THE BANGKO Sentral ng Pilipinas will require thrift banks to own at least 5 percent of insurance firms they will partner with for the purpose of cross selling financial products.
This was according to BSP Deputy Governor Nestor Espenilla Jr., who said the bancassurance rules that will apply to thrift banks will be the same as those currently observed by universal and commercial banks, which are required to have a minimum 5-percent share in insurance firms they have partnerships with.
Bancassurance refers to the practice of banks selling insurance products. Currently, only universal and commercial banks are allowed to engage in this type of activity. Soon, however, thrift banks will be allowed to do the same.
“The [cross selling] framework for thrift banks will have to be the same as those for universal and commercial banks,” Espenilla said, adding that the guidelines covering the cross selling of insurance products by thrift banks will be released by the BSP early next year.
He said the draft guidelines had already been circulated among industry members, and the BSP is already in the process of consolidating their inputs.
Requiring banks to have a stake in insurance firms they have bancassurance agreements with is intended to help ensure banks will exercise accountability over the products they will sell, Espenilla said. If banks are to sell insurance products, the central bank official added, they must share with the insurance firms the responsibility over the quality of the products.
The decision to allow thrift banks to engage in bancassurance is aimed at making insurance products more accessible to average Filipinos. Regulators noted that thrift banks, which are bigger in number and are more geographically scattered, have a wider reach of consumers.
Moreover, allowing thrift banks to sell insurance products is consistent with the goal of increasing the penetration rate of the insurance industry in the Philippines.
Currently, only 4.5 percent of Filipinos are covered by insurance, according to industry estimates.