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Bancassurance in Malaysia: Life, Non-Life and Creditor Insurance is a study and related PartnerBASE™ dataset examining the provision of life, non-life and creditor insurance by banks and other lending institutions in Malaysia.

Drawing on the results of a survey of 50 banking entities in Malaysia, the study verifies the percentage of organisations investigated that distribute each of the following 13 types of insurance: accident insurance, creditor insurance related to consumer finance, creditor insurance related to credit cards, creditor insurance related to mortgages, critical illness insurance, health / hospital cash plans, household insurance, income protection insurance, investment-related life insurance, medical expenses insurance, personal motor insurance, retirement savings, and risk life insurance.

For those banking entities that are active in one or more of these fields, the reports ascertain the operating models that they use to source the type of insurance in question (e.g. external, joint venture or captive underwriters) and the identity of the specific providers used. This information is then displayed in terms of the weighted share of partnerships of these providers, which takes into account the number of retail customers of the partner banking entities, thus highlighting those insurance companies that hold the distribution relationships that offer the most potential.

You may be able to use this report, plus the PartnerBASE™ dataset and market data annexes that accompany it, in one or more of the following ways:

- gain access to a source of information that provides a comprehensive overview of the provision of personal insurance products by all significant banking entities in Malaysia;

- identify partnership opportunities for the same personal insurance products that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;

- understand which underwriters and other product providers have been successful in establishing distribution relationships with the most important banking entities in Malaysia;

- assess the background to the most significant bancassurance deals, differentiating between those that originate from long-term or strategic objectives and those that are more transient;

- appreciate the magnitude of the opportunity to sell personal insurance products through banks and other lending institutions in Malaysia.

Overall, in a market in which banks hold a steadily advancing position in the life insurance sector, a significant share of non-life insurance and an importance presence in the market for Shariah-compliant takaful products, across the 50 banks and other lending institutions researched in Malaysia, Finaccord’s research identified over 250 bancassurance distribution initiatives for the various types of insurance investigated.

Table Of Contents

Bancassurance in Malaysia: Life, Non-Life and Creditor Insurance
TABLE OF CONTENTS
0.0 EXECUTIVE SUMMARY ... 1
1.0 INTRODUCTION 3
What is this report about? .. 3
Distribution partnerships with banks and other lending institutions constitute the focus of this report ... 3
Rationale . 3
Bancassurance offers a significant distribution channel for life and non-life insurance in Malaysia… ... 3
… and is also fairly important for Shariah-compliant takaful products . 3
Methodology ... 4
Survey of banks and other lending institutions .. 4
Market data . 4
Definitions ... 5
Investment-related life insurance ... 5
Retirement savings . 5
Risk life insurance ... 6
Critical illness insurance . 6
Income protection insurance .. 6
Accident insurance . 6
Health / hospital cash plans ... 6
Medical expenses insurance .. 7
Personal motor insurance .. 7
Household insurance .. 7
Creditor insurance ... 7
Mortgages, consumer finance and credit cards 7
Weighted provider share of partnerships .. 8
Operating models ... 8
Abbreviations and exchange rates 9
PartnerBASE and market data annexe 9
Finaccord .. 10
2.0 MARKET BACKGROUND .. 11
Banks and other lending institutions covered . 11
Introduction to the banking sector ... 11
The top ten banks by number of retail customers are all indigenous Malaysian entities… .. 11
… and several are expanding elsewhere in south-east Asia . 12
Foreign banks account for around 23% of the banking system's total assets… ... 12
… and Islamic banking entities for around 21% . 12
Shariah-compliant takaful insurance is also a significant segment within the overall insurance market .. 12
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS .. 13
Insurance market size and growth .. 13
The market for investment-related life insurance has delivered steady growth in recent years ... 13
The private retirement savings market in Malaysia remains in an embryonic state… .. 13
...with the Private Retirement Scheme (PRS) having been introduced quite recently .. 13
Consumer interest in both annuities and PRS funds has been muted .. 13
Distribution share of banks .. 15
The distribution share of banks in life insurance has been advancing gradually… .. 15
… and is highest (as might be expected) in the single premium segment 15
BANCASSURANCE IN MALAYSIA: LIFE, NON-LIFE AND CREDITOR INSURANCE
© FINACCORD (07/2014) II
Bancassurance provision rates, operating models and partnerships ... 15
Investment-related life insurance . 15
The Malaysian bancassurance market is characterised by a significant number of joint ventures… .. 15
… among which Etiqa is prominent in several fields, including investment-related life insurance ... 16
Sun Life entered into a long-term bancassurance partnership with CIMB Group in January 2013 . 16
AIA's purchase of ING Malaysia allowed it to inherit a pre-existing bancassurance deal with Public Bank 16
The third-ranked competitor is a specialist in family takaful products 16
AXA and Affin Holdings set up their bancassurance joint venture in 2006 ... 16
MetLife bought into AmBank Group's bancassurance subsidiaries in April 2014… . 17
… and Prudential expanded its joint venture relationship with BSN in the same month .. 17
Several other distribution agreements are determined by strategically-driven multi-country initiatives… 17
… including that of Allianz with HSBC… 17
… and that of Prudential with Standard Chartered. 17
Retirement savings ... 19
A number of banks also offer products designed specifically for retirement savings… 19
… sourced either from insurance companies or asset management firms ... 19
Captive and joint venture providers control a significant proportion of partnerships in this sphere .. 19
Performance of key bancassurance underwriters .. 21
Bank-owned life insurers sell through a variety of distribution channels in addition to bank branches… 21
… hence their market share is a lot higher than the distribution share of banks would imply .. 21
Bank-owned life insurers are likely to be significant players in the family takaful market . 21
4.0 PROTECTION-RELATED LIFE INSURANCE... 22
Insurance market size and growth .. 22
The market for protection-related life insurance has grown at a real compound annual rate of 4.6% . 22
Distribution share of banks .. 23
Bancassurance provision rates, operating models and partnerships ... 23
Risk life insurance . 23
Risk life insurance policies are promoted by a majority of banking institutions surveyed… . 23
… with the leading bancassurers similar to those for investment-related life insurance ... 23
Manulife entered into a ten-year bancassurance agreement with Alliance Bank in June 2013 ... 24
Critical illness insurance ... 26
Stand-alone critical illness cover is available from around one quarter of Malaysian banks 26
Income protection insurance 26
Performance of key bancassurance underwriters .. 26
5.0 ACCIDENT AND HEALTH INSURANCE .. 28
Insurance market size and growth .. 28
Health insurance premiums grew at a nominal compound annual rate of 15.3% between 2009 and 2013... 28
Distribution share of banks .. 29
Banks' share of distribution for total non-life insurance has apparently declined in recent years . 29
Bancassurance provision rates, operating models and partnerships ... 30
Accident insurance ... 30
By weighted share of partnerships, Etiqa is ranked first mainly due its use by Maybank… . 30
… and is followed by Prudential BSN Takaful, MSIG, Syarikat Takaful Malaysia and Takaful Ikhlas . 30
Medical expenses insurance 32
The provision rate for medical expenses cover is lower than that for accident insurance... . 32
…with Prudential BSN Takaful ranked first in this field .. 32
A total of ten different insurance providers have secured bancassurance deals in this arena . 32
Health / hospital cash plans . 34
Banks are less likely to offer health or hospital cash plans than other types of accident and health policy… . 34
… and only six insurance providers have secured bank distribution deals for them 34
Performance of key bancassurance underwriters .. 36
The market share of key bancassurance underwriters in total non-life insurance remains fairly constant… .. 36
BANCASSURANCE IN MALAYSIA: LIFE, NON-LIFE AND CREDITOR INSURANCE
© FINACCORD (07/2014) III
… but it has fallen back in accident and health insurance . 36
Etiqa is a major player in the total non-life takaful market .. 37
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE . 38
Insurance market size and growth .. 38
Premiums for personal motor cover have outgrown those for household insurance in recent years .. 38
Distribution share of banks .. 39
Bancassurance provision rates, operating models and partnerships ... 39
Personal motor insurance 39
20 banks and other lending institutions have an arrangement for selling personal motor insurance ... 39
Etiqa sells motor insurance not only via Maybank but also through several other banks . 39
In this field, Allianz is ranked second thanks to a sole partnership with CIMB Bank 39
A total of five joint venture underwriters are used by banks for personal motor insurance… ... 40
… but only two captives ... 40
Household insurance 42
The provision rate for household insurance is higher than that for personal motor insurance . 42
Lonpac's sole bancassurance partnership is attributable to this domain .. 42
Seven banks utilise a panel of multiple external underwriters for household insurance ... 42
Performance of key bancassurance underwriters .. 44
The combined market share of key bancassurers has held firm in both total motor insurance… ... 44
… and total property insurance ... 44
7.0 CREDITOR INSURANCE 46
Consumer lending market size and growth 46
Mortgage lending .. 46
Mortgage balances increased at a nominal compound annual rate of 13.2% between 2009 and 2013… . 46
Non-mortgage lending .. 47
… with total non-mortgage consumer lending balances moving up at an equivalent rate of 8.3% .. 47
Credit and other pay later cards ... 48
The total number of credit cards in circulation fell sharply in 2010 but has remained steady since then . 48
Creditor insurance provision rates, operating models and partnerships ... 49
Creditor insurance linked to mortgages ... 49
All but two mortgage lenders offer related creditor insurance 49
Etiqa supplements distribution through Maybank with several other partnerships ... 49
Syarikat Takaful Malaysia has established ties in this arena with a total of six different banks… 50
… and Takaful Ikhlas with five . 50
As for other insurance types, joint ventures are often used for mortgage-related creditor insurance .. 50
Manulife, Prudential and Tokio Marine are all used as external underwriters in this context ... 50
Creditor insurance linked to consumer finance ... 52
Over 30 arrangements are visible for creditor insurance linked to consumer finance… .. 52
… with many partnerships identical to those for mortgage-related creditor insurance… . 52
…although the research also identifies a number of differences… ... 52
…and the existence of a few specialist consumer credit providers also creates diversity 52
Creditor insurance linked to credit cards . 54
A few card issuers have introduced schemes for credit card payment protection insurance ... 54
Creditor insurance risk coverage . 56
Most creditor insurance products in Malaysia are configured as loan-related life insurance policies .. 56
Creditor insurance market size, growth and forecast . 57
The creditor insurance market is likely to have expanded quite rapidly in recent years… ... 57
... and the outlook to 2017 is also positive .. 58
The introduction of policies covering temporary incapacity or unemployment could spur higher growth 58

LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY ... 1
Overview of bancassurance provision rates for different types of insurance in Malaysia, 2014 ... 2
1.0 INTRODUCTION 3
Banks and other lending institutions in Malaysia contacted by Finaccord, segmented by type 4
2.0 MARKET BACKGROUND .. 11
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS .. 13
Gross written premiums for investment-related life insurance and retirement savings in Malaysia, 2009 to 2013 .. 14
Gross written premiums for investment-related life insurance and retirement savings in Malaysia, 2009 to 2013 (table) ... 14
Distribution share of banks in total (non-takaful) life insurance in Malaysia, 2010 to 2013 .. 15
Bancassurance provision of investment-related life insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships 18
Bancassurance provision of retirement savings in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 20
Market share in total (non-takaful) life insurance of key bancassurance underwriters in Malaysia, 2008 to 2012 .. 21
4.0 PROTECTION-RELATED LIFE INSURANCE... 22
Gross written premiums for protection-related life insurance in Malaysia, 2009 to 2013 . 22
Gross written premiums for protection-related life insurance in Malaysia, 2009 to 2013 (table) . 23
Bancassurance provision of risk life insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 25
Bancassurance provision of critical illness insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 27
5.0 ACCIDENT AND HEALTH INSURANCE .. 28
Gross written premiums for accident and health insurance in Malaysia, 2009 to 2013 ... 28
Gross written premiums for accident and health insurance in Malaysia, 2009 to 2013 (table) ... 29
Distribution share of banks in total non-life insurance in Malaysia, 2008 to 2012 29
Bancassurance provision of accident insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 31
Bancassurance provision of medical expenses insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships 33
Bancassurance provision of health / hospital cash plans in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships 35
Market share in total (non-takaful) non-life insurance of key bancassurance underwriters in Malaysia, 2008 to 2012 . 36
Market share in total (non-takaful) accident and health insurance of key bancassurance underwriters in Malaysia, 2008 to 2012 37
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE . 38
Gross written premiums for personal motor and household insurance in Malaysia, 2009 to 2013 . 38
Gross written premiums for personal motor and household insurance in Malaysia, 2009 to 2013 (table) . 39
Bancassurance provision of personal motor insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 41
Bancassurance provision of household insurance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 43
Market share in total (non-takaful) motor insurance of key bancassurance underwriters in Malaysia, 2008 to 2012 .. 44
BANCASSURANCE IN MALAYSIA: LIFE, NON-LIFE AND CREDITOR INSURANCE
© FINACCORD (07/2014) V
Market share in total property insurance of key bancassurance underwriters in Malaysia, 2008 to 2012 .. 45
7.0 CREDITOR INSURANCE 46
Residential mortgage lending balances outstanding in Malaysia (absolute and per capita), 2009 to 201346
Consumer non-mortgage lending balances outstanding in Malaysia (absolute and per capita), 2009 to 2013 .. 47
Credit and other pay later cards issued and per capita in Malaysia, 2009 to 2013 .. 48
Key data points for the consumer lending market in Malaysia, 2009 to 2013 .. 49
Provision of creditor insurance linked to mortgages in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 51
Provision of creditor insurance linked to consumer finance in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships 53
Provision of creditor insurance linked to credit cards in Malaysia, 2014: provision rate, operating models and weighted provider share of partnerships . 55
Risk coverage of creditor insurance policies in Malaysia, segmented by type of underlying product, 2014 ... 56
Creditor insurance gross written premiums in Malaysia, segmented by policy type, 2009, 2013 and 2017 ... 57
Creditor insurance gross written premiums in Malaysia, segmented by cover type, 2009, 2013 and 2017 ... 59
Creditor insurance gross written premiums in Malaysia, segmented by policy and cover type, 2009, 2013 and 2017 (table) ... 59

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