Acting as an agent for insurance business, integrating reporting and banking
On May 10, 2024, the State Administration of Financial Supervision ("FSA") issued the Notice on Matters Concerning the Insurance Agency Business of Commercial Banks (hereinafter referred to as the "Notice").
The Circular clearly abolishes the restriction on the number of cooperation between bank outlets and insurance companies, and abolishes the previous clause that "each branch of a commercial bank can only carry out insurance agency business cooperation with no more than three insurance companies in the same fiscal year". On the one hand, this is conducive to commercial banks enriching the shelves of insurance products. On the other hand, bank branches will be more market-oriented and flexible in choosing to introduce insurance product partners, and the strong channel position of bank branches will be strengthened.
The "Notice" once again emphasizes the requirement of "integration of newspaper and bank", and clarifies that the commission rate agreed in the entrustment agency agreement shall not exceed the commission level of the insurance company's legal person product filing. In the first half of 2023, the agency insurance income of joint-stock banks grew rapidly, which once effectively supported the growth of their fee and commission income. However, since the second half of 2023, due to the requirements of "integration of newspapers and banks", the contribution of bank agency insurance income to the overall fee and commission income has begun to decline.
Combined with the spirit of the "Notice", in the short term, the agency insurance income of commercial banks in 2024 will be greatly negatively affected under the influence of factors such as "integration of newspapers and banks". However, in the medium and long term, the increasing marketization of insurance products distributed by banks will promote the healthy development of the market. At the same time, as the position of the banking channel becomes stronger, the insurance agency fee may also rebound in the medium to long term.
On 10 May 2024, the State Administration of Financial Supervision ("FSN") issued the Notice on Matters Concerning the Insurance Business of Commercial Banks (Jin Gui [2024] No. 8, hereinafter referred to as the "Notice")[1].
1. Abolish the restriction on the number of cooperation between bank outlets and insurance companies
In the Circular, the State Administration of Financial Supervision requires: "Remove the limit on the number of cooperation between bank branches and insurance companies. It is clarified that commercial banks act as agents for Internet insurance business, telephone sales insurance business and other insurance business, and there is no limit to the number of cooperative insurance companies at all levels of branches and outlets. At the same time, it is clarified that the second paragraph of Article 39 of the Notice on Printing and Distributing the Administrative Measures for the Agency Insurance Business of Commercial Banks [2] (CBIRC Ban Fa [2019] No. 179) is repealed, that is, the clause that "each branch of a commercial bank can only cooperate with no more than 3 insurance companies in the same fiscal year" is no longer valid.
This means that in the future, there will no longer be a limit on the number of insurance companies cooperating with a single offline bank outlet, which will help commercial banks further enrich the insurance product shelves and provide customers with more diversified products. On the other hand, bank branches will be more market-oriented and flexible in choosing partners to introduce insurance products, and their strong position in the channel will be strengthened. In the medium and long term, this may make it possible for the insurance agency handling fee to rebound to a certain extent after the downward trend of the "integration of newspapers and banks" reform.
Second, once again clarify the requirements of "integration of newspaper and bank".
In terms of the commission standard for bank agency business, the State Administration of Financial Supervision requires: "The commission rate agreed in the principal-agent agreement shall not exceed the commission level of the insurance company's legal person product filing." At the level of cooperation, the State Administration of Financial Supervision requires: "In principle, the legal entities of both parties shall sign a written principal-agent agreement for cooperation between insurance companies and commercial banks." 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. ”
This is the first time since August 2023 that the State Administration of Financial Supervision has once again emphasized the relevant requirements of the "integration of reporting and banking" in the bancassurance channel. According to media reports[3], the State Administration of Financial Supervision (SAFS) issued the Notice on Regulating Insurance Products through Bank Agency Channels in August 2023, the Notice on Matters Concerning the Management of Bancassurance Products in October 2023, and the Notice on Matters Concerning the Regulation of Bank Agency Channel Business of Life Insurance Companies in January 2024, which put forward clear and strict regulatory requirements for the "integration of newspapers and banks" in the bancassurance channel. Among them, it clarifies the responsibilities of the head office and branches of insurance companies in the policy of "integration of newspapers and banks", and requires that insurance companies shall not directly or indirectly pay any fees other than commissions to bank agency channels in the name of billing fees and information fees; At the same time, it also proposes that for issues such as channel arbitrage and off-the-books payment, it should be extended to the bank for inspection if necessary.
On the whole, the regulatory authorities will further strictly implement the "integration of reporting and banking" in the bancassurance channel, solve the chaos in the past such as commercial banks and insurance companies seizing the market share of the bancassurance channel through non-standard means and distorting the market to cause price abnormalities, so as to standardize the bancassurance channel market and promote the banking and insurance industries to return to the origin of serving customers.
Third, after the "integration of newspapers and banks", short-term insurance sales will be under pressure
Judging from the situation of joint-stock banks with published data, in the first half of 2023, the rapid growth of agency insurance income of joint-stock banks has become an important part of supporting their fee and commission income, but since the second half of 2023, the contribution of agency insurance income to the overall fee and commission income has begun to decline.
From the perspective of the year-on-year growth rate of agency insurance income, in 2023, the growth rate of agency insurance income of China Merchants Bank, Industrial Bank, Ping An Bank and Minsheng Bank will be 9.33%, 92.00%, 50.70% and 59.33% respectively, all of which will maintain rapid growth. However, compared with the first half of 2023, the growth rate of insurance income of Industrial Bank, Ping An Bank and Minsheng Bank has slowed down. From the perspective of agency insurance income accounting for handling fees and commission income, the proportion of agency insurance income of China Merchants Bank, Industrial Bank, Ping An Bank and Minsheng Bank in 2023 will reach 14.63%, 4.53%, 8.53% and 5.06% respectively, which will decrease by 5.03, 2.09, 4.95 and 4.31 percentage points respectively compared with the proportion in the first half of 2023.
At the same time, China Merchants Bank pointed out in the first quarter report of 2024 that in the first quarter of 2024, China Merchants Bank's agency insurance income was 2.524 billion yuan, a year-on-year decrease of 50.28%, and the proportion of fee and commission income decreased by 3.31 percentage points to 11.32% compared with 2023.
On the whole, in the short term, the agency insurance income of commercial banks in 2024 will be greatly affected under the influence of factors such as "integration of newspapers and banks". However, in the medium and long term, the increase in the marketization of insurance products distributed by banks will promote the healthy development of the market, which will help commercial banks and insurance companies expand the scope of cooperation, promote long-term and in-depth cooperation, explore new paths for transformation and development, and effectively improve the comprehensive operation ability of customers. At the same time, as the position of the banking channel becomes stronger, the insurance agency fee may also rebound in the medium to long term.
Annotation:
[1]资料来源：《国家金融监督管理总局关于商业银行代理保险业务有关事项的通知》[EB/OL]，2024/5/9[2024/5/10]，https://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=1161126&itemId=928。
[2] 资料来源: 《中国银保监会办公厅关于印发商业银行代理保险业务管理办法通知》[EB/OL], 2019/8/28[2024/5/10], https://www.gov.cn/xinwen/2019-08/28/content_5425215.htm.
[3]资料来源：《国家金融监管总局再发文，必要时向银行延伸检查！》，金融时报[EB/OL]，2024/1/23[2024/5/10]，https://baijiahao.baidu.com/s?id=1788859842580659866&wfr=spider&for=pc。
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