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

Drawing on the results of a survey of 61 banking entities in the Philippines, 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.

Table Of Contents

Bancassurance in the Philippines: 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 is a very important distribution channel for life insurance in the Philippines . 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 ... 5
Critical illness insurance . 6
Income protection insurance .. 6
Accident insurance . 6
Health / hospital cash plans ... 6
Medical expenses insurance .. 6
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 9
2.0 MARKET BACKGROUND .. 11
Banks and other lending institutions covered . 11
Introduction to the banking sector ... 11
The Philippines hosts a substantial and relatively complex banking sector… .. 11
…composed of universal and commercial banks, thrift (or savings) banks, and rural and co-operative banks .. 12
Regulations have prevented many foreign banks from establishing themselves in this market… .. 12
… although these are in the process of being amended to foster more competition 12
There have been several significant mergers or acquisitions in recent years ... 13
Introduction to bancassurance 13
Bancassurance is developing well in spite of several regulatory obstacles… .. 13
…although in August 2014 these were in the process of being relaxed ... 13
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS .. 14
Insurance market size and growth .. 14
The value of the market increased by over 30% in real terms between 2009 and 2013 .. 14
Pre-need plans are an important element in the voluntary private retirement system .. 14
Distribution share of banks .. 15
Banks control a very significant distribution share in the overall life insurance market . 15
Bancassurance provision rates, operating models and partnerships ... 16
Investment-related life insurance . 16
Investment-related life policies are available from a relatively low number of banks in the Philippines… ... 16
… with Generali Philippines identifiable as a leader by weighted share of partnerships… .. 16
… although its market share indicates that it has yet exploited the vast retail client base of its partner .. 16
AXA Philippines and BPI-Philam Life are both classifiable as joint venture underwriters. 16
PNB Life (working with Philippine National Bank) is the only captive underwriter in this arena ... 17
The relationship of Pru Life with Standard Chartered is the result of a wider pan-Asian partnership .. 17
Retirement savings ... 19
Arrangements for retirement savings are identical to those for investment-related life insurance ... 19
Performance of key bancassurance underwriters .. 21
The market share of key bancassurance underwriters is already high and seems to be growing ... 21
AXA Philippines secured 68% of its total policy sales from the bancassurance channel in 2013 21
4.0 PROTECTION-RELATED LIFE INSURANCE... 22
Insurance market size and growth .. 22
Although it fell in 2012, growth in the value of this market has otherwise been consistent .. 22
Distribution share of banks .. 23
Bancassurance provision rates, operating models and partnerships ... 23
Risk life insurance . 23
Risk life insurance not linked to lending products is on offer from a dozen banking institutions… ... 23
... with partnerships again very similar to those for investment-related life insurance… ... 23
... albeit CTBC Bank and Land Bank of the Philippines have unique arrangements in this sphere . 23
Critical illness insurance ... 25
Stand-alone critical illness cover is rarely available from Filipino banks... . 25
Income protection insurance 25
... and the availability of income protection insurance is even lower . 25
Performance of key bancassurance underwriters .. 25
5.0 ACCIDENT AND HEALTH INSURANCE .. 28
Insurance market size and growth .. 28
The accident and health insurance market is small but growing rapidly ... 28
Distribution share of banks .. 29
Bancassurance provision rates, operating models and partnerships ... 30
Accident insurance ... 30
Mainly through its link with BDO Unibank, OAC is the most prominent provider in this field… 30
... followed by AXA Philippines… 30
… and then by joint venture underwriters co-owned by MSandAD and AIA 30
Philippine National Bank is unusual in working with two captive underwriters in this arena . 30
Medical expenses insurance 32
This type of insurance is available from China Bank, RCBC and Standard Chartered 32
Health / hospital cash plans . 32
Five banks (out of 60 researched) offer health or hospital cash plans .. 32
Performance of key bancassurance underwriters .. 35
Key bancassurance underwriters are growing their market share of total non-life insurance… .. 35
… albeit they use a range of distribution channels over and above bank branches . 35
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE . 36
Insurance market size and growth .. 36
Both personal motor and household insurance have posted healthy growth rates in recent years . 36
Distribution share of banks .. 37
There should be scope for banks' distribution share to advance from its current fairly low level . 37
Bancassurance provision rates, operating models and partnerships ... 37
Personal motor insurance 37
Over 30 banks and other lending institutions have an arrangement for selling personal motor insurance... ... 37
... with Prudential Guarantee and Assurance ranked first in terms of its weighted partnership share . 37
Third-ranked Malayan Insurance benefits mainly from its captive relationship with RCBC .. 38
Both Bank of the Philippine Islands and United Coconut Planters Bank also use captive underwriters .. 38
Four banking entities utilise a broker to source personal motor insurance… 38
… and another four employ multiple underwriters.. 38
Household insurance 40
Over 70% of banking institutions researched are distributors of domestic property cover… ... 40
... with operating models and partnerships often resembling those for personal motor insurance… ... 40
… albeit eight are uniquely active in this sphere 40
Performance of key bancassurance underwriters .. 40
7.0 CREDITOR INSURANCE 42
Consumer lending market size and growth 42
Mortgage lending .. 42
Mortgage balances increased at a nominal compound annual rate of 18.5% between 2009 and 2013… . 42
Non-mortgage lending .. 42
…and the value of total non-mortgage consumer lending has also expanded in recent years ... 42
The Philippines also possesses a fairly large informal lending market . 43
Credit and other pay later cards ... 43
Credit and other pay later cards per capita inched up from 0.07 in 2009 to 0.09 in 2013 43
Creditor insurance provision rates, operating models and partnerships ... 45
Creditor insurance linked to mortgages ... 45
Over 90% of Filipino mortgage lenders operate a scheme for related creditor insurance 45
Apart from OAC, the largest players in this arena are captive and joint venture underwriters… . 45
…with six of the top eight providers owned or co-owned by banking groups ... 45
Nevertheless, as many as 14 entities make use of a single external underwriter… . 45
… and 11 work with multiple providers for this type of creditor insurance . 46
Creditor insurance linked to consumer finance ... 48
The provision rate for creditor insurance linked to consumer finance is somewhat lower 48
Many partnerships in this field are identical to those for mortgage-related creditor insurance… . 48
…although nine lending institutions are only active in this domain 48
Creditor insurance linked to credit cards . 50
Credit card payment protection insurance is quite commonly marketed by card issuers in the Philippines... . 50
... with Manulife and BPI-Philam Life ranked highest by weighted share of partnerships… . 50
... followed by Sun Life Grepa Financial and AXA Philippines… ... 50
… and then by a further five underwriters ... 50
Creditor insurance risk coverage . 52
Most policies are configured as basic risk life policies covering death only .. 52
Creditor insurance market size, growth and forecast . 53
The Filipino market for creditor insurance is likely to be expanding rapidly from a low base… 53
… in spite of the apparent absence of policies related to point-of-sale automotive finance… . 53
... and is forecast to increase further up to 2017 54

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY ... 1
Overview of bancassurance provision rates for different types of insurance in the Philippines, 2014 .. 2
1.0 INTRODUCTION 3
Banks and other lending institutions in the Philippines contacted by Finaccord, segmented by type... 4
2.0 MARKET BACKGROUND .. 11
3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS .. 14
Gross written premiums for investment-related life insurance and retirement savings in the Philippines, 2009 to 2013 . 15
Gross written premiums for investment-related life insurance and retirement savings in the Philippines, 2009 to 2013 (table) . 15
Bancassurance provision of investment-related life insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 18
Bancassurance provision of retirement savings in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships . 20
Market share in total life insurance of key bancassurance underwriters in the Philippines, 2010 to 2013 . 21
4.0 PROTECTION-RELATED LIFE INSURANCE... 22
Gross written premiums for protection-related life insurance in the Philippines, 2009 to 2013 ... 22
Gross written premiums for protection-related life insurance in the Philippines, 2009 to 2013 (table) 23
Bancassurance provision of risk life insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships . 24
Bancassurance provision of critical illness insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 26
Bancassurance provision of income protection insurance in the Philippines, 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 the Philippines, 2009 to 2013 . 28
Gross written premiums for accident and health insurance in the Philippines, 2009 to 2013 (table) .. 29
Bancassurance provision of accident insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships . 31
Bancassurance provision of medical expenses insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 33
Bancassurance provision of health / hospital cash plans in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 34
Market share in total non-life insurance of key bancassurance underwriters in the Philippines, 2011 to 2013 .. 35
6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE . 36
Gross written premiums for personal motor and household insurance in the Philippines, 2009 to 2013 ... 36
Gross written premiums for personal motor and household insurance in the Philippines, 2009 to 2013 (data) . 37
Bancassurance provision of personal motor insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 39
Bancassurance provision of household insurance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 41
7.0 CREDITOR INSURANCE 42
Residential mortgage lending balances outstanding in the Philippines (absolute and per capita), 2009 to 2013 .. 42 BANCASSURANCE IN THE PHILIPPINES: LIFE, NON-LIFE AND CREDITOR INSURANCE
Consumer non-mortgage lending balances outstanding in the Philippines (absolute and per capita), 2009 to 2013 .. 43
Credit and other pay later cards issued and per capita in the Philippines, 2009 to 2013 44
Key data points for the consumer lending market in the Philippines, 2009 to 2013 . 44
Provision of creditor insurance linked to mortgages in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 47
Provision of creditor insurance linked to consumer finance in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 49
Provision of creditor insurance linked to credit cards in the Philippines, 2014: provision rate, operating models and weighted provider share of partnerships 51
Risk coverage of creditor insurance policies in the Philippines, segmented by type of underlying product, 2014 .. 52
Creditor insurance gross written premiums in the Philippines, segmented by policy type, 2009, 2013 and 2017 .. 54
Creditor insurance gross written premiums in the Philippines, segmented by cover type, 2009, 2013 and 2017 .. 55
Creditor insurance gross written premiums in the Philippines, segmented by policy and cover type, 2009, 2013 and 2017 . 55

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