Atlas Magazine December 2003

The New Insurance Distribution Networks: Banks and Postal Services are the unannounced guests of the Insurance Sector

Following the example of many countries, Tunisia has recently passed a law authorizing banks and postal services to sell life products.

This market opening, that favors already powerful economic actors, introduces an important change in the mode of distribution of the insurance product. The postal services alone have more than 1 000 sales points throughout the country. However, the opening is limited to the life sector.

Morocco, that is currently legislating on this question too, intends to limit the bancassurance perimeter to person insurance products.

Whether in Tunisia, in Morocco or elsewhere, insurance distribution networks are developing. Insurance companies, through their underwriting offices or general agents, will have now to take into account the new partners.

Banks and postal services alike have important means and highly sophisticated management tools. Instruments such as automatic withdrawal and premium instalment can be decisive in the choice made by the insured.

Moreover, the trust vested in the new actors is higher than that granted to the traditional network, handicapped by a clumsy management of the motor insurance sector.

So long as bancassurance and postal services are limited to person insurance, traditional networks will have enough time to reorganize and reorient their activity toward this type of insurance, which they have neglected until recently.

An extension of the activity to damage insurance by the new networks will be fatal to several agents and brokers. Such a scenario means that in the long term, bancassurance and postal services might end up dominating the risk market.

When will insurance sales points be allowed? The bets are already open.

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