Among the insurers that are shortlisted to become DBS’ partner in a $1.5 billion bank distribution deal, experts say.
The bancassurance deal is the last major agreement of the same kind that will distribute products to the chosen partner exclusively for over 15 years. This is a deal which is made available for insurance firms to tap into the fast-growing insurance market in Asia.
DBS’s current partner Aviva Plc is also one of those firms shortlisted for the bank distribution deal which is expected to start next year.
Morgan Stanley was hired by DBS in 2014 to advise on the agreement and back then, it wasn’t made clear yet when the final selection will be made as to which firm would be chosen as an insurance partner of DBS.
DBS wants to choose just one insurance partner for the entire Asian market that it is currently operating in but to create competition and to have more flexibility, it has shortlisted other insurers too like FWD Insurance, Metlife Inc., and Canada’s Sun Life Financial Inc.
Two of DBS’s strongest markets—Singapore and Hong Kong, are seen profitable for insurers because of their current status as the main wealth management centers in Asia not to mention their aging populations. Aside from these two countries, DBS also has operations in Taiwan, Indonesia and India.
Unlike the traditional agency model, the bancassurance model is lucrative for Asia’s commercial banks because insurers around the globe are willing to pay expensive fees for them to gain access to the branch networks of the lenders.
The shortlisted insurance partners value this deal because this offers an exclusive access to the large branch networks of the bank across Asia and this provides an opportunity for them to sell to the customers of the bank inside the branches.
Since the largest retail banking networks of Asia like Citi, Standard Chartered and HSBC are already locked up, it leaves DBS as the last major partner that is available to insurance firms.