MANILA, Philippines – The local unit of Canadian insurer Sun Life Financial is looking at new variants in bancassurance or selling its policies through the branch network of banks.
Sun Life Financial is the second leading life insurance company in the Philippines with a reported premium income of over P9.5 billion last year.
The company said it is exploring several forms of alliances or joint ventures to practice bancassurance, one of the more effective distribution channels second only to the agency network.
Other life insurers have successfully entered into bancassurance arrangements and are now reaping the benefits of large volumes of policies. But these insurers had to sell at least five percent of their equity to the bank partner for the right to practice bancassurance.
Sun Life Financial president and chief executive officer Rizalina G. Mantaring said if a commercial bank cannot afford to acquire at least five percent equity in the life insurer, it can work out several options.
“One option is to form a distribution company owned by several commercial banks that does not yet practice bancassurance,” Mantaring said.
Still another option is to form another insurance firm, which will be owned by a consortium of commercial banks.
Most of the major domestic commercial banks clearly have a bancassurance partner. The remaining medium-sized commercial banks, however, may not be able to afford a five-percent stake in Sun Life Financial.
“We are talking with the regulators,” the Sun Life official said.
Industry leader Philippine American Life and General Insurance Co. (Philamlife) practices bancassurance with the Bank of the Philippines Islands (BPI); Generali Pilipinas with the Banco de Oro Unibank Inc. (BDO); AXA Philippines with the Metropolitan Trust and Banking Corp. (Metrobank); Grepalife Financial with the Rizal Commercial and Banking Corp. (RCBC); and China Banking Corp. (China Bank) with Manulife Financial Philippines.
These insurers have all reported major increases in premium income emanating from the bancassurance arrangements, and the bank-partners, in turn, recorded significant gains in fee-based income.
Sun Life Financial, meanwhile, is looking to increase its premium income beyond its original growth targets of 30 percent.
“New business already grew by 50 percent in the first five months of the year,” Mantaring pointed out.
Last year, it recorded a premium income of over P9.5 billion, of which P761 million are traditional products and P920 million classified as variable or insurance products with investment features. New business amounted to P1.68 billion.