Union Bank, Insular Life in bancassurance deal

Aboitiz-led Union Bank of the Philippines and homegrown insurer Insular Life Assurance Co. Ltd. have resolved to become a “game-changer” in the bancassurance industry and gain market leadership by pursuing this business differently from the early birds.

The partnership allows Insular Life to tap Union Bank’s six million customers and 300 branches in selling life insurance products without creating a new joint venture (JV) company. The cross-ownership requirement has been addressed by Insular Life’s long-time 16.21 percent stake in the bank.

The pair decided to adopt the bancassurance model used by DBS-Manulife partnership in Singapore. Insular Life chief executive officer Nina Aguas said: “It’s a very strong bancassurance agreement but it’s not a JV. It’s also waste of capital if we will put capital and they will put capital. We already invested in one (insurance company),” she said.

The money that both companies will otherwise shell out to create a new corporate entity could instead be used to hire more quality manpower and invest in their training, Aguas said.

“We have a late-comer advantage because we’re learning from the mistakes of others. When there’s a JV, because there are people that you put there (to sell insurance in bank branches), it’s like a revolving door. They feel like second class citizens…but this one we have ownership of the people on both sides,” Aguas said.

The partnership seeks to offer “real financial advisory” similar to how financial advisers privately perform needs analysis of valued clients, said Omar Cruz, the chief bancassurance executive of Insular Life.

“Just like in private banking, there is no need to cross the banking world because everything is within the banking premises. And this is made possible by this model where the financial advisors, the relationship managers (RMs), even the senior RMs and sales directors who do the selling are actually licensed, certified and trained financial advisors and employed within the bank. So therefore, they are subjected to what I call the rigors of sound banking practices,” Cruz said. “I think this is a big game-changer in the market.”

Critical to the success of such model, Cruz said, would be proper recruitment of people within the bank and investing in professional training of these bank personnel. “The intention is to raise the bar in selling professionalism to the global standard,” Cruz said.

Another key difference is that instead of pushing specific products, Cruz said variable unit-linked (VUL) products would be designed based on the client’s need at any stage in life.
VUL is a unit-linked protection plan where benefits are linked to the returns of one’s chosen investment fund which in turn is dependent on prevailing market conditions. —DORIS DUMLAO-ABADILLA