KSA
(Al-Hamidy,
2006), Foreign banks’ presence in Saudi Arabia can be traced back to 1926, when
the Netherlands Trading Company, later to become Algemene Bank Nederland (ABN)
began operations. It enjoyed a virtual monopoly until the late 1940s. In 1947,
Banque Indo Chine opened a branch, followed by the Arab Bank Limited (1949),
the British Bank of the Middle East (1950) and
the National Bank of Pakistan New
York Saudi Arabia
By 1975, 10 international banks with 29 branches were
present in the Kingdom. These institutions operated as branches of their parent
companies but, in 1976, the Saudi government decreed that these should become
incorporated as local banks with majority Saudi shareholdings. Consequently, in
1976 the Council of Ministers (the final legislative authority) offered foreign
banks operating in the Kingdom a chance to form joint venture banks with Saudi
shareholders. This decision required foreign banks to convert their branch
operations to Saudi joint stock companies in which they could retain up to a
40% shareholding. In subsequent years, all foreign banks accepted these
proposals and formed joint ventures, as there were a number of favourable
incentives offered.
Following these changes, during the period from 1982
to 2000, no new foreign or domestic banks with one exception for a domestic
bank were granted a license, as the government believed that the existing
branch network adequately served the country. Nevertheless, the Saudi banking
system currently has a presence of more than a dozen foreign bank shareholders
from many parts of the world. Their shareholdings range from less than 1% to
40% of a bank’s total capital. In addition, there are international banks with
full branch operations.
In past five years, Saudi Arabia Bahrain Saudi Arabia Kuwait Bahrain
2.2 KSA Insurance Market
(Swiss Re No.7/2006), The Saudi insurance market is emerging with USD 1.4
billion market in 2005 and it projected by many experts to grow to USD 4 billion
by 2010. According to a survey conducted by the Institute of Banking Institute of Banking
The cooperative insurance is an accepted Islamic
concept form of insurance. Essentially, it is founded on mutual-like approach
where a group of societal (Maysami and Kwon, 1999) Insurance companies operating
in Saudi Arabia are required under the new regulations of 2004 to adhere to
this approach. Out of the 70 insurance companies working in the Saudi market,
only 15 companies are officially recognised to operate.
While KSA ranks second in amongst Arab insurance
industries, the Saudi insurance market represents 0.5% of the GDP, which is low
compared to some regional countries (Arig, 2003). The insurance industry
directly employs more than 2,500 employees out of which Saudi nationals
represent 36% (Institute
of Banking
Different distribution channels existent in the Saudi
insurance market; which are direct sales, independent brokers, agents,
franchise and Bancassurance. Since the launch of
Bancassurance in KSA, nine banks formed a strategic relationship with insurane
companies to introduce Bancassurance products to their customers. Five
years ago, Bancassurance was a new word and, everybody wondered how to spell
it, but today everybody knows. Awareness
has reached people. It continues to expand and I believe that all the banks
will eventually become involved; otherwise, they will lose valuable income
potential. However, religious beliefs
undermine the insurance business in KSA. Consumers tend to buy insurance to
comply with regulation.
Chapter – 3 –
Literature Review
3.1 The
Development of Bancassurance
3.1.1
Definition of Bancassurance
Bancassurance in French means the selling of insurance
products by banks through their own distribution channels. The word is a
combination of "banque or bank" and "assurance" signifying
that both banking and insurance is provided by the same corporate entity.
According to Wikipedia,
Bancassurance is the term used to describe the sale of insurance products in a
bank. A great many people have tried to come up with a comprehensive definition
of the term "Bancassurance".
It is often defined as the distribution of insurance products by banks
but, in fact, it is much more than that, especially if we consider the history
and practices of all the different Bancassurance operators around the world.
Bancassurance is ordinary insurance with a more powerful distribution network
that has a strong affinity with its private and business customers. Florido
(2002) suggested that Bancassurance is defined as, any level of cooperation
between banks and life insurance companies in selling their products to their
target customers. The executive director of ING Group, Huizinga (1993)
observed, “Bancassurance is the distribution”. A number of insurance and
financial institutions have researched the spread of banks selling insurance
and defined Bancassurance. According to a periodical issued by the Swiss
Reinsurance Company (Swiss Re No.7/2002),
Bancassurance is defined as the distribution of insurance products by banks.
Munich Re (2001) points out that Bancassurance is the provision of insurance
and banking products and services through a common distribution channel and/ or
to the same client base. The usage of the word picked up as banks and insurance
companies merged and banks sought to provide insurance, especially in markets
that have been recently liberalized. It is a controversial idea, and many feel
it gives banks too great a control over the financial industry.
3.1.2
History of Bancassurance
Genetay and Molyneux (1998) provide
an excellent overview of Bancassurance in Europe and document its historical
roots dating back to the 1800s. As
discussed by these authors, Daniel (1995) differentiates three periods of
banassurance development: (1) prior to 1980, banks sold closely related
insurance products, such as consumer credit, home property, and currency theft
insurance; (2) after 1980, banks expanded into savings insurance products,
including (for example) endowment contracts in France that paid a lump sum at a
future point in time; and (3) in the 1990s banks made major progress in
traditional insurance activities, including various annuity investment
contracts and combined savings and insurance contracts (known as whole-life
insurance) in the United Kingdom. Significant entry by banking firms in Europe during the 1990s into insurance activities was
primarily motivated by deregulation of the financial sector under the 1989
Second Banking Coordination Directive.
Effective in January 1993, this Directive allowed financial institutions
in European Union (EU) countries to operate in member countries without
obtaining a license from the regulatory authorities in a guest country. EU competition among so-called universal
banks and large retailers entering financial services has led to cross selling
of multiple services. Banks increasingly
have used relationship pricing wherein customers purchasing a number of
financial services receive better pricing than single-product customers. In this regard, Bancassurance has been
growing more rapidly in Europe than banking-securities combinations,Staikouras
(2006). According to Focus (2005), The first countries to venture into the
field were Spain France
3.2 The
Driving Factors of Bancassurance
In fact, there are a number of
driving factors lying behind the formation of Bancassurance strategy. Banks see
Bancassurance as a way of creating a new revenue flow and diversifying its
business activities. By entering insurance and expanding non-interest-income
(i.e., fee income), banks can diversify some of their net interest rate margin
risk without sacrificing profitability. The economies of scope is another
factor.Banks may be able to sell insurance at a lower cost than the
independent, small agencies/brokerages by targeting its existing, sizable customer
base; taking advantage of their significant brand awareness within their
geographic regions; and using their existing employees as an insurance sales
force. Cost economies of scope might exist also with respect to transaction
costs. In addition, by diversifying their business into insurance, banks might
fully exploit their brand name and provide “one-stop banking” for its existing
customers. The latter increases the number of products per customer and reduces
the possibility of losing customers to competitors. The entrance of banks into
insurance might provide deeper penetration into the insurance market,
especially the middle-income market.
Estrella (2001) examines direct
measures of potential diversification gains from consolidation of financial
firms. His results indicate that there may be bilateral diversification gains
from mergers involving the banking and insurance industries. Estrella points
out that these gains are not limited to life insurance as suggested by the
previous authors, but extend to nonlife insurance companies, which actually
lead to larger diversification gains than with life insurance companies. He
also shows that life insurance and nonlife insurance have relatively large
correlations with regard to each other, but also with regard to large banks.
One of the main reasons that banking-insurance combinations enhance
diversification is not lack of commonality, but that the insurance industries
are already highly diversified compared to other financial sectors.
Also, Boyd (1993) used hypothetical
cross-product mergers and simulations and found risk reduction effects from
these deals.
The emergence of Bancassurance contributed to overall
efficiency, an increase in economies of scope and an increase in productivity
of both banks and insurance companies in some of the European countries.
Similarly, to what Swiss Re, (No.7/2002) reported, that Bancassurance has led
to lower, report or stable distribution cost compared with career agents in
Asia. Economies of scope may arise from both the production and consumption of
financial services (Saunders and Walter, 1994). A larger scale production of
elements common to these various financial services can lead to cost advantages
through economies of scale. Several specific cost advantages which have been
identified include: gains through concentration of risk management,
administration functions, and integrated product development; marketing
economies in the common delivery of different services; better information
access and sharing of information across different product groups; reputational
and pecuniary capital to be shared across different products and services; and
enhanced potential for risk management through diversification gains. On the
consumption side, economies of scope may derive from: the potential for lower
search, information, monitoring and transaction costs; negotiating better deals
because of increased leverage; and lower product prices in a more competitive
environment. The
empirical evidence on the existence of economies of scope between banking and
insurance service is very limited, however. One of the few studies is Carow
(2002). He analyzed the Citicorp - Travelers Group merger that increased the
prospects for new legislation removing the barriers between banking and
insurance. He finds that the merger resulted in a positive wealth effect for
institutions most likely to gain from deregulation. Life insurance companies
and large banks (other than Citicorp and Travelers Group) had significant stock
price increases, while the returns of small banks, health insurers, and
property/casualty insurers were insignificantly different from zero.
According to Capita (2006), Banks
have a number of competitive advantages in the provision of insurance products.
First, they have much better information on individual consumers—seen as key to
pricing risk effectively. Second, the
banks may be able to bring enormous economies of scale, particularly if they
are part of a major global network. Michael Porter identified two basic types
of competitive advantage, which are cost advantage and differentiation
advantage. A competitive advantage exists when the firm is able to deliver the
same benefits as competitors but at a lower cost (cost advantage), or deliver
benefits that exceed those of competing products (differentiation advantage).
Thus, a competitive advantage enables the firm to create superior value for its
customers and superior profits for itself. Figure 1 shows the changing in the competitive
marketplace that financial institutions are faceing.
FIGURE 1. Competitive marketplace
(Source: Robert Daly, 2003)
According to Capgemini Analysis (2006), customers have become more self-sufficient,
price-sensitive, and less loyal . Moreover, insurers and distributors can no
longer assume a satisfied customer will be loyal when the relationship is
tested. Figure 2 shows the changing customer trends.
FIGURE 2. Changing Customer Trends (Past 5 Years)
(Source: Capgemini Analysis, 2006)
Munich Re (2001) summarizes the reasons why banks have decided to enter the
insurance industry area: (1) The intense competition between banks, against a background
of shrinking interest margins, has led to an increase in the administrative and
marketing costs and limited the profit margins of the traditional banking
products; (2) Customer preferences regarding investments are changing. For
medium-term and long-term investments there is a trend away from deposits and
toward insurance products and mutual funds where the return is usually higher
than the return on traditional deposit accounts; (3) The need for more
efficient utilization of branches and bank employees is today as pressing as
ever. According to
Benoist (2002), life insurance products can bring immediate
added value to a retail bank's customer service process and the bank sales
force can sell them effectively; (4) Analysis of available information on the customer’s financial and
social situation can be of great help in discovering customer needs and
promoting or manufacturing new products or services; (5) The realization that
joint bank and insurance products can be better for the customer as they
provide more complete solutions than traditional standalone banking or
insurance products; (6) There is a strong need for customer loyalty to an
organization to be enhanced; (7) The increasing pressure on public pension
systems and an increasing need for additional retirement provisions or
long-term investment products; and (8) Banks are used to having long-term
relationships with their customers. This allows similar skills to be practised
and the bancassurer can make use of the best that each partner has to offer;
(9) Bancassurers can have a competitive advantage over traditional insurers
(non-bancassurers), derived from the provision of customer service through automated
teller machines (ATMs). In particular the bancassurer can provide its customers
with an ATM card that can be used to gain access to any ATM and request
information such as cash values, unit price, policy status, next premium due
date, loan accounts, surrender values, etc.
With regard to the other player, the
insurance companies distribute their products through retail bank branches.
They pay commission to the bank, like making payments to their agents and
agencies. Nevertheless, Donne (2003), elaborated on the advantages for the
insurers in a Bancassurance relationship on six aspects:
1.
Ability to tap into banks’extensive customer base;
2.
Reduced reliance on traditional agents by making use of
the various channels owned by banks;
3.
Shared services with banks;
4.
Develop new financial products more efficiently in
collaboration with their bank partners;
5.
Establish market presence rapidly without the need to
build up a network of agents;
6.
Obtain additional capital from banks to improve their
solvency and expand business.
However, Focus (2005) elaborated more
two advantages for the insurance companies. Firstly, the insurance company
often benefits from the trustworthy image and reliability that people are more
likely to attribute to banks. Secandly, the insurance company also benefits
from the reduction in distribution costs relative to the costs inherent in
traditional sales representatives, since the sales network is generally the
same for banking products and insurance products. Equally, Donne (2003)
observed that banks have what insurers want: distribution, branch network,
customer base, databases, regular contact, brand, reputation and
customer loyalty. Of course, not
everybody in the market agrees. Mr Claude Tendil, Chairman of Generali France,
expressed this in an article published by La Tribune on February 28, 2005,
where he admitted that he was “still hostile to the Bancassurance model” since,
in his opinion, “it works in only one direction, to the benefit of the banks”.
To sum up, Bancassurance represents
a strategy by which banks and insurers co-operate in a more or less integrated
way to work the financial markets (Swiss Re No.7/2002). For both banks and insurers, there is a great opportunity to learn and
to make improvements in their own operation.
3.3 Bancassurance
Model
The Bancassurance model shows the
ways in which the banks and insurance companies enter into Bancassurance. It
refers to the operating structures for the banks to market insurance products
(Smit and Lugt 2000; Swiss Re No.7/2002; Florido 2002; Nigh and Saunders 2003). The choice of
a suitable model depends on the related laws of nations and the objective
conditions of both players. However, the simplest structure of Bancassurance is
through a distribution agreement, which is commonly used in KSA. Integrated Bancassurance has developed in
parallel to the dramatic expansion of the European life insurance market since
the mid-1980s. This expansion has relied mostly on savings-type insurance
products, a significant portion of which are very close to traditional banking
products such as fixed-income securities or mutual funds. Europewide, Bancassurance
has been far more successful selling savings-type products than risky products
such as those relating to longevity or disability.
There is no single way of entering
into Bancassurance which is “best” for every insurer and every bank, Munich Re (2001). The choice of a suitable Bancassurance model depends on
the particular cultural and regulatory environment of the host country. As in
all business situations, a proper strategic plan drafted according to the
company’s internal and external environmental analysis and the objectives of
the organization is necessary before any decision is taken. There are many ways
of entering into Bancassurance. The main scenarios are the following, Munich Re (2001):
v
One party’s distribution channels gain access to the
client base of the other party.
This is the simplest form of Bancassurance,
but can be a “missed opportunity”. If the two parties do not work together to
make the most of the deal, then there will be at best only minimum results and
low profitability for both parties. If, however, the bank and the insurance
company enter into a distribution agreement, according to which the bank
automatically passes on to a friendly insurance company all “warm leads”
emanating from the bank’s client base, this can generate very profitable income
for both partners. The insurance company sales force, in particular usually
only the most competent members of the sales force, sells its normal products
to the bank’s clients. The cooperation has to be close to have a chance of
success. For the bank the costs involved – besides those for basic training of
branch employees – are relatively low.
v
A bank signs a distribution agreement with an insurance
company, under which the bank will act as their appointed representative.
With proper implementation this
arrangement can lead to satisfactory results for both partners, while the
financial investment required by the bank is relatively low. The products
offered by the bank can be branded.
v
A bank and an insurance company agree to have cross
shareholdings between them.
A member from each company might join
the board of directors of the other company. The amount of interest aroused at
board level and senior management level in each organization can influence substantially
the success of a Bancassurance venture, especially under distribution
agreements using multidistribution channels.
v
A joint venture: this is the creation of a new
insurance company by an existing bank and an existing insurance company.
v
A bank wholly or partially acquires an insurance
company.
This is a major undertaking. The bank
must carefully define in detail the ideal profile of the targeted insurance
company and make sure that the added benefit it seeks will materialize.
v
A bank starts from scratch by establishing a new
insurance company wholly owned by the bank.
For a bank to create an insurance
subsidiary from scratch is a major undertaking as it involves a whole range of
knowledge and skills which will need to be acquired. This approach can however
be very profitable for the bank, if it makes underwriting profits.
v
A group owns a bank and an insurance company which
agree to cooperate in a Bancassurance venture.
A key ingredient of the success of
the Bancassurance operation here is that the group management demonstrate
strong commitment to achieving the benefit.
v
The acquisition (establishment) of a bank that is
wholly or partially owned by an insurance company is also possible.
In this case the main objective is
usually to open the way for the insurance company to use the bank’s retail
banking branches and gain access to valuable client information as well as to
corporate clients, allowing the insurance company to tap into the lucrative
market for company pension plans. Finally, it offers the insurance company’s
sales force bank product diversification (and vice versa). This form is used in
many cases as a strategy by insurance companies in their effort not to lose
their market share to bancassurers.
The best way of entering Bancassurance
depends on the strengths and weaknesses of the organization and on the
availability of a suitable partner if the organization decides to involve a
partner. Whatever the form of ownership, a very important factor for the
success of a Bancassurance venture is the influence that one party’s management
has on that of the other. An empowered liaison between respective managements,
with regular senior management contacts, as well as sufficient authority to
take operational and marketing decisions, is vital. Regular senior management
meetings are also a vital element for a successful operation. There must be a
strong commitment from the top management to achieving the aims in the business
plan. Figure 3 shows the degree of integration in structuring Bancassurance.
FIGURE 3. Bancassurance Structure
(Source: Swiss Re No.7/2002)
All range of Bancassurance business
models mentioned above that exists in the world falls into the following three
main categories, Fitch (2006):
1.
Partnerships ( Distribution Agreements)
In this model, the insurance company
distributes its products partly, though not exclusively, through a banking
channel. In addition, there is no dedicated legal entity to underwrite this
business, which is in practice directly accounted for on the insurer’s balance sheet.
In line with efforts to strengthen
revenue capacity and promote business differentiation, banking institutions
have formed strategic alliances with other types of financial
institutions. This model is usually implemented when either regulation or tax
treatment does not allow a close integration of banking and insurance
activities. Under this model, the insurance company typically pays distribution
commissions to the bank, which are in turn offset by entry and management fees
charged to policyholders. The business logic for such a model is the
recognition by a bank of a real need to be in a position to offer (mostly life)
insurance products to its customers while being unable or unwilling to develop
such expertise internally.
2.
Joint Ventures
This business model relies on a more
or less balanced shareholding between one or several banks and an insurance
group in a joint venture insurance company. This joint venture distributes its
products only through the network of its banking parent(s). In addition, the
relationship between the bank and the insurer is sometimes reinforced by a
strategic shareholding. The joint venture typically pays distribution
commissions to the bank, which are in turn offset by entry and management fees
charged to policyholders. In addition, the bank also benefits from the joint
venture's profitability through dividends paid. As in the case of the
partnership model, the business logic for creating a joint venture is a
recognition by a bank of a real need to be in a position to offer (mostly life)
insurance products to its customers with an intention to build up expertise in
this area. Typically, the joint venture is granted exclusive access to market
insurance products through the bank's network. However, the joint-venture
business model is also very popular in non-life insurance.
3.
Captives ( Financial Services Group)
According to this model, an insurance
company markets its products almost exclusively through the distribution
channel of its banking parent. In such cases, the ownership by the bank in the
insurer is typically very high, often 100%. The captive insurance company
typically pays distribution commissions to the bank, which are in turn offset
by entry and management fees charged to policyholders. In addition, the bank
also benefits from the insurer's profitability through dividends paid. When
compared to the partnership model or a joint venture, the logic for the captive
business model is the recognition by the bank of a real need to be in a
position not only to offer (mostly life) insurance products to its customers
but also to keep the full know-how and profitability of the business in-house.
The insurance captive becomes an important tool of the bank's marketing policy
and is a separate legal entity only due to regulatory constraints.
Nevertheless, it is very important that the bank management has sufficient
understanding of the insurance business. Depending on the group structure, the
insurance captive may be a direct subsidiary of the bank or a sister company,
both owned by the same holding company. This difference in terms of legal
structure generally reflects the significance of the business written by the
insurance captive through non-group channels. All
over the world, new financial groups with substantial banking and insurance
activities, emerge. In the US, where the regulatory environment still prohibits
the full integration of banking and insurance activities, the merger between
Citicorp and Travellers Group, completed at the end of 1998, has increased the
interest in the topic. It is thought that the Travellers-Citicorp merger could
push other firms into similar partnerships and removes the legal barriers,
separating banks from insurance companies.
Figure 4 shows the benefits of these
models.
FIGURE 4. Benefits of Bancassurance Models
(Source: Swiss Re No.7/2002)
However, Many large European
institutions are structured as “conglomerate” with separate bank and insurance
subsidiaries held by a common holding company. The fact that conglomerates very
visibly run both banking and insurance activities does not necessarily mean
that there is much interaction between the two. Thus, Fitch (2006) prefers to
use the term "Bancassurance" only when the two businesses are run in
an integrated manner. Figure 5 shows the distribution of Bancassurance deals by
operating models in Asia.
FIGURE 5. Bancassurance Models in Asia
(Source: Swiss Re No.7/2002)
3.4
Bancassurance Disadvantages
The advantages and disadvantages of
Bancassurance depandes on the way banks and insurer structure their relation.
Thousands of pages of analysis have been written describing the different
techniques and methods used to make the above ventures successful. However the
obstacles to overcome include the cultural differences between the bank and
insurance employees, and concern the different ways in which these two entities
function. Banks are demand driven organisations with a reactive philosophy
whereas insurance organisations are usually need driven and adopt an aggressive
and proactive selling philosophy. Such cultural differences must be understood,
respected and lived with. Another major obstacle is the remuneration method
employed where bank employees get a fixed salary as opposed to insurance agents
who are to a great extent given bonuses based on their level of production and
therefore, have an incentive to promote insurance products. Further to the obstacles outlined above, the bank is
responsible for its share of the underwriting risk and faces the possibility of
dissatisfied customers. If the insurance company provides poor quality service,
such as bad claims handling, or high prices, the dissatisfaction of the clients
will be reflected on their approach towards the bank, by threatening to leave
the bank if their insurance needs are not satisfied. Of course no one can avoid
the risk of a Bancassurance venture failing, and if that happens the clients
who had already been approached by the insurance company using the bank’s
client base may be tempted to stay with the insurance company or insurance
agent after abandoning the bank. This could also arise if independent agents
involved in the sales process, represent more than one company therefore
leading to a change of insurance company. This exactly scenario occurred in KSA
with Bancassurance relation on the market. As we have disscussed the
Bancassurance models, there is no single pattern to follow in creating a Bancassurance
operation. There are different development models, which can be divided into 3
main categories. In other word, the disadvantges of Bancassurance must be
linked to the model adopted by the bank and the insurer to structure their
relation. According to Foucs (2005), we could sum up their disadvantages into
the following:.
1.
Partnerships (Distribution Agreements)
·
Lack of flexibility
There is a possible diffecality in
launching new product. The nuture of the relation does not allow any parties to
launch a new product without optaining approvals.
·
Culture clash
There is a possibility of differences
in corporate culture. This may have an impact on the communication and sales.
·
Limeted control
Both parties can not control the
level of services that is offerd at the other party end. This would effect the
orgaization reputation if the service level was not up to the standard.
·
Easy of exit due to the lack of commitment
·
Limited customer ownership
·
Low accsess of profit
2.
Joint Ventures
·
Difficult to mange on the long term
·
Potaional confilact
3.
Captives ( Financial Services Group)
·
Substantial investment
As we can see from the above, the
level of integration decreses the disadvantges. However, many pepole belives
that all the adveantges favour the bank and disadvantges are disportiontely
borne the insurance companies.
3.5 The
Bancassurance Success Factors
Services have not been easy to define (Lovelock,
1999). A widely mentioned definition of services has been provided by Kotler “A
service is any activity or benefit that one party can offer to another, which is
essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product”. Gronroos, (1998),
defines the services as “an activity or series of activities of more or less
intangible nature that normally, but not necessarily, take place in
interactions between the customer and service employees and/or physical
resources or goods and/or systems of the service provider, which are provided
as solutions to customer problems.” As may be observed from the above
definitions, a service can hold characteristics that distinguish it from
manufactured products. A service is individually perceived on the basis of
rational assumptions by customers and providers, and often described by
abstract expressions such as trust, feeling, security, and experience
(Gronroos, 1998). This exemplifies one of the characteristics suggested to
distinguish services from goods namely intangibility. The others are inseparability,
heterogeneity, perish ability, and ownership. Intangibility highlights the fact
that services are often not possible to feel, taste, see, hear, or smell before
they are purchased; they are impalpable. Intangibility is closely related to
the concept of comprehensibility, since a service is not easily defined, formulated,
or grasped mentally. Moreover, services can often not be separated from the
provider, as they are, at least to some extent, produced and consumed
simultaneously and thus the customer participates in the production of the
service. Services are often characterized as heterogeneous, as it is difficult
to achieve standardization of output; services are perishable and cannot be
stored; and a customer always has access to or the use of a service, but not
ownership of the activity or facility, (Cowell, 1985).
3.5.1 Factors Affecting
Insurance Marketing
Insurers are essentially different from other services
because they pledge to cover the customer against damage or loss of a named
asset. Insurance service is distinguished by the following factors:
1.
Perish ability
Insurance products cannot be stored and sold in a
direct manner, unlike manufactured products. This stresses the need to manage
demand as well as the marketing mix, (Meidan, 1982).
2.
Inseparability
A great deal of the rendering of insurance services
entails the customer to be part of it. The customer is required to provide
information in order for the insurer to provide an offer, issue or alter a
policy, or submit a claim, which has a major impact on the way distribution
channels are managed, and how service are priced and promoted. This factor
makes it necessary for insurers to be alert about quality and focused on
satisfying the customer’s needs.
3.
Heterogeneity
Most insurance products are based on individual
customer profiles, which make it difficult to avoid variation in the offerings
of products. Gabbott and Hogg (1994) observe that variability in services
affects the insurer’s ability to establish patterns of consumer behaviour, which is a
central aspect of any marketing endeavour.
4.
Fluctuation in Demand
The factors influencing the customers’ demand of
insurance varies from disposable income, inflation rate, levels of assets
ownership and regulations from a macro perspective, to competition and
perception of risk, from micro perspective.
Therefore, high elasticity can be the nature of insurance products,
giving the price more significance in dealing with demand changeability
(Meidan, 1982).
5.
Balance of Growth and Risk
Selling insurance services the organisation undergoes
a risk. This is why it is necessary to check the balance between expansion,
sales and circumspection.
6.
The Impact of Regulations
Regulations implemented by the governments play a
pivotal role in shaping the attributes of the insurance markets. The size,
competition and the product are examples that may be sensitive to legislations.
(Meidan, 1982)
3.5.2
Critical Success Factors
Critical success factors (CSFs) are defined as “those
things that must be done if a company is to be successful”. CSFs must be
important to achieve overall corporate goals and objectives, measurable and
controllable by the organisation to which they apply, relatively few in number,
expressed as things that must be done, applicable to all companies in the
industry with similar objectives and strategies, and Hierarchical. Few
companies in the industry only attain competitive advantage, but failure can
happen, if the CSFs are not accommodated which mean that the business
objectives are not achieved. (Jaramillo and Marshall, 2004) The techniques
in identifying critical success factors are either industry versus company or
macro versus micro. At the most general level, the emphasis is on industry and
macro issues in order to scan the environment to provide sources that will be
the determinants of a firm and/or industry’s success. Methods include
environmental scanning and socio-political consulting services. Industry-level
analysis stresses the factors in the basic structure of the industry that
significantly affect any company’s performance operating in that industry. Industry
structure frameworks such as Porter's (1985) Competitive Strategy Framework are
applied. Alternatively,
micro-level consultations with industry experts and insiders to identify how
firms compete are conducted. Company-specific studies investigate a target
firm’s competitive strengths or weaknesses, or those variables that have been
instrumental to a firm’s success in a particular industry. Methods used include
subjective assessment at the functional level using strategy and capability
checklists, and subjective managerial assessment of factors affecting
performance during the firm’s history. Although specific guidelines are
limited, it is suggested that criticality should be defined in terms of major
activities, investment required, or profit impact. Thus service consumption and
production have interfaces that are always critical to the customers'
perception of the service and consequently to their long-term purchasing
behaviour. In the service marketing literature, the management of these
interfaces is called interactive marketing a service firm wants to keep its
customers, interactive marketing, i.e. the marketing effect of the simultaneous
service production and consumption processes, must be positive. Hence, for the
long-term success of a service firm the customer orientation of the service
process is crucial. If the process fails from the customers' point of view, no
traditional external marketing efforts, and frequently not even a good outcome
of the service process, will make them stay in the long run. Only a low price
may save the situation, at least for a while. (Gronroos, 1998) In the financial
services, Cooper and Edgett (1996) examined the critical success factors for
new services and concluded that the CSFs are a defined, systematic, and formal
new product process in place, clearly defined stages, activities specified
within each stage, go/kill criteria specified for each decision point, a
standard list of deliverables to each gate, and clearly specified and visible
decision-makers at each gate. Another study conducted by Keck (1995) with the objective
of identifying the critical success factors for captive insurance companies
came to the results that extrinsic rewards, motivation to achieve peer
recognition, office delegation, willingness to spend money to run the business
effectively and goal-oriented management were the critical success factors.
Freund (1988) suggested three critical success factors for insurance marketing.
First is the ability to achieve critical mass volumes through existing brokers
and agents. This can be accomplished through establishing strong relationship
with intermediaries and focus on telemarketing and agent compensation.
Performance indicators include policies in force, new business and share of
business of intermediaries. Second, follow leader’s product within six months,
which can be made via strategic joint ventures, sound underwriting skills and
agility in IT development. This is measured by time to market, percentage of
products launched and elapsed time to develop IT applications. Third is to
manage product and product line profitability, which can be attained through
improving cost accounting and controlling loss ratio.
3.5.3 Bancassurance Keys to
Success
The reality of Bancassurance is multifaceted. A clear
success in many markets such as France Spain Italy
FIGURE 6. Critical success factors
(Source: Electronic Data
Systems, 2006)
According to Focus (2005), there appears to be no “miracle recipe” but a certain
number of facts that they have been able to establish, after analysing a number
of cases of Bancassurance around the world. Also, the study conducted by The
Boston Consulting Group and Project Advisory Committee (1999) highlights the
critical success factors for the Bancassurance. The critical success factors
that are highlighted in these two studies can be
loosely grouped into the following themes:
Aggressive goals
By setting aggressive targets, Bancassurers have
exhibited strong levels of commitment to their insurance and investment
businesses, making the substantial necessary up-front investments such as sales
force training, new product development, and acquisitions, to achieve their
goals.
Strong senior management
leadership and support
Committed top management has been key to enable the
cultural transformations of banks and to ensure the successful integration of
non-traditional products into the bank product line. Because of the significant
organizational changes required to adopt the Bancassurance model, senior
management must be actively and consistently involved throughout the redesign
and cultural change process.
Close integration between
the insurance company and the bank
There is absolutely no doubt that this integrated
model has enabled Bancassurance to establish a crucial competitive advantage.
Bancassurance is based on a particularly efficient management model that is
totally integrated with the banking business. A close and strategic integration
of the insurance business with the bank allows a bank to more fully control the
design and development of both products and sales and administrative processes.
Insurance and investment subsidiaries of successful Bancassurers are not
typically managed as separate, stand-alone businesses, but are managed as
integral parts of the retail bank.
Simple, easy-to-understand
products and a standardized, streamlined selling process
Bancassurers have understood that off-the-shelf
insurance products would not be successful with their mass-market customers.
Bancassurers customize policies not only to meet the basic needs of their
customers, but also to standardize the sales process by making products easy
for both customers and salespeople to understand. Banco Bilbao Vizcaya, a major
Spanish bank, for instance, has developed a sales software program that is
connected to its central insurance system. Within a few minutes of answering a
series of scripted questions, the salesperson can receive an underwriting
decision from the system, and the contract is printed, sold, and signed on the
spot.
Integrated, generalist sales
force
A key factor in the successful implementation of the
Bancassurance model has been the tight integration of the sales force into the
branches. Under the generalist model, sales professionals are trained to sell
basic banking, insurance, and investment products. Experience at several
European banks indicates that the best generalist salesperson can be as much as
five times more productive than the average life insurance agent can.
Effective training programs
To prepare a generalist sales force to sell a broad
range of products, successful Bancassurers have invested in focused training in
the sales process and insurance and investment product knowledge. Training also
includes any necessary preparation for licensing examinations.
Clear, meaningful incentives
Successful Bancassurers set branch sales objectives
that include both traditional and non-traditional bank products to encourage
branch personnel to give the new products “shelf space” and to focus on those
products that are the most profitable for the bank.
Effective sales support
systems
Given the increasing complexity of the product lines
and the sales process, integrated information support systems must be developed
to provide an effective customer experience. This means building appropriate
customer databases and integrating information and transaction processing
systems to provide customers with a seamless experience regardless of which
products or services are being provided.
Insightful and effective
customer segmentation
Purchasing criteria will vary by segment and by
product, and it is critical for each bank to understand its target segments’
values and decision-making processes. In investments, consumers focus on
performance and convenience, and switch mutual funds more often than insurance
products. For insurance products, banks may have an easier time gaining share
with young, uninsured consumers who have not yet developed brand loyalty. In
insurance, consumers often rely on a strong brand name to convey history and
stability. A challenge for banks is consumer concern about bank commitment to
insurance, given bank mergers as well as a lack of history in the business.
Leveraging existing bank
resources and capabilities
Because of the close integration between their banking
and insurance operations, Bancassurers are able to reduce costs by sharing and
leveraging resources across the two value chains.
3.5.4 Customer Satisfaction
Bancassurance operators have put the customer at the very heart of their
thinking and development strategies. This means:
- Providing a full range of financial products and services (banking
and insurance) through a single sales network
- Offering high-quality advice through readiness to listen and
accurate information
- Quickly meeting customer needs by a branch-based IT system but also
easy access to the service, sometimes 24/7, with telephone support centres
or Internet platforms
- Providing know-how and follow-up (especially claims management) as
good as the best traditional insurance providers
Chapter – 4 –
Methodology
The objective of the
research is to provide an analysis for the Banccassurance partnership business
model in Saudi Arabia , at the aim of evaluating its implementation and
examining the value added to banks and insurers by adopting such business
model.. The research project is based on a combination of in-depth,
semi-structured interviews, a
document search, and an extensive literature review and this approach known as
“Triangulation”, (Bell, 2002). Triangulation
refers to the practice of cross-checking or confirming data and findings by
using more than one research method. The term comes from activities like
navigation and cartography and literally refers to the practice of taking three
points of reference to be sure of a particular location. I will triangulated my findings by checking the
semi-structured interview data against data from documents like organizational
memos, company annual reports, trade journals and press reports.
The reason for this
multi-method approach was to ensure some level of accuracy in the research
findings..As stated by Bryman (2003), the results of an investigation employing
a method associated with one research strategy are cross-checked against the
results of using a method with the other research strategy, which should result
in greater confidence in the findings.
The reason for
selecting semi-structured interviews as the qualitative research method is the
adaptability they offer, something that cannot be achieved through
questionnaires. Often, the way a respondent answers a question, e.g. tone of
voice, body language etc. can provide information that would otherwise go
unnoticed. In addition to that, the culture differences in KSA will be a huge a
barrrier in using a quantiative research method such as self-completion
questionnaires or survey. In other words, The quantiative research method are
not taken seriously in KSA and the output of it could effect the finding of
this research. Also, the semi-structured interviews should allow me to ensure a greater level of accuracy
in the research findings. Also, many other
studies into Bancassurance have been conducted using in-depth interviews with
insurance and banks executives , and so I take some comfort in adopting a similar
approach.
4.1 Primary Data
4.1.1 Sample
As I was interested in talking to Bancassurance Managers (In banks and insurance
companies), Insurance Channel Managers (Insurance companies), Customer Service
Managers (Banks) and Retail Managers (Banks), the sample frame was
limited to one bank and an insurer as less than four banks are adopting the
Bancassurance partnership business model. I have conducted 12 face-to-face
interviews with managers. Although a sample of 1
out of a the 4 business relation that are adopting the Bancassurance
pertnership business model doesn’t allow for the generalisations of the
finding, it did prove enough to provide enough rich data to answer the research
questions.
4.1.2 Pilot Interviews
The purpose of the pilot interviews
was to evaluate the questions used in the interviews. I have used three of my
colleagues for the pilot interviews, which they have been employed as
Bancassurance Managers for both banks and insurers in KSA. The pilot was
conducted as follows:
·
Prepared 1st draft interview schedule
·
Carry out 1st pilot interview
·
Carry out 1st draft analysis of interview
·
Prepare 2nd draft interview schedule
·
Carry out 2nd pilot interview
·
Carry out 2nd analysis of interview
·
Commence interviews with survey sample
During the discussions with the pilot
interviewees, the following items were examined (De Vaus, 2004):
v
Variation
Do the pilot respondents give similar answers
to questions?
v
Meaning
Checking to see the respondents
understand the questions
v
Redundancy
Checking to see if there are any
unnecessary questions
·
Non-response
Checking if there are any questions
that the pilot respondents were hesitant to answer
The pilot interviews proved to be
very useful. Several questions were modified or replaced as a direct result of
the feedback received from the pilot respondents. The pilot interviews were
particularly useful in identifying questions that were too similar. It also
showed that the questions are often taken as a means of opening a discussion on
a particular subject, which then elicited much more detailed insights and
opinions.
4.1.3 In-Depth Interviews
Interviews were
conducted with six manager’s responsible for Bancassurance in a bank and anther
six manager’s responsible for Bancassurance in an insurance company. The aim of
these interviews was to criticaly eveluate the implemention of the Bancassurance
partnership business model; and examine the value added to banks and insurers
by adopting such business model, and identify key elements that make Bancassurance successful. The interviews were semi-structured with the various
questions based on a number of areas developed via the literature review, in
order to ensure that all of salient areas were covered. These questions were
designed to uncover facts rather than opinions, which can often be unreliable,
changeable and always subjective. Although the semi-structured approach should
make recording and analysis of the interviews easier than that of a totally
unstructured interview, the aim was to keep to interviews as informal as
possible to allow the exploration of ideas that may not have been considered.
The questions, or interview guide were prepared along the lines of those
suggested by Bryman (2003):
·
The topics covered were divided into the same subject areas
as the literature review. This approach allowed for easier comparison to the
findings of the literature review and also ensured that there was a reasonable
flow to the interview.
·
The questions asked, although not too
specific, were designed to ensure that the research questions could be
answered.
·
Language used in the interviews was
of a nature that the interviewees would understand.
·
I made sure that no leading questions
were asked. This is a fundamental point as with my background in the industry,
it would have been easy to approach the interviews with preconceived ideas on
what the outcome would be and therefore lead interviewees into giving the
answers I expected.
·
Before the actual interviews took
place, I asked for and recorded background information on each of the
interviewees, such as position, length of service, previous employment etc to
allow for their responses to be contextualised.
4.1.4
Analysis
Bryman (2003) suggests the two most
common strategies of qualitative data analysis are:
v
Analytical Induction
“Where the researcher seeks universal
explanation of phenomenon by pursuing the collection of data until no cases
that are inconsistent with a hypothetical explanation (deviant or negative
cases) of a phenomenon is found.”
v
Grounded Theory
“Theory that was derived from data systematically
gathered and analysed through the research process. Two central features of
grounded theory are that it is concerned with the development of theory or out
of data and the approach is iterative or recursive meaning that data collection
and analysis proceed in tandem, repeatedly referring back to each other.”
The approach I adopted was loosely
based on Grounded Theory; the data collected in each interview was coded, i.e.
broken down into component parts. In addition, data was continuously compared
to previously collected data so that emerging concepts could be elaborated upon
in future interviews.
4.2
Secondary Data
The literature
review is based on academic journals, professional reports and books that are relevant to the research
area. The literature covers four main areas, which are the development of
Bancassurance, the driving factors of Bancassurance, Bancassurance models, Bancassurance
disadvantages, and Bancassurance success factores. I have triangulated my
findings by checking the semi-structured interview data against data from
documents like journals, professional reports, books and press reports.
4.3
Research Limitations
Mostly the lack of time and resources
had their influence on this research project in many aspects. The scarcity of
up to date published research about Bancassurance in KSA was a factor that
affected drawing conclusion that are more comprehensive. The partnership
business model is the focus; however when found relevant reference to the
Bancassurance is made to allow establishing a broader view. Several issues will
not be discussed in further detail due to the word limit.
Chapter – 5 –
Research Findings
I have interviewed six managers from a bank and six
managers from an insurer, which they are responsibles for Bancassurance.
Therefore, the research findings will represent both sidies.
5.1 The
Development of Bancassurance
5.1.1
Definition of Bancassurance
Regarding the Bank, Four interviewees
stated that the defination of Bancassurance is selling saving and protection plans through the bank network. According
to them, the saving and protection plans are life insurance based on the
investment and it is the type of products that fits with the bank services. The
bank cannot be turned into an insurance company. However, the other two
interviewees stated that the defination of Bancassurance
is using the bank network to sell insurance products. They stated that
Bancassurance is an international trend in financial services and the bank
should take an advantage of such opportunity to maximize the use of the
distribution network.
Regarding the Insurer, only one interviewee stated that the
defination of Bancassurance is the selling of insurance products by banks
through their own distribution channels. He reported that Bancassurance is an
important distribution for the insurance companies and it is a world wide
trend. The rest of the
interviewees stated that the defination of Bancassurance is selling isurance
products to the bank as a customer or using the bank as a distrbuter to our
products. According to them, all business that could be done with or
through the bank is a Bancassurance.
5.1.2
History of Bancassurance
All interviewees from the Bank and
the Insurer reported that the level of Bancassurance business generated was
below expections. Bancassurance business up to 2001 was only the saving and protection plans (Life insurance).
However, the driving license insurance was added in 2002. Reponses from all can be loosely grouped into one of
following themes:
1.
Religion
Under the Islamic religion,
conventional insurance is forbidden. The customers were looking to productas
that comply with the aslamic relegion. Banks and insurers tried to overcome
that in the saving and protections plans by change the
investment choice for the customers to Islamic funds and market these plans as
an investment plans. However, the
customers were still questioning the life insurance. On the other hand,
customers were only taken the driving
license insurance because it is compulsory.
2.
Awareness
There is still a huge lake of
insurance awarenss in KSA.
3.
Products
The number of insurance products that
are offerd through the bank are limeted life insurance and the driving license compulsary
isurance.
However, all
interviewees reported that they believes
that market is changing so fast and they could deal with these reasons.
5.2 The
Driving Factors of Bancassurance
There have been a number of factors
which have lead to the development and success of Bancassurance. All
interviewees from the bank reported that as markets open up and competition
escalates in KSA, the banks have to look beyond traditional activities to
remain competitive. During the interviews, the Bank driving factors were
discussed at length with each interviewee. Reponses from all can be loosely
grouped into one of following themes:
·
Bancassurance offers another area of profitability to
banks with little or no capital outlay.
Despite the fact that Banks believe
that competition is about to happen on a large scale in the KSA market, all agree
that competition has an impact on their
profits.
“In the Bancassurance partnership
business model (distribution agreement), we do not need capital outlay at all
and we will make mony from this relation.”
“ By Bancassurance, we are opening a
new area of profitability to the bank.”
“We are maximizing the use of our net
work by offering Bancassurance products”
·
A desire to provide one-stop customer service.
“The bank should be turned into a
financial supermarket where the customer can find all what he needs”
“ The customer is saving for his
family future but he can not get the peace of mind without the life insurance.
Therefore, it is a must that he could find all what he needs in one place”
“ One-stop service is the new trend
in financial services”
“ The challenge is to offer all
financial products that customer would need”
·
Opportunities for sophisticated product offerings.
“We need to have a competative
advantge by adopting the Porter differentiation strategy”
“ The customer awareness is
increaseing in KSA and he is looking to the bank that are offaring more value
added products”
“ We need to have a product lines
that would attract more customers”
·
Diversify and grow revenue base from existing
relationships.
“The objective is to increase the
income from the existing relation and we do that by offering a range of
different services.”
“The other big thing is that it
provides us with an additional income stream. For instance, we use the
Bancassurance as income source through the added value.”
“We need to maximize our profit from
the existing relation with our customers"
·
Diversify risks by tapping another area of
profitability.
“ We are reducing the risks by our
diversification strategy”
“ By diversifying the sources of
income you reduce the risk”
·
The realisation that insurance is a necessary consumer
need.
“Every one need insurance”
“ There is a big trend in the KSA
market toward insurance”
“ Many insurance services has become compulsory in KSA”
·
Bank aims to increase percentage of non-interest fee
income
“ The big challenge for banks in KSA
is to increase the non-interest fee
income”
“It is difficlut to increase the
non-interest depositis in KSA under the current market conditions. Therefore,
Banks needs to look for the non-interest fee income”
On the other hand, all interviewees from
the insurer reported that as the KSA insurance markets open up and competition
escalates, the insurance companies have to look beyond traditional distribution
channels to remain competitive. They stated
similar reasons for why insurance companies needs Bancassurance:
·
This new distribution network will allow the insurance
company to extends its customer base.
“ The partnership business model will
allow us to increase our customer abse.”
“ As much as the bank will sell the
Bancassurance products our customer base will increased”
·
Minmizing the risk through diversifiication.
“ The diversification strategy in
distrubition channel will minmize the risk”
“Having four channels is better than
having three”
·
Low distribution costs.
“ The best channel ever”
“ The distribution costs on
Bancassurance are much lower than the other channels”
Both parties believe that the value
added from these driving factors would increase the competitive advantage for a
bank and insurer in Saudi
Arabia
5.3
Bancassurance Model
All interviewees reported that the
Bancassurance relation can be strauctured into the follwong forms:
·
The Bancassurance partnership business model
(distribution agreement), the insurance company typically pays distribution
commissions to the bank, which are in turn offset by entry and management fees
charged to policyholders. The average commision paied from insurance companies
to banks was a range from 8% to 20%, with the average being 14%.
·
The captive model where a bank starts from scratch by
establishing a new insurance company wholly owned by the bank.
According to them, the most commen
model used is the Bancassurance partnership business model, as the majority of banks prefer it.
During the interviews, the Bancassurance partnership business model advantages
were discussed at length with each interviewee. Reponses from all can be
loosely grouped into one of following themes:
1.
No capital investment reqiured.
2.
Operations start quickly.
Just one interviewee reprted anther
reson, which is the bank can terminate the relationship at any point of time
without losing monay.
On the other hand, all interviewees
from the insurer reported that same advantges like the bank members in the
interviews. However, two interviewees stated another reason, which is the
insurer under this business model will not limet the relation to one bank. This
should allow the insurer to evaluat the relation with different banks and foucs
on the profitable one.
5.4 Bancassurance Disadvantages
During the interviews, the
Bancassurance disadvantages were discussed with each interviewee. Reponses from
all can be loosely grouped into one of following themes:
1.
The lack of shared vision
As the bank staff reported, the insurance company is
looking only for the prmium. However, the insurer staff reported that banks is
looking for the value add to increase customer saticfaction.
2.
The differences in corporate culture,
As they stated, the corporate culture is different
between the two organizations and this causes a lack of coumincation.
3.
The lack of innovation.
Banks staff reported that insurer are not willing to
come up with new products that would attract more customers to banks. Insurers
are only focusing on the sample product. However, insurer staff reported that
the bank is not cooprating to make this happen
4.
Customised products.
As they stated, insurers are copying the international
products and they are not trying to develop customized products for the KSA
culture.
However, only two of the interviewees
reported that they can not see any disadvantages from their relation with insurers
via Bancassurance.
5.5 The Bancassurance Success Factors
During the interviews, the
Bancassurance success factors were discussed at length with each interviewee.
Reponses from all can be loosely grouped into the following themes:
Offer products close to
traditional bank products; blend features
“The insurer should work closely with the bank to
develop product that would complement the traditional bank products.”
“The insurer should be focusing in creating insurance
products with blend feature.”
Market to customer views of
wants and needs
“We need to market the idea not the product.”
“The marketing activities should be focusing on the
customer’s views of wants and needs.”
Leverage bank customer
knowledge and relationships actively
“We have to leverage our bank customer knowledge.”
“By leveraging customer knowledge and relationships
actively we will able to increase our performance.”
Build specialized marketing
support
“The marketing support is the key to success.”
“We achieve our goals without a specialized marketing
support.”
Build multi-product customer
relationships
“We have to build a multi customer relation through
different products.”
“Creating a multi product relation with the customers.”
Differentiate customer
segment marketing
“The marketing activities should take in consideration
the different customer segments.”
Base marketing on service
over price
“We should focus in our marketing activities on the
service over the price.”
“In Bancassurance, we are offering service.”
A well
integrated opartion
“ A well integrated opration is the
key to sucsses.”
“ An integrated opration would be a
competitive advantage.”
On the other hand, all interviewees
agreed that Bancassurance will have a succssful future in KSA. They all stated
that it will continue to grow rapidly in KSA with the increase of insurance
awareness in KSA. They also stated that banks and insurers should adopt these
keys to make this relationship successful.
Chapter – 6 –
Analysis of Research Findings
6.1 The
Development of Bancassurance
6.1.1
Definition of Bancassurance
As described in the literature
review, a great many people have tried to come up with a
comprehensive definition of the term "Bancassurance". It is often defined as the distribution of
insurance products by banks but, in fact, it is much more than that, especially
if we consider the history and practices of all the different Bancassurance
operators around the world. According to a periodical issued by the Swiss
Reinsurance Company (Swiss Re No.7/2002),
Bancassurance is defined as the distribution of insurance products by banks.
The research results show that, Four
out of six interviewees from the bank, they are understanding the Bancassurance
as the selling of saving and protection plans through the bank
network. They can see only Bancassurance as life insurance products only. The
other two interviewees from the bank stated that
the defination of Bancassurance as described in the literature review. Regarding the Insurer, only one interviewee stated
that the defination of Bancassurance as described in the literature review. The
rest of the interviewees were understading the defination of Bancassurance to
be dealing with the bank as customer or as a distributor to their products.
It is clear that there is a misunderstanding for the
definition of the term "Bancassurance" in both sides. The lack of understanding for the concept of
Bancassurance would affect the way that both parties would adopt the relation.
On the bank's side, the understanding of the definition are limiting the way
that banks are looking to Bancassurance as life insurance only. However, the
literature review does not limit Bancassurance to life insurance only. On the other hand, the insurer is looking to
the Bancassurance as a mixed relation between customer relation and distributor
relation. However, there is huge difference between the two relations. As described in the literature review, Munich
Re (2001) points out that Bancassurance is the provision of insurance and
banking products and services through a common distribution channel and/ or to
the same client base.
6.1.2
History of Bancassurance
As discussed in the literature review, the Bancassurance model was a succssful
business model in many countries. However, there are no avilable data to
eveluate the history of such a model in KSA. The research results show that all
interviewees agreed that the implemaination of the Bancassurance business model
was not succssful for three reasons, which are Religion, Awareness, and
Products. However, if we linked those reasons to the understanding of the
Bancassurance definition we will understand the reasons behind that.
The KSA banking experience was based on life insurance as discussed in the literature
review and that affected the development of the Bancassurance in KSA. Adopting
the western Bancassurance products without taking in consedration the culture
difference also led to that.
According to the Economist Intelligence
Unit (2006), a clear understanding of the local
culture is critical in exploring new markets. Life insurance activities have
not been popularly practiced in KSA insurance market, this could be attributed
to different factors such as religion, culture, and costs, according to Swiss Re (No.5/2006) life insurance represent 1.2% from the total KSA insurance
premiums in 2005. Understanding the local culture is vital to the successful
implementation of Bancassurance.
As discussed in the literature review, the new insurance regulation along with the increase in
the number of compulsory insurance product would have an impact on the
Bancassurance business in KSA. On the other hand, all interviewees reported that they believe
the market is changing so fast and they could deal with these reasons.
6.2 The
Driving Factors of Bancassurance
The follwing driving factors were
identified via the interviews with the bank members:
·
Bancassurance offers another area of profitability to
banks with little or no capital outlay.
·
A desire to provide one-stop customer service.
·
Opportunities for sophisticated product offerings.
·
Diversify and grow revenue base from existing
relationships.
·
Diversify risks by tapping another area of
profitability.
·
The realisation that insurance is a necessary consumer
need.
·
Bank aims to increase percentage of non-interest fee
income
As discussed in the literature
review, these findings concur with those of Estrella (2001) , Swiss
Re, (No.7/2002), Munich
On the other hand, the follwing
driving factors were identified via the interviews with the insurers members:
·
This new distribution network will allow the insurance
company to extends its customer base.
·
Minmizing the risk through diversifiication.
·
Low distribution costs.
As discussed in the literature review, these findings
concur with those of Donne (2003) and Swiss Re, (No.7/2002). The insurance company
will reap the benefits of this synergy by exploiting the sources of new
business made available by the branch network of the bank to geographically
distant clients. The insurance company must aim at taking full advantage of the
customer data base and at the same time realise that it can now benefit from
this cheaper distribution network. In addition, a wider range of products will
be made available, including products which were impossible to be developed and
promoted through the bank’s channels before the venture. Last but not least,
the insurance company should also be in a position to exploit the economies of
scale and low marginal costs. According to Donne (2003) and Focus (2005), the following factors would be
added the finding from the interviewes with the insurer members: (1) Shared
services with banks; (2) Develop new financial products more efficiently in
collaboration with their bank partners; (3) Establish market presence rapidly
without the need to build up a network of agents; (4) Obtain additional capital
from banks to improve their solvency and expand business; and (5) The insurance
company often benefits from the trustworthy image and reliability that people are
more likely to attribute to banks. Equally, Donne (2003) observed that banks
have what insurers want: distribution, branch network, customer base,
databases, regular contact, brand, reputation and customer loyalty.
To sum up, these draiving factors
represent the advantages of the Bancassurance relation, which is the bases
behaind such strategic relation. The economies of scale and
scope are an important driving factor behained this strategic relationship. However, It appears that both parties
are not fully aware of the advantages of this relation. This lack of awareness
for the benefits of this relation would affect the way that both parties are
welling to contribute to make this relation works.
6.3
Bancassurance Model
The follwing models were identified
via the interviews with the bank members:
·
The partnership business model (distribution agreement)
·
The captive model ( Financial Services Group)
As discussed in the literature review, these findings
concur with those of Smit and Lugt 2000; Swiss Re No.7/2002; Florido 2002; Nigh and
Saunders 2003; and Fitch 2006. However, all range of Bancassurance business
models mentioned above that exists in world falls three main categories. The
third one is the Joint Ventures model.
Also, we found out from the interviews
that the most commen model used in KSA is the Bancassurance partnership
business model. The advantages of this model are:
1.
No capital investment reqiured.
2.
Operations start quickly.
Another interesting point was that
only one interviewee reported another reson, which is the bank can terminate
the relationship at any point of time without losing significant financial loss.
As discussed in the literature review,
these findings concur with most of the literature review.
As discussed in the literature review, the Bancassurance
model shows the ways in which the banks and insurance companies enter into Bancassurance.
It refers to the operating structures for the banks to market insurance
products (Smit and Lugt 2000; Swiss Re
No.7/2002; Florido 2002; Nigh and Saunders
2003). The choice of a suitable model depends on the related laws of nations
and the objective conditions of both players. In other words, the model adopted
would be affected by the understanding of the definition and the draiving
factors behind forming this strategic relation.
6.4 Bancassurance Disadvantages
The follwing disadvantages were
identified via the interviews :
1.
The lack of shared vision
2.
The differences in corporate culture,
3.
The lack of innovation.
4.
Customised products.
However, only two of the interviewees
reported that they can not see any disadvantages from their relation with
insurers via Bancassurance.
As discussed in the literature review, these findings
concur with those Foucs (2005). The advantages and disadvantages of Bancassurance
depandes on the way banks and insurers structure their relation. Thousands of
pages of analysis have been written describing the different techniques and
methods used to make the above ventures successful. However the obstacles to
overcome include the cultural differences between the bank and insurance
employees, and concern the different ways in which these two function.
According to Foucs (2005), we could sum up the disadvantages of the other two
Bancassurance models identified on the literature review into the following:.
·
Joint Ventures
1.
Difficult to mange on the long term
2.
Potential confliact
·
Captives ( Financial Services Group)
1.
Substantial investment
As we can see from the above, the
level of integration decreses the disadvantges and this should be linked to the
understanding of the definition and the driving factors behind forming this
strategic relation. However, we should notice that many pepole belive that all
the adveantges are in favour of the bank and disadvantges are only for the
insurance companies.
6.5 The Bancassurance Success Factors
The follwing success factors were
identified via the interviews:
·
Offer products close to traditional bank products; blend features
·
Market to customer views of wants and needs
·
Leverage bank customer knowledge and relationships actively
·
Build specialized marketing support
·
Build multi-product customer relationships
·
Differentiate customer segment marketing
·
Base marketing on service over price
·
A well integrated opartion
As discussed in the literature review, Services have not been easy to define (Lovelock,
1999). A widely mentioned definition of services has been provided by Kotler “A
service is any activity or benefit that one party can offer to another, which
is essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product”. Gronroos,(1998),
defines the services as “an activity or series of activities of more or less
intangible nature that normally, but not necessarily, take place in interactions
between the customer and service employees and/or physical resources or goods
and/or systems of the service provider, which are provided as solutions to
customer problems.” Services are often characterized as heterogeneous, as it is
difficult to achieve standardization of output; services are perishable and
cannot be stored; and a customer always has access to or the use of a service,
but not ownership of the activity or facility, (Cowell, 1985). According to
Meidan (1982, insurance service is distinguished by different factors, which
are Perish ability, Inseparability, Heterogeneity, Fluctuation in Demand,
Balance of Growth and Risk, and The Impact of Regulations. However, critical
success factors are defined as “those things that must be done if a company is
to be successful”. According to Jaramillo and Marshall (2004), the techniques
in identifying critical success factors are either industry versus company or
macro versus micro. At the most general level, the emphasis is on industry and
macro issues in order to scan the environment to provide sources that will be
the determinants of a firm’s and/or industry’s success.
The keys to success for Bancassurance are numerous,
variegated and sometimes surprising! It is also difficult to establish priorities
and identify determining factors, because each country’s situation, history and
culture contributes, and sometimes runs counter, to the studies devoted to this
question. As discussed in the literature review, these findings
concur with those Focus (2005) and The
Boston Consulting Group and Project Advisory Committee (1999). However, the
following themes would be added to the finding from the interviews:
·
Aggressive goals
·
Strong senior management leadership and support
·
Effective training programs
·
Clear, meaningful incentives
·
Effective sales support systems
The Bancassurance operators have put the customer at
the very heart of their thinking and development strategies. The bank and the
insurer need to have a full awareness for the
key sucsess factors of this relation to maxmize the outcome.
Chapter – 7 –
Conclusions
This dissertation has focused on following areas of
Bancassurance business model:
·
The Driving Factors of Bancassurance
·
Bancassurance Model
·
Bancassurance Disadvantages
·
The Bancassurance Success Factors
The view is to understand how a Bank and an Insurer
under the partnership business model in KSA are viewing these areas. The aim
therefore has been to answer four questions:
•
Why do Saudi banks develop a strategic business relationship with
insurers via Bancassurance?
•
What are the disadvantages of this relationship, for both insurers and
banks?
•
Can Bancassurance increase the competitive advantage for a bank and
insurer in KSA through value added?
•
What are the key elements to make Bancassurance partnership model
successful?
These areas may appear to be independent of each
other; however, the research
shows that they are intrinsically linked in many ways.
The first objective of this research project is to
identify why Saudi banks develop a strategic business relationship with
insurers via Bancassurance. The combination
of banking with insurance (Bancassurance) is an important change and offers in
principle large economies of scope, in terms of sales channels, product
development, risk management, marketing, etc. The emergence of Bancassurance
contributed to overall efficiency, an increase in economies of scope and an
increase in productivity of both banks and insurance companies. The driving factors represent the
advantages of the Bancassurance relation, which is the bases behaind such
strategic relation. The economies of scale and scope are an important driving factor
behined this strategic relationship. Through the interviews many driving factors for the bank
and the insurer were identified. However,
the literature reviews did allow us to identify more driving factors.
These factors are important to be taken in consideration by the bank and the
insurer as motive for them to develop a
strategic business relationship with insurers via Bancassurance. Moreover, the
main driving factors for both the bank and the insurer are to create a
competitive advantage in the market. This did prove that that Bancassurance
could increase the competitive advantage for a bank and insurer in KSA, which
was the third objective of this research project. In addition, we have identified that the
advantages of this relation are depending upon the way banks and insurers are
structuring their relation. Through the
interviews and the literature reviews, we were able to identify
different business models of Bancassurance that could be adopted by the two
parties to structure their relation. However, we were able to identify from the
literature reviews that the level of integration on the Bancassurance relation
has an impact on the advantages and disadvantages of such relatioship. The view of this research
project is to understand how a Bank and an Insurer under the partnership
business model in KSA are viewing these areas. Therefore, we were able to
identify from the interviews and the literature
reviews the advantages and disadvantages of
the Bancassurance relation under the partnership business model. That was the
second objective of this research project. The final objective of this research
project is to identify the key elements to make Bancassurance partnership model
successful. This study has identified, throughout
the interviews, a number of crucial factors for successful services in Bancassurance.
However,
the literature reviews did allow us to identify more elements. These elements are important and it
should help both parties to maximize the outcome of the Bancassurance relation
under the partnership business model.
7.1
Recommendation
The Banks and Insurance companies in
KSA need to move beyond the early stage toward more integrated business model. This research project shows throughout the interviews that there is a lack of understanding for the
definition of the Bancassurance, a limited knowledge for the diriving factors
of Bancassurance, short term vision for the strtegic relation and unclear
awareness for the key succsse factors.
To have a sucessful implemintation of
the Bancassurance strategic relation, both parteies need to have a clear
understanding of the definition of Bancassurance. After that, they both need to
identify their driving factors for forming this strategic relation. The best way of entering Bancassurance
depends on the strengths and weaknesses of the organization and on the
availability of a suitable partner if the organization decides to involve a
partner. Therefore, I would recommend the following roadmap for both banks and
insurer to creat a sucssful strategic relation via Bancassurance:
Ø
Define the
strategic objectives and goals of this relation (driving factors)
Ø
Evaluate and select the appropriate Bancassurance model
that meets the Company’s goals
Ø
Develop criteria for evaluating distribution partners
Ø
Evaluate and rank partners
Ø
Negotiate and sign agreement that should have a fair
Financial terms and conditions that will make all parties believe the financial
terms and conditions are fair as well as attractive.
Ø
Detail business plan that is adopting a phased approach in the implementation.
Ø
Define fiscal targets
Ø
Identify impact on:
1.
Organization
2.
Sales
capabilities
3.
IT systems
4.
Front-end and back-office processes
Ø
Detail customer needs and behaviours
Ø
Refine Bancassurance products to meet customer needs,
Keep the product simple, and sell the benefits.
Ø
Deploy capabilities required for selling and delivery
of Bancassurance products
However, There is no single way of
entering into Bancassurance which is “best” for every insurer and every bank, Munich Re (2001). The choice of a suitable Bancassurance model depends on
the particular cultural and regulatory environment of the host country. As in
all business situations, a proper strategic plan drafted according to the
company’s internal and external environmental analysis and the objectives of
the organization is necessary before any decision is taken.
There is no one magic formula to Bancassurance.
The model chosen has to be consistent to the overriding strategy for Bancassurance
and objectives for this particular business. Execution excellence is the key to
success. Banks and insurers should focus on what is important and adopt a
relentless ambition to build a leading Bancassurance business.
The final recommendations are on
further research. This study primarily focuses on specific areas on the
Bancassurance business models. Future research may look deeper into more
specific issues in the KSA market such as the examination of the ‘gaps’ between
customers’ expectations and perceptions, channel choice, cultural influences,
the Islamic Bancassurance ”Bank Takful” etc., which presumably should also be
helpful for the Bancassurers in the industry.
7.2 Reflection
The process of clearly defining the research
objectives and preparing a time plan, both as part of the project proposal,
were the key to the project’s success as it meant there was always a clear
focus. However, I have changed sub-questions of the research to focus more on
the research objectives based on the tutor comments of my proposal. I have also
included more justification for the reason for choosing such research
methodology as per the tutor comments. The issues encountered impacted the
length of time taken to revise the research based on these comments.
On the other hand, the main issue encountered was the
availability of relevant research in the chosen area for the Saudi market. The
Bancassurance is still a new business model in Saudi Arabia
The final issue is the potential for bias during the
research, particularly as I am working for the last 7 years in Bancassurance
business and the last 4 years of them as Bancassurance manager with two banks
and most recently for an insurance company. Therefore, I have tried to avoid
leading questions in the interviews and I maintained an objective approach when
conducting the analysis. However, as Gavron (1996) found, ‘It is difficult to
see how this can be avoided completely, but awareness of the problem plus
constant self-control can help’.
Regarding ethics, confidentiality was important and I
have agreed with those that I have already interviewed that individuals and
company names will not be mentioned in the dissertation.
Overall, I found the whole project experience to be
mostly an enjoyable one. I have improved my time management, planning,
self-motivation and research skills and hope to use these to my advantage in my
career in the future.
Chapter – 8 –
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Appendix A
Potential of the Saudi Arabian Insurance
Market from a Reinsurance Perspective
Source: Munich Reinsurance Company, the Saudi Arabian
Insurance Industry Summit, February 2006
Saudi Arabia’s non-life penetration (premiums in percentage
of GDP) is below global trend
Saudi-Arabia‘s premium growth is still behind other
countries of the region
Appendix B
The Saudi
Economy: 2006 Performance, 2007 Forecast
Appendix C
Primary
Future Market Threats (distributor view)
Source: Capgemini Analysis, 2006
Appendix D
Insurance
density and penetration in the emerging markets in 2005
Source: Swiss Re No. 5/2006
End
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