BPI forecasts growth with bancassurance

MANILA, Philippines - Bank of the Philippine Islands (BPI) said it expects the practice of bancassurance to contribute significantly to its non-interest earnings with the partnership between Philippine American Life and General Insurance Co. (Philam Life) and BPI/MS Insurance Corp. for the sale of life insurance and non-life insurance products, respectively, through the bank’s branch network.

Bancassurance, or cross-selling as defined by the Bangko Sentral ng Pilipinas (BSP), is the marketing of insurance products through the branch network of a bank.

BPI senior vice president and head for consumer banking Natividad N. Alejo said the partnership has given the bank far reaching uplifts.

“We have found the right solution, we have gotten the hang of how to cross sell the bank’s various bancassurance products, while our partners have customized their products for the bank’s client base,” Alejo said.

BPI realizes earnings from fee-based earnings as well as profits from the joint venture arrangements with Philam Life and BPI/MS Insurance.

The life and non-life insurance partners, in turn, are empowered to utilize the vast branch nationwide network of the Ayala-led commercial bank, considered the country’s leader in terms of profitability and third in terms of resources.

Aside from contributing to the bank’s bottom line, the partnership ‘introduces’ the bank and its basket of products and services to the client base of Philam Life and BPI/MS Insurance.

Philam Life is the biggest life insurance and financial firm with the largest number of policyholders and products, while BPI/MS Insurance is among in the top five in the country’s non-life insurance industry.

Nonetheless, Alejo downplayed the gains as well as the prospects of bancassurance for BPI.

“It is still a work in progress where there are still a lot of opportunities that will come along. BPI is focused on the core business of distribution, and we have partnered with the experts on the manufacturing of the insurance product that fits the bank culture and the bank clientele,” the bank official said.

In 2010, the growth of non-interest income from bancassurance ballooned by over 300 percent for life insurance, and over 900 percent for non-life insurance.

Life insurance accounts for 75 percent while non-life insurance generates for 25 percent of total fee income from insurance.

Joint venture BPI Philamlife deploys product experts called bancassurance sales executives (BSEs) inside selected BPI branches. 

The BSEs are co-located inside the branch and are there to accept referrals from a cluster of branches and fulfill the cross selling process.  

Presently, there are over 320 BSEs in 670 BPI branches and the bank's 3.6-million client base.

Alejo said what is critical is that branch personnel have started to embrace bancassurance as a critical segment of its operations, and that the cross-selling enhances the bank’s profitability. In fact, BPI is presently mulling upgrading the skills of its banking managers to include the same training undertaken by the BSEs.