Economic Observer reporter Wang QingFollowing the two issuances in the second half of 2023, the State Administration of Financial Supervision and Administration recently issued the Notice on Matters Concerning the Regulation of the Banking Channel Business of Life Insurance Companies (hereinafter referred to as the "Notice") to insurance companies, further clarifying and refining the relevant requirements for the "integration of reporting and banking" in the banking and insurance channels from various aspects such as insurance companies' design and filing of products, improving the construction of internal control mechanisms, strengthening supervision and management, and strengthening off-site supervision and on-site inspections.
The current situation is to do the same work as in the past, but the commission that can be received is greatly reduced. However, despite the reduction in the commission rate, insurance is still one of the products that our wealth managers are more actively selling. Li Shang, a joint-stock financial manager in Shanghai, said in an interview with reporters on January 25, 2024.
Li Shang explained that first of all, under the downward trend of long-term interest rates, insurance is still the preferred allocation product for customers with stable risk appetite. Insurance can lock in long-term or even lifetime returns, with a predetermined interest rate of 30% or 2Compared with other products, the 5%+ dividend insurance product still has the advantage of stable income, and at the same time meets the needs of customers in various aspects such as pension and wealth inheritance. Secondly, the median income of insurance business is still relatively high compared with other wealth products. Wealth managers need to increase their performance income through insurance and still have the motivation to start insurance sales.
Bidding farewell to the fee-driven model of the past, how will the business logic of the bancassurance channel change?
The whole chain of bancassurance business is re-standardized
The so-called "integration of newspapers and banks" means that the surcharge rate of the insurance company is consistent with the actual expense rate when it reports on the terms and conditions, and the most important part of the expense rate is the handling fee paid to the sales channel or the commission of the salesperson.
In the past, due to the serious homogeneous competition in the life insurance industry, the cost management of insurance companies was generally more extensive, resulting in the actual cost exceeding the level of product filing, and there was a situation of "inconsistent reporting". "Inconsistencies in newspapers" not only disrupt the market order, but also the root cause of problems such as false fees, false insurance, and false surrender, and it is also the soil that breeds "black industry". Based on this, the regulatory authorities to strengthen the "integration of reporting and banking" of products is also the only way to promote the industry's accounting operation and strengthen management.
Based on the current financial and actuarial supervision system, the "Notice" refines the bancassurance channels from five aspects: standardizing product design and filing, improving the construction of internal control mechanisms, strengthening internal supervision and management, strengthening off-site supervision and on-site inspection, and giving full play to the strength of multiple organizations.
Among them, the "Notice" requires insurance companies to scientifically and prudently formulate assumptions and list the term and structure of the surcharge rate, and clarify the total cost level available at the surcharge rate, including the commission rate paid to the bank, the salary incentive of the bancassurance specialist, the training and customer service fee, and the shared fixed fee, of which the commission rate should be listed as the upper limit.
In fact, in August 2023, the State Administration of Financial Supervision and Administration issued the "Notice on Regulating Insurance Products of Bank ** Channels", which clearly stipulates that the handling fee rates of bancassurance channel insurance products for single payment, 3-year payment, 5-year payment, and 10-year payment are strictly limited to within %.
At the press conference on the data and information of the banking and insurance industry in the third quarter of 2023 held on October 20, 2023, the relevant person in charge of the life insurance supervision work of the State Administration of Financial Supervision and Administration said that up to now, through full communication between insurance companies and banking institutions, the vast majority of banks that carry out bancassurance business have re-signed contracts with insurance companies in accordance with the "integration of newspapers and banks". According to preliminary estimates, the commission fee of the bancassurance channel has decreased by about 30% compared with the previous average.
In an interview with reporters, a person from a city commercial bank said that since the issuance of the regulatory document last year, most banks have actively implemented the relevant requirements, and the handling fee rate of all insurance products is strictly limited to 14% for single payment and 18% for 10 years and above. Under this standard, it is expected that the average insurance handling fee rate in 2024 will be reduced by 30%-40% compared with last year.
The notice also clearly divides the responsibilities of the head office and its branches for the first time in the implementation of the "integration of newspapers and banks" by insurance companies. Insurance companies are required to strictly enforce financial discipline, strengthen the management of the authenticity of expenses, strictly regulate the payment of commissions, and the commissions paid to the bank's ** channels shall not exceed the upper limit of the listed commission rate.
In addition, in order to put an end to the long-standing problem of "small accounts" in the bancassurance channel, the "Notice" also requires that insurance companies shall not directly or indirectly pay any fees other than commissions to the bank's ** channel in the name of billing fees and information fees.
For the "Notice" issued this time, a number of industry insiders said that through the implementation of the "integration of newspapers and banks", it can effectively standardize the business of bancassurance channels, prevent disorderly competition, and promote the return of the industry's commission level to a scientific and reasonable level. At the same time, it is also an important measure to protect the legitimate rights and interests of insurance consumers, which will help to reduce the cost of bancassurance business, improve the quality of liabilities, strictly control business chaos, and promote the long-term healthy development of the industry.
Zhou Jin, PwC China Financial Management Consulting Partner, believes that the internal control and compliance management systems of insurance companies should play a role in the implementation of the "integration of newspapers and banks", and all units at all levels should work together. Specifically, the board of directors of the company bears the ultimate responsibility for compliance management, and the management and headquarters assume the management responsibility for formulating, guiding and supervising; The branch is the executive unit and assumes the responsibility of the first line of defense for risk control and compliance. In the event of a violation, regulatory penalties can affect the company as a whole, so organizations at all levels are held accountable.
How enthusiastic are the banks in sales?
In Li Shang's view, after the official implementation of the "integration of newspapers and banks", will the interest rate be 3 like the scheduled in 2023It is not known that the 5% reduction in products will lead to the suspension of product sales in batches, but even if not all products are taken off the shelves, there is a high probability that a batch will be removed from the shelves.
After the policy is implemented, the insurance companies that can survive will operate more steadily and safely. However, under the reshuffle of the industry, the number of employees has decreased, and even if the production capacity of a single person increases, the sales performance of insurance companies will inevitably decline. In this case, if the insurance company is unable to balance the relationship between the workforce and the cost of the product, then there may be a price increase in the product. Therefore, for customers who are planning to buy, we still recommend that you can prepare as early as possible and do not miss it easily. For customers who have no intention of purchasing, it is also recommended to remain rational, do not blindly get on the car, and sort out their own financial arrangements before deciding whether to allocate them. Li Shang said.
It is worth mentioning that despite the reduction in the fee rate, there is still a slight increase in the sales volume of some bancassurance compared with last year.
In this regard, the above-mentioned city commercial bank analysis said that this is mainly based on two reasons: first, the customer's investment preference is more conservative, and the acceptance of insurance is constantly improving; Second, through the team building in the past two years, the financial manager's awareness and sales skills of insurance have been further strengthened, which has formed a good sales atmosphere between customers and financial managers since the beginning of this year.
Subsequently, in the process of continuous promotion and implementation of the "integration of newspapers and banks" policy, what path should banks adopt to optimize their operations?
The above-mentioned city commercial banks said that the first is to enrich the product shelves and introduce large-scale insurance products such as personal pension and commercial pension. It can not only meet the general pension reserve and supplementary needs of customers, but also increase the scale of insurance through such products. Secondly, strengthen personnel skills, optimize the structure to guide long-term delivery. Starting from the second quarter, we will establish a hierarchical training mechanism for personnel in the industry in accordance with the industry's insurance grading policy, and continuously strengthen the sales skills of personnel at different levels, especially to guide the sales of long-term products with functions such as pension and wealth inheritance. In addition, make good use of value-added services to increase the attractiveness of product sales through services. Insurance companies have abundant service resources in medical care, pension and education, and in the future, our bank will integrate and optimize different types of value-added services to provide diversified starting points for insurance sales through high-quality services.
In fact, in the context of the regulatory heavy-handed rectification of bancassurance channels, short-term commissions and handling fees are inevitable, and in the future, how to redistribute benefits between insurance companies, consumers and channels, different insurance companies and intermediary companies will have different response strategies.
In this regard, the relevant person in charge of Taiping Life Insurance said that after the implementation of the "integration of newspapers and banks" by a provincial branch of Taiping Life, the number of cooperative bank outlets increased by about 20%. From 2 to 15 January 2024, Taiping Life's bancassurance term premium increased by 5% compared to the same period last year. At the same time, the company actively develops bancassurance channel participating insurance products. As of January 17, the company's 2024 bancassurance channel participating insurance premium has exceeded that of the whole year of 2023. In the future, the company will continue to improve the bank's supply capacity, network in-depth operation ability, resource coordination and integration ability and professional ability of the team, and optimize the basic law of bancassurance channels to promote the tilt of resources towards excellent performance.
An insurance intermediary company told reporters that the promotion of "newspaper and bank integration" has a great impact on intermediary companies with high fees and low profit models. After the homogenization of intermediary product fees, insurance companies with brand advantages, the number of institutions, and value-added services will stand out in the intermediary market, and the market will usher in a reshuffle.
It is reported that at present, the proportion of fixed costs of traditional intermediaries in revenue has exceeded the surcharge rate of pricing under the "integration of newspapers and banks", and these costs are rigid expenses. In this context, no matter how the basic commission law is adjusted, it is difficult to keep up with the previous level, coupled with the heavy management costs of institutions, some insurance intermediaries have to take the initiative to face and make changes.
For Internet platforms, when the cost of the first year drops and the first person cannot get the high commission, the loyalty to the platform will decline, and the company will switch to an insurance company or insurance brokerage company with brand advantage or team empowerment advantage; For platforms with to C (consumers) as the main profit model, the customer acquisition cost of such platforms is extremely high, and their profitability is still insufficient in the past to subsidize the delivery cost through the first year's commission. After the implementation of the 'integration of newspapers and banks', the commission cannot be used to compensate for the delivery costs, which is likely to directly lead to losses. The above-mentioned intermediary said.