The Ministry of Finance, Planning, and Industry’s Financial Regulatory Department has approved a plan by two insurance joint ventures to offer bancassurance products under a pilot project following the liberalisation of the insurance industry in Myanmar.
“We are preparing to release the rules and regulations for offering bancassurance in the domestic market. For now, we have approved KBZ MS General Insurance and AYASOMPO to offer bancassurance distribution channels under a pilot project,” U Zaw Naing, director general of the Financial Regulatory Department told The Myanmar Times.
KBZ MS is a joint venture insurance company between between IKBZ Insurance and Japanese insurer MSI, while AYASOMPO is a joint venture between AYA Myanmar, and Japanese insurer Sompo. Bancassurance is the selling of life assurance and other insurance products and services by banking institutions.
“There are a lot of domestic retail banks in strategic areas in the country. Bancassurance makes obtaining insurance more accessible via the banking network. We are looking at bancassurance to become a distribution channel to support development of the insurance market in Myanmar, ‘’ U Zaw Naing said.
Since the liberalisation of the market in 2019, some local insurers along with their foreign partners have been considering bancassurance as another option to serve the country’s insurance needs.
Based on 2016 analysis by The Foundation for the Advancement of Life and Insurance Around the World, the distribution share of bancassurance in selected countries represents 42.2 percent, and given the recent growth of bancassurance, the distribution share might converge to 50pc in the future, according to research commissioned by local insurer KBZ MS.
“This means that the total bancassurance channel in Myanmar could grow to K2 trillion (US$1.3 billion) if applied to the total projected insurance market in Myanmar by 2029,” the research showed.
During its launch in December 2019, KBZ MS shared that its strategy for this year will focus on building new acquisition channels such as an extensive network for bancassurance and also recruitment and training of financial advisers.
After the successful launch of KBZ MS’s first bancassurance collaboration with Myanmar Oriental Bank last August, KBZ MS said it would focus on reaching out to customers wherever it is convenient by establishing new partnerships with more local banks and other partners.
“The success of the bancassurance pilot by KBZ MS and Myanmar Oriental Bank was driven by alignment between the bank and KBZ MS from board level all the way to working level. Furthermore there was strong execution discipline and detailed tracking activities” said KBZ MS Commercial Head Mr Jyothish PM.
“A Test & Learn approach combined with our international bancassurance experience was also critical for our success,” he added.
The pilot project shows that Myanmar bancassurance even in its initial stages can produce figures of 10 policies per sales person per month compared to AXA Mandiri of Indonesia which set the best in region with 8-10 monthly polices sold per branch per month.
Anil Mancham, CEO of KBZ MS said: “In Myanmar, banks need to put in place a proper process to select their insurance partners to ensure that besides access premium, candidates are assessed against proper quality criteria.”
Mr Mancham added that bancassurance is an exciting new channel for banks in Myanmar that can generate significant incremental income and in the next five year.
AYASOMPO is able to contribute expertise our Myanmar joint venture will need to grow in the country, especially expertise in bancassurance based on our ground-level experience through distribution partnership with one of ASEAN’s leading universal banking groups, Sompo Japan Nipponkoa Insurance Inc Chief Representative Mr Keiji Okada, told The Myanmar Times last year.