Life Insurers Strengthening Tie with Banks

Life insurers in the Chinese market are attaching more importance to strengthening tie with commercial lenders due to fiercer competition in the bancassurance sector.

"HSBC Life Insurance Co., Ltd. will copy its successful global bancassurance mode to China in accordance to the market's concrete situation and establishment of the branches will track footprints of HSBC," CEO Terry Lo said in an interview on September 8. That is to say following HSBC, it will copy a consolidated bancassurance mode to eight Chinese cities including Beijing, Guangzhou and Shenzhen within five years. HSBC Life does not ink any exclusive contracts with HSBC but unlike other life insurers, it cooperated with the banking sister in product R&D, sales and service. Notably, it moved into the latter's office building this year, which makes it easier to communicate.

The one-to-one cooperation is proved to have begun working as bancassurance has contributed to over 80 percent of its premium revenue. In the first half of this year, it ranked No.3 among foreign-funded life insurers in Shanghai in terms of annualized premium from new bancassurance policies. The pre-tax profit HSBC Insurance captured during the six months hit USD 1.6 billion, surging 36 percent year on year and accounting for 17 percent of the total of HSBC Group. Of it, 52 percent was gained from the Asian market, compared to 35 percent a year ago.

Driven by such cooperation mode with parent Bank of Communications (BoCom, SEHK: 3328 and SHSE: 601328), BoCom Life Insurance Co., Ltd. saw premium in the first seven months of this year rocket 778.18 percent from a year earlier. Guan Huanfei, general manager of the Chinese insurer, said in May this year that bancassurance had contributed to over 90 percent of its premium revenue. Its products were sold in more than 100 outlets of its parent in Shanghai and many of them were developed by both sides.

In addition, Sun Life Everbright Life Insurance Co., Ltd. entered into a strategic partnership with China Everbright Bank (SHSE: 601818) and Nissay-Greatwall Life Insurance Co., Ltd. expects to make full use of nationwide outlets of Agricultural Bank of China Ltd. (ABC, SHSE: 601288 and SEHK: 1288) with the help of China Great Wall Asset Management Corp.

Those who have no banking background like New China Life Insurance Co., Ltd., together with their banking partners, developed a list of special products.