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[November 07, 2012]
The RDR provides long-term opportunities for bancassurers
Nov 07, 2012 (Datamonitor via COMTEX) -- The RDR will place a heavy burden on the bancassurance channel as a result of upskilling and the decision to become either independent or restricted in how they offer advice. However, because of their size, banks are in a better position to adapt to the trend towards higher regulatory standards than other distribution channels.
In addition to already benefiting from cross-selling opportunities, banks are well placed to capitalize on the Retail Distribution Review (RDR) as a competitive alternative to independent advisors. Banks are seen as providing a full range of services to customers at no extra cost, including insurance add-ons to bank account customers, and as such have a competitive advantage over independent financial advisors (IFAs). However, some consumers may place a high value on the "independent" tag, which would limit bancassurers' ability to compete directly with IFAs for the same groups of customers.
Given that their advisors must be trained to the same high qualification level as those of IFAs, bancassurers will be able to pass on a genuine difference in the price of advice due to the economies of scale within the bancassurance model. This is because bancassurers will have opportunities to negotiate significant discounts from a select group of providers, making them attractive to retail and mass market customers.
While the RDR is expected to see IFAs struggle to retain continuous streams of revenue through commission, the bancassurance channel will be a sustainable distribution model in the long term. Therefore, bancassurers should embrace the opportunities that the RDR presents to continue growing new business and market share within the life insurance market.
For further information, please read the forthcoming Datamonitor brief "UK Bank Distribution of Protection, Long-Term Investments, and General Insurance" or contact Lauren Kennedy at email@example.com.
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