Pelac is a joint venture between Equitable PCIBank and the Philippine American Life and General Insurance Co. (Philamlife).
Carl Gustini, Pelac president and chief executive officer said that its target of 160 bank branches outlets means that it should have 160 financial sales executives (FSEs) by the same period, or one FSE for every branch of Equitable PCI Bank within and outside of Metro Manila.
"In fact, we would like to have 95 FSEs in 95 branches by end March next year," Gustini said. Ultimately, Pelac would want to have an FSE in each of the 400 or so branches of the bank, considered that third largest commercial bank in the country.
The first batch numbering 31 FSEs, are already operational at the start of December this year. They reportedly initiated over 200 interviews and appointments with bank customers.
Gustini said that the American International Group (AIG) and Pelac set an achievable short to medium term target of 10 percent of all its business being written from the alternative distribution system.
"In the Philippines, that is a tall order from the standpoint of what has been achieved by Philamlife, and as it is a start-up period for Pelac," the Pelac chief executive said. "That is nonetheless a healthy number!"
The 31 operational underwent a one-month training period and fielded in 31 prominent branches of Equitable PCI Bank in Metro Manila. A second batch of 26 is presently finishing a similar training program.
Each FSE receives a basic wage rather than a commission typical of sales agents. The reason for this is quality over quantity.
"We would like to get to the bottom of the financial needs of the bank customers. Needs driven, not sales-driven is how we want them. They are financial consultants for the long terms needs of the bank customers," Gustini added.
Pelac was formed when Philamlife acquired 95 percent of Equitable Life, then a subsidiary of the commercial bank. Equitable PCI Bank retained five percent of the Pelac thus allowing the insurer to sell its life insurance products within the bank’s branch premises.
Under a circular of the Bangko Sentral ng Pilipinas (BSP), only commercial banks can sell products of its subsidiary if it holds a minimum equity share of five percent of the said subsidiary.
The bank regulator calls it cross-selling while its is commonly known as bancassurance in the insurance industry.
Since the bank retains a five-percent equity, it would want the program or bancassurance to succeed. The bank would then put the alternative marketing practice as part of its strategic plan. Insurance products then become one of their consumer banking products.
Equitable PCI Bank wants to be "a one-stop shop," that means all the bank customer’s needs are catered for, including financial planning and risk needs.
The leading advocate of bancassurance today is the Philippine Axa Life Insurance Corp. (PhilAxa Life), a subsidiary of commercial banking industry leader, the Metropolitan Bank and Trust Co. (Metrobank).
PhilAxa Life claims that more than half of its first-year premiums in 2002 were a direct result of the alternative sales practice with Metrobank.
Other insurers that have initiated bancassurance and their banking partners are: Ayala Life Assurance Corp. (Ayala Life) with the Bank of the Philippine Islands (BPI); Insular Life Assurance Corp. (Insular Life) with the Union Bank of the Philippines (Union Bank); New York Life Assurance Corp. (New York Life) with Allied Banking Corp.; the Great Pacific Life Insurance Corp. (Grepalife) and Nippon Life Assurance Corp. (Nippon Life) with the Rizal Commercial and Banking Corp. (RCBC).