Several banks are feeling pressure from trying to ensure that bancassurace sales would kick off to a good start in the New Year.
The pressure stems from the fact that there is a shortage of short-term savings products from insurers and the increased attention paid by banks to agents. If a bank fails to serve customers well, it runs the risk of the customers turning to rival banks. At the same time, counter staff are apprehensive of selling long-term insurance products.
One reason for this is that the CIRC has cracked down on short-term high cash-value insurance products which were wildly popular in 2014-2016.
A review shows that policies to be paid in a single premium or over the short term will dominate insurance products to be sold in the first quarter of next year, reported Securities Daily.
To strike a balance between wealth management products and adhering to the CIRC line, one bank which markets the products of eight insurers says it will focus on single-premium five-year policies and “pay for three years and covered for five years” policies. Among the 20 insurance products marketed for the eight insurers, eight are single-premium five-year policies.
In preparation for a good start to 2018, some insurance companies have been testing their products to ascertain how well they would sell so that more focus can be placed on the best selling policies.
Apart from the tenure of the insurance products planned for next year, yield rates will also fall. Annualised yields on the 20 bancassurance products to be sold by the one bank will be 4% for 11 policies and more than 4% for only two products. The other five products will offer a yield of less than 4%. Previously, before the CIRC crackdown, yields were often higher than 5%, reaching even 7% in some products.
A CIRC regulation dubbed Circular 134, which took effect on 1 November, banned insurers from issuing universal insurance or investment-linked products as riders, thus weakening the attractiveness of insurance policies relative to wealth management products offered by other financial institutions.
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