Analyzing the evolution of the panorama of the Italian bancassurance sector and comparing it with that of other countries, in order to underline strengths, weaknesses and market opportunities: this is the objective with which the latest Report Digital Bancassurance of the Italian Insurtech Association.
In 2020, insurance products for 62.5 billion euro were placed through the network of bank branches, which represent approximately 58% of total insurance deposits and therefore constitute the first channel by total incidence, followed by distribution through the insurance agencies. Almost all of the premiums refer to Life business (96%), while the residual is the premiums associated with the Non-Life business, which for 2020 amounted to approximately € 2.6 billion. However, this segment (excluding Auto) has been growing steadily in recent years, with premium income that has gone from 1.7 billion euros in 2016 to around 2.6 billion euros in 2019. In 2020, due to the pandemic that "penalized" the bank branches that remained closed, or with reduced operations during the lockdown, the collection stopped at 2.3 billion euros, reaching the same levels as in 2018. On average, bancassurance represents about 10% of deposits overall in the context of non-motor damage collection.
In Europe we find a different subdivision of market coverage by the different types of distribution, according to the different needs of consumers which are both constantly evolving but also characteristics of the local market. In the Life market, the countries in which bancassurance is the largest distributor are currently Italy, Spain and France (65%), followed by Malta, Turkey and Portugal. However, by analyzing the trend of the last 5 years, it is evident that the role of bancassurance in the distribution of life products is growing uniformly in all countries, with an average of + 60% in the period considered. As for non-life products, they are mainly distributed by agents and brokers in both large and smaller markets.
The latest sector reports (including the Nomisma and CRIF Hybrid Lifestyle Observatory) confirm the growing propensity of Italians for a more digitalized relationship with their institute. Banks are already using digital web and mobile channels to offer their user base most of their services, except for insurance ones: only 15% have a digital insurance offer following the single sign-on of online banking and only 10% sell policies through their mobile app. Observing the strategic plans presented by the main Italian banking groups, there is a renewed interest in the digital distribution of policies, even if some resistance on the part of top management persists, mainly deriving from the difficulty in explaining the products (55%), from the idea that customers are not very interested (45%) and by the opinion that the value of these products is insufficient to justify the effort and investments in digitization (36%).
Beyond the reticence, according to the IIA, the path towards a more digital bancassurance is a path of no return, mainly due to two key factors. The first is the decline in profits, which banks are facing due to very low or almost zero interest rates, to which is added the risk of credit default due to the pandemic crisis. In this context, banks and insurers are forced to develop new sources of income, and digital bancassurance is an opportunity to increase revenues through the direct proposition of insurance policies. The second factor is the change in customer habits: fewer and fewer people are willing to visit branches to meet consultants, and instead expect solutions that allow them to manage their personal finances and insurance policies remotely.
Digital Bancassurance does not just mean adapting traditional insurance products and processes to the digital world, but creating new ones. Based on this assumption, the Report identifies four digital bancassurance models that are emerging: