In 2023, the supervision of the bancassurance channel will become more and more stringent, from the predetermined interest rate from 35% down to 30%, to the reduction of bancassurance channel commissions, and then to the recent issuance of the "Notice on Regulating Insurance Products by Bank ** Channels" (hereinafter referred to as the "Notice") issued by the State Administration of Financial Supervision and Administration to a number of life insurance companies to restrict the commissions of bancassurance channels. The "Notice" emphasizesThe commission fee of the bancassurance channel needs to be strictly "integrated with the newspaper and the bank".
What is "newspaper and bank integration"?
To put it simply, the "integration of reporting and banking" means that the level of fees reported by insurance companies to the regulator should be consistent with the actual cost level implemented. The Circular requires that the cost assumptions should be prudently and reasonably determined when designing insurance products distributed by banksWhen filing, the cost assumptions, fee structure, and commission ceiling are clearly stated in the actuarial report of the productWhen paying, the actual expenses such as commissions should be consistent with the filing materials.
In actuarial science, the total premium includes the net premium, additional premium, etc. The additional expenses include various administrative expenses, commissions, taxes and other expenses of the company. When the surcharge ratio is assumed to be significantly lower than the actual selling expenses, the total premiums collected will be lower than the actual total premiums payable, resulting in a loss of fee differences, which is not conducive to the company's long-term and sustainable operation. In layman's terms, if the integration of newspapers and banks is not implemented, insurance companies may face a situation of reduced actual premium income caused by huge marketing expenses. In the long run, it seems that the book size premium has risen, but it is not conducive to the long-term sustainable and stable development of insurance companies.
Why should the regulatory authorities implement the "integration of newspapers and banks"?
On a micro level,The "integration of newspapers and banks" is a starting point for the regulatory authorities to manage insurance companies, which can avoid the aggressive operation of insurance companies.
From the perspective of the three elements of insurance product research and development:
Predetermined Interest Rate:It is the risk-free rate of return (IRR) of the premium. In recent years, the predetermined interest rate has been 35%-3.0%, which is common to the entire industry, so there is no difference.
Predetermined incidence:Refers to the probability of risk occurrence, the booking incidence rate directly affects the protection cost of the policy, the higher the probability of occurrence, the more expensive the premium. For example, the younger and older the insured person is, the more expensive the premiums are. Risk rates are based on industry-published life cycle schedules, so there will be no significant differences between companies in terms of predetermined rates.
Predetermined surcharge rate:Reflects the operating costs of the insurer and has a direct impact on premiums or coverage liability. Taking increased whole life as an example, there are hundreds or thousands of increased whole life insurance policies on the market, all of which have a predetermined interest rate of 30% of the product, why is there a difference in cash value or revenue to the customer?In fact, the main difference between the products is the predetermined surcharge rate. And this is also the focus of the regulator's current requirement of "integration of newspapers and banks". It is also fundamental to avoid the aggressive operation of insurance companies.
Secondly, in a more macro contextThe regulator's promotion of the "integration of newspapers and banks" is to maintain the stability of the entire insurance industry, which is the foundation of the development of the insurance industry.
In the insurance industry, there has long been a vicious competition of "commissions for premiums". The differences in the products of various insurance companies are getting smaller and smaller, and the homogenization phenomenon is very serious, and some companies, especially small and medium-sized companies, in order to stand out in the fierce market competition, are guided by the best advantages to attract customers. However, this practice has become the fuse of vicious competition in the industry, or raising the handling fee and high rebates;Either to maximize the benefits of the product side;Either engage in some marketing plans, signing gifts, etc. to attract and promote customers. This virtually increases the operating costs of insurance companies and destroys the healthy competition between insurance companies. The implementation of "integration of newspapers and banks" will help all insurance companies reduce illegal arbitrage, malicious surrender, sales and other phenomena, help improve business efficiency, and promote the healthy development of the industry.
The impact of the implementation of "integration of newspapers and banks" on the whole industry
Significantly reduce the intermediary fee rate and truly reduce costs and increase efficiency
The "integration of newspapers and banks" can not only make the handling fees of insurance products more standardized, more reasonable, and more transparent, but also avoid vicious competition between insurance companies. At the same time, it can also protect the rights and interests of consumers, improve the fairness of the market, and make the entire industry more stable and sustainable.
2.Influencing the development momentum of the industry
The leading companies may rely on their comprehensive advantages in risk control, brand, and products to play a better role under the "integration of newspapers and banks" under the strengthening of supervision, and at the same time rely on the resources accumulated in the past to gain more high-quality and high-contribution customers, so as to further increase their market share.
For the bancassurance channel, the commission is reduced;Savings insurance is so popular that it is limited;Up to now, the regulatory authorities have strengthened the concept of "integration of newspapers and banks", bancassurance is once again facing development choices and value reconstruction, and the in-depth integration and marketing revolution between banks and insurance companies have also been put back on the agenda.
Against the backdrop of these challenges, the bancassurance industry must re-examine its development choices and value reconstruction. Banks and insurers need to be more deeply integrated and revolutionized in marketing to adapt to new market conditions and regulatory requirements. Only in this way can we ensure the sustainable development of the bancassurance channel and provide better services to customers.