Money

HSBC insurance unit to strengthen bank sales outlets

By Gao Changxin (China Daily)
Updated: 2011-04-14 14:29

SHANGHAI - HSBC Insurance will continue to drive its growth in China through bank insurance, the insurance arm of HSBC Holdings Plc said on Wednesday.

Bank insurance, often called Bancassurance, is a partnership between a bank and an insurance company to sell insurance products through the bank's sales channel.

"Bank insurance is our main business model in China and we will continue growing through that model," said Lao Jianrong, chief executive officer of HSBC Life Insurance Co Ltd, the China-based unit of HSBC Insurance (Asia) Ltd.

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On Wednesday, HSBC Life Insurance announced that global insurance revenue grew 33 percent to $3.3 billion in 2010. Business in Asia contributed more than half of the insurer's profit, registering a rise of 39 percent year-on-year.

HSBC Life Insurance currently has 31 bank insurance sales outlets nationwide, in partnership with HSBC Bank (China) Co Ltd, Hang Seng Bank Ltd and Bank of Communications Co Ltd. Sales through these outlets accounted for 85 percent of the insurer's business in China in 2010.

"Negotiations are ongoing with banks to strengthen partnerships with the existing bank partners and expand bank insurance sales networks," said Lin Lixia, head of the bank insurance department.

Currently, all the outlets are in the city of Shanghai and the insurer plans to launch businesses in other eight cities nationwide by 2014, according to Lin.

Bank insurance has been gaining momentum in China in recent years because the sales model allows insurers to maintain smaller direct-sales teams and utilize the banks' customer bases.

In 2010, China Life Insurance Co, China's biggest insurer by premiums issued, saw half of its 318 billion yuan ($48.66 billion) premium realized through bank insurance.

Su Hengxuan, vice-president of China Life Insurance said last month that bank insurance accounted for 52 percent of the total premium in the nation's life insurance sector.

However, along with the rapid development of bank insurance, some sales irregularities, such as misleading sales and commercial bribery, also surfaced.

By way of response, the China Banking Regulatory Commission issued a policy in November barring insurance company employees from conducting business through banking outlets nationwide.

While some insurers registered sluggish premium growth in the first quarter, Lao said HSBC Life Insurance's performance hasn't been greatly affected by the imposition of new rules.

"We hadn't engaged in any malpractices, so the rule won't affect us."