Agent Banking and Insurance: Is There a Value Alignment?
MicroSave's Briefing Note 123 discusses the potential value for stakeholders when insurance products are offered through the agent banking channel. It also highlights the challenges that might arise when implementing insurance products through agent banking. Regulators and practitioners are increasingly beginning to recognize the prospect of insurance inclusion through agent banking. Its advantages and challenges include:
- High levels of confidence from regulators in its potential for financial inclusion;
- Inexpensive and voluminous point of sales for insurance companies;
- Extended reach and cross-selling to the base of the pyramid segment for banks;
- One-stop financial solution for clients;
- Insurance sales reinforces the business case for banking agents;
- Concerns about the quality of business for insurers;
- Concerns about portfolio management for banks;
- Concerns about costs for agents;
- Clients might be discouraged by the intangibility of agent technology.
The Note concludes that insurance inclusion through agents requires careful planning at both insurer and implementing bank level. The success of insurance sales through agent banking would ultimately depend on careful planning of products, channels, and markets.