Senath Jayatilake, Chief Executive Officer, and Wathsala Aluthgedara, Chief Partnership Distribution Officer of Union Assurance, share insights into the company’s bancassurance strategy, positioning it prominently within the sector.
How does Union Assurance approach bancassurance and address the broad opportunities in the sector?
Senath: Life insurers provide comprehensive protection solutions tailored to meet diverse customer requirements, offering financial security against unforeseen circumstances. On the other hand, banks specialize in offering products and solutions that enhance financial access and empowerment. These two institutions address varying financial needs based on customer life stages. The collaborative model of bancassurance combines the strengths of insurers and banks, offering customers comprehensive one-stop-shop financial solutions through their trusted banking partner. Bancassurance accounts for over 50% of total insurance sales in many major markets.
The company effectively utilizes this model by collaborating with our key bank partners to provide customers with comprehensive financial security while also enriching their financial well-being. Leveraging our extensive experience of over 37 years in life insurance, we are proud to lead in Sri Lanka’s bancassurance sector, extending our reach across all parts of the country.
Furthermore, to propel this model forward, we will continue to innovate and customize our insurance product offerings and distribution models in collaboration with our strategic bank partners to jointly provide Sri Lankan banking customers with the most innovative and comprehensive protection solutions in the market.
Could you share the key strategies that have prepared Union Assurance to be the leader in bancassurance?
Senath: Two key strategic focus areas have contributed significantly to our success in the bancassurance sector.
The first strategic focus revolves around deep engagement and integration with our bank partners. Currently, we are operational in 7 of the 12 private banks in the nation and have been active in the bancassurance field for over 13 years. Given our long-standing experience in the Sri Lankan bancassurance sector; working with multiple partners across a diverse customer segment, we have acquired the technical know-how and expertise, infrastructure, and business agility to cater to the varying requirements of the Sri Lankan market.
We focus on developing product propositions that are not only tailored to these needs but also align seamlessly with each partner’s unique ecosystem. This approach has been instrumental in enhancing our penetration in the bancassurance market.
The second strategic focus is our continuous evolution in product development. We have consistently been at the forefront of innovating life insurance solutions. Our offerings go beyond basic protection; they include structured protection with a robust savings platform, enhanced protection features, and comprehensive health covers. This approach ensures that our solutions evolve in tandem with the changing needs of our customers.
Could you share insights into how partnerships with various banks have been cultivated and how the partnerships have contributed to the success of winning bancassurance services?
Senath: Our approach to managing the partnership ecosystem is highly customized and partner-centric. We recognize that each of our banking partners has a unique customer base, influenced by factors like the types of solutions they focus on and the profiles of their key customer segments. Therefore, rather than offering a one-size-fits-all solution, we tailor our solutions specifically to fit the unique ecosystem of each partner.
This tailored approach involves close collaboration with our partners and their bancassurance teams. A key aspect of this collaboration is the ongoing effort to educate the customer base on the need for life insurance solutions to protect their financial future and the role life insurance plays in building a stable financial ecosystem for each customer. By doing so, we strengthen the value proposition of life insurance, ensuring that customers receive the most relevant and complete information and can make more informed decisions on their protection solutions.
Can you highlight how Union Assurance collaborates with banks to ensure optimal value for stakeholders?
Wathsala: We are the leading bancassurance provider in Sri Lanka, excelling in both volume and branch footprint. The strategic partnerships that we enter into with our banking partners are focused on value creation for the customers we serve and therefore require the adoption of the right operating models to identify customer needs and provide tailor-made solutions.
Fundamental to our approach is a customer-centric focus, wherein we meticulously craft protection solutions tailored to the diverse needs of various bank customer segments. Our commitment lies in offering solutions that transcend the one-size-fits-all paradigm, providing customers with unparalleled convenience, trust, and loyalty. Through these partnerships, banks not only gain the advantage of an expanded, non-traditional product portfolio but also position themselves as a one-stop-shop for comprehensive financial solutions. Thus, this strategic alliance adds substantial value to every stakeholder, fostering equitable benefits for the bank, its customers, and our organisation alike.
What is your outlook on the bancassurance sector, and what are the company’s plans for growth?
Wathsala: Although the World Bank forecasted a contraction in Sri Lanka’s GDP for 2023, it is followed by positive sentiments of an economic recovery this year. Despite challenges from the Easter attacks, COVID-19, and the financial crisis, the market has already begun to show positive signs of growth. The life insurance industry grew by 11% in Gross Written Premiums as of the third quarter of 2023, with Union Assurance outperforming the market at 14%.
In Sri Lanka, bancassurance is still at a nascent stage compared to global standards but is becoming increasingly popular, contrasting with more mature markets in Europe and East Asia. As the market leader, Union Assurance sets industry standards, boasting the highest volume in bancassurance and the largest footprint across bank branches.
At present, the economic climate remains challenging with lower disposable incomes, rising taxes, and depleted savings alongside escalating health costs impacting financial stability, this also underscores the vital need for security and protection, further emphasizing the role of life insurance.
Looking ahead to 2024 and beyond, Union Assurance plans to continue leading with industry innovations and forming new partnerships and is optimistic about driving the growth of bancassurance in Sri Lanka.