On May 9, the State Administration of Financial Supervision and Administration issued the Notice on Matters Concerning the Agency Insurance Business of Commercial Banks (hereinafter referred to as the "Notice"). The "Circular" proposes that commercial banks act as agents for various types of insurance business, and there is no limit to the number of cooperative insurance companies at all levels of branches and outlets, and first-level branches can directly sign agreements after obtaining the authorization of legal persons.
This also means that the restriction that no more than three bank branches can cooperate with insurance companies will be removed, and a single branch is expected to sell more insurance companies' products. This is undoubtedly a "big loosening" for the bancassurance channel that promotes the "integration of newspapers and banks".
In 2010, in order to rectify the chaos of the bancassurance channel, the former China Banking Regulatory Commission suspended the sales of bancassurance outlets, and limited each bank branch to no more than three insurance companies. In 2019, the former China Banking and Insurance Regulatory Commission (CBIRC) also reiterated the "1+3" requirement for the Internet and telemarketing business.
According to the analysis of Soochow Securities, the relaxation of the restrictions on "1+3" cooperation outlets and the clear market-oriented orientation will greatly enrich the bancassurance products and services in the short term and expand the bancassurance industry in the long term. Soochow Securities expects that after the "1+3" cooperation restrictions are lifted, small and medium-sized insurance companies will be able to obtain cooperation opportunities to reach more outlets in the short term, and channel competition will intensify. However, it should be emphasized that under the constraints of "integration of newspapers and banks", small and medium-sized companies cannot gain market share through extensive competition in cost competition, and their products and services are facing the test of market-oriented competition.
Loosen the bancassurance cooperation
"Although it is only 390 words, the impact on the industry is not small." After the issuance of the "Notice", some insurance practitioners expressed their feelings. According to the Circular, commercial banks are not limited to the number of cooperative insurance companies at all levels in the agency of Internet insurance business, telephone sales insurance business and other insurance business. In addition, the Notice also clarifies the criteria for bancassurance cooperation. At the level of cooperation, the Circular requires that insurance companies and commercial banks cooperate with each other, and in principle, the legal entities of both parties shall sign a written principal-agent agreement. If it is really necessary for a first-level branch to sign an entrustment-agent agreement, the first-level branch shall obtain the written authorization of its legal entity in advance.
In terms of the benefits of bancassurance cooperation, the Circular clarifies the commission standard for bank agency business, that is, the commission rate agreed in the principal-agent agreement shall not exceed the commission level of the insurance company's legal person product filing.
This is also a reiteration of the previous policy of "integration of newspapers and banks". "Integration of reporting and banking" means that the product pricing assumptions used by the insurance company in the product approval or filing materials submitted to the regulatory authorities should be consistent with the behavior of the insurance company in the actual business process.
According to the State Administration of Financial Supervision and Administration, the implementation of the "Notice" is conducive to giving better play to the advantages of commercial banks and insurance companies, promoting long-term and in-depth cooperation between the two sides, and exploring new paths for transformation and development; It is conducive to broadening the scope of cooperation between commercial banks and insurance companies, and enhancing the value of bank agency insurance business and consumer satisfaction; It is conducive to enriching bancassurance products and services, better meeting the diversified and multi-level protection needs of consumers, and effectively safeguarding the rights and interests of consumers.
A senior executive of a small and medium-sized insurance company told the Economic Observer that the liberalization of policies has brought opportunities, but there are also pressures. Under the constraints of the "integration of newspapers and banks" on the cost side, in the face of competition from large insurance companies, small and medium-sized insurance companies will usher in more opportunities, but they will also face the challenge of surcharge ratio.
According to the analysis of Soochow Securities, on the one hand, after the "1+3" constraints are relaxed, industry competition will intensify in the short term; On the other hand, under the constraints of "1+3", the branches of large commercial banks holding life insurance companies often give priority to meeting the business needs of holding life insurance companies, which to a certain extent crowds out the resources and depth of non-bank insurance companies' market-oriented participation in bancassurance channels. The "Notice" poses a challenge to bank-based life insurance companies on how to get rid of their dependence on the advantages of shareholders as soon as possible, broaden diversified development channels and enrich product supply capacity. In the long run, leading large insurance companies need to give full play to their economies of scale advantages in brand recognition, customer service depth and product diversification and supply capacity, and can actively explore long-term and in-depth cooperation with banks to explore new paths for transformation and development.
On August 22, 2023, the State Administration of Financial Supervision and Administration issued the Notice on Regulating Insurance Products through Bank Agency Channels, emphasizing that the commission fees of bancassurance channels should be strictly "integrated with reporting and banking", and stipulating that the handling fee rates for future single payment, 3-year payment, 5-year payment, and 10-year payment should be strictly limited to 3%, 9%, 14%, and 18%.
At the press conference on the data and information of the banking and insurance industry in the third quarter of 2023 held on October 20, 2023, the relevant person in charge of the life insurance supervision work of the State Administration of Financial Supervision and Administration said that up to now, through full communication between insurance companies and banking institutions, the vast majority of banks carrying out bancassurance business have re-signed contracts with insurance companies in accordance with the "integration of newspapers and banks". According to preliminary estimates, the commission fee of the bancassurance channel has decreased by about 30% compared with the previous average.
It is worth noting that due to the impact of the "integration of newspapers and banks", the premium scale of the bancassurance channel, which is soaring in the first half of 2023, has entered a state of slow growth. The bancassurance channel size of the insurance industry declined at the end of 2023 and early 2024, while the net income from bank fees and commissions also declined due to factors such as the decline in agency insurance business income.
Bancassurance cooperation over the years
The bancassurance channel is one of the important business sales channels of insurance companies, and its main cooperation model is that insurance companies obtain premium income and customer resources through banking channels, and banks sell insurance products for insurance companies based on huge customer resources and perfect sales network, so as to obtain handling fees and commission income and improve the allocation of customers' wealth management products.
In February 1996, the People's Bank of China issued the Interim Regulations on the Administration of Insurance Agents, which clarified the part-time agent system, but stipulated that only one insurance company could provide agency services. However, due to the fact that the main products in the early stage of the development of the insurance industry were ordinary life insurance products, which were different from the business models and customer needs of banks, the cooperation between banks and insurance did not develop rapidly at that time.
In 2003, the implementation of the new "Insurance Law" released the bancassurance channel "one-to-one" agency model restrictions, since then the bancassurance channel has shown a rapid growth momentum, coupled with the reduction of deposit interest rates, insurance companies to increase the development of investment-oriented products, the scale of bancassurance channel premiums continue to rise, in 2003 the bancassurance channel contributed to the premium income reached 76.491 billion yuan, accounting for 25.4% of the total life insurance premiums.
With the rapid growth of the premium scale of the bancassurance channel, the problems of bancassurance cooperation have also been frequently exposed, and the regulators have begun to regulate the development of the bancassurance channel. In November 2010, the former China Banking Regulatory Commission (CBRC) issued the Notice on Further Strengthening the Compliant Sales and Risk Management of Commercial Banks' Agency Insurance Business, requiring that the personnel of bank outlets selling insurance products must have insurance agency qualifications, and at the same time stopping the behavior of insurance company personnel stationed in bank outlets for sales, and stipulating that each bank branch shall cooperate with no more than three insurance companies.
After that, the bancassurance channel quickly entered a negative growth cycle, and by 2013, the proportion of premium income contributed by the bancassurance channel in the total life insurance premiums dropped rapidly from 50% in 2010 to 36.7%. Subsequently, the regulators continued to strengthen the supervision of the bancassurance channel, but under the influence of factors such as the growth of consumer demand, the premium scale of the bancassurance channel resumed its growth trend in 2014, and its contribution to the life insurance premium of the insurance industry also increased to 44.1% in 2016.
In 2017, the life insurance industry ushered in a new round of strict supervision, in the context of emphasizing "insurance surname insurance, return to the origin", the development and sales of short- and medium-term survival products were restricted, and the bancassurance channels that favored such products were affected again, and the contribution of premium income from bancassurance channels to life insurance premiums fell to 30.3% in 2019.
Since 2019, the number of agents of insurance companies has risen and fallen, the development model of agent channels has faced challenges, and banks have begun to pay attention to the sales of insurance products under the influence of multiple factors such as the new regulations on asset management and the decline in the income of products such as agency funds, and the bancassurance channel has returned to the strategic layout of many large insurance companies.
An insurance industry insider believes that for the insurance industry in transition, the significance of the bancassurance channel needs to be re-examined, that is, from the past "scale contribution" to "scale and value contribution", which means that the cooperation between banks and insurance needs to explore new models.