Denis St. Bernard, Contributor
JUDGING BY recent information it appears that the bancassurance concept is taking off in Jamaica. Figures from the Superintendent of Insurance showed a total gross premium income of $1.6 billion earned at the end of 1999 compared to $9 million just 10 years ago, when NCB Insurance Services came on as the first company offering the bancassurance services. Since then two other players have come on to the market, namely BNS Insurance Services and CIBC.
Much has been made of the cultural conflicts inherent in combining banking and insurance. The two sides have learned from each other. Banks have learned to be somewhat adverse to risk and their insurer partners have become more client driven, each taking stock of the other.
Where one business is more established than the other in the market, the more established player can help the new-comer to become acclimatised to the regulatory and cultural environment. Having both banking and insurance operations can also help the country to land customers it would not have gotten otherwise.
Ms. Ingrid Chambers, general manger of Scotia Jamaica Life Insurance Company, in a recent interview showed great enthusiasm for the bancassurance products and services offered by her company and believe that this is the future of the financial sector. Ms. Chambers went on to highlight that this is a very young company, just two years old and the low premiums offered for their life insurance product, together with low operations cost and a wide distribution network are some of the major assets of BNS.
"One of the major challenges is the culture change from insurance into banking and visa versa, particularly for our customers, however there are clear signs that our customers are quickly adjusting to the change," said Ms. Chambers.
"A similar strategy is what has been a success for NCB Insurance Services, the pioneer of the bancassurance business," added general manager Orville Johnson. "This type of operation offers a more economical cost structure and therefore our clients can now benefit from this reduce cost."
Mr. Johnson is currently the chairman of the Life Insurance Companies Association (LICA).
He also went on to explain that these interlocking relationship between insurance, banking and other financial services is really a European phenomenon, where the Financial Services Act, which covers all ranges of financial products and services, are now standard. This is also now commonplace in Australia and New Zealand, however U.S. laws never allowed this convergence until recently."
This is a clear indication, pointed out Mr. Johnson, that we in the Caribbean cannot be lagging behind and it is heartening to see that the Minister of Finance has declared that a super financial regulatory structure will be in place by April, 2001, and his administration will be pushing full steam ahead to make this a reality.
Trevor Hamilton, marketing manager of CIBC, was a bit more modest with his CIBC "Money Tree" bancassurance product, which he stressed is a very profitable product for the bank and their clients because it has the difference of being established on group life platforms, unlike other competitors who have an individual life platform. This means that CIBC would be cheaper as a result of the group life platform.
GROWTH IN BANCASSURANCE IN JAMAICA
Year gross premium income
1989 9.3 million
1990 37.1 million
1991 96.1 million
1992 147.1 million
1993 239.7 million
1994 108.1 million
1995 223.2 million
1996 190 million
1997 256.7 million
1998 622.4 million
1999 1,642.3 million
NB. The above figures came from the Superintendent of Insurance Office.
Denis St. Bernard is a marketing and insurance consultant. He is also the co-host of risky business, a radio programme which deals with risk and insurance matters.
