"Big time" means wanting to land among the top five out of the 39 life insurance companies in the Philippines by 2009.
After all, PELAC is a joint venture between the Philippine American Life and General Insurance Co. (Philamlife), the country’s leading life insurance firm, and Equitable PCI Bank, the country’s third largest commercial bank.
PELAC will specialize in selling its policies through the client base and branch network of the bank said to reach over 400 nationwide.
"We want to be ranked among the top five life insurers in the next five years," said PELAC president and chief executive officer Carl Gustini.
That means PELAC must generate nearly P2 billion in gross premiums or an average of P400 million in first-year premiums by 2009.
As of end 2002, Manufacturers Life Insurance Co. was ranked fifth overall in terms of premium income, which stood at the vicinity of P1.6 billion. Sixth spot is occupied by Ayala Life Assurance recording a premium income of P1.3 billion.
PELAC targets 160 operational tables in each of the first 160 bank branches including one financial sales executives (FSE) by end 2004. By end 2005, all the 400 bank branches should have an FSEs in place.
Since its started operations in December last year, the first batch of FSEs already sold 100 policies.
Gustini pointed to the crucial support given by Equitable Bank and Philamlife that would mark the success of the newest member of the country’s life insurance industry. Plus the global network and experience in bancassurance of the American International Group (AIG), the parent company of Philamlife.
"We will also be customizing insurance products that would compliment the bank products of Equitable Bank as well as introducing innovative products such as US dollar-based insurance products and an education-based insurance product," the PELAC president explained.
It would also take shots at other alternative distribution channels although bancassurance will remain its principal and majority bread-and-butter.
The life insurer that first successfully launched bancassurance was John Hancock Life Insurance Corp. on an alliance with Solid Bank Corp. However, Solid Bank was acquired by the Metrobank Group which was operating both life and non-life insurance companies.
The most recent "success" story in bancassurance is the case of the Philippine Axa Life Insurance Corp. (PhilAxa Life), a subsidiary of the Metrobank Group. It started utilizing bancassurance with the extensive branch network of the Metropolitan Bank and Trust Co. (Metrobank) over two years ago.
In 2002, 60 percent of PhilAxa Life’s first-year premiums came as a direct result of bancassurance. The insurer expects the same to account for almost 70 percent of first year premiums in 2003.
Bancassurance is an alliance between a bank and an insurer wherein the insurer taps the bank’s branch network and client base to market and sell its products.
Meanwhile, Gustini said that they are urging the Bangko Sentral ng Pilipinas (BSP) to reconsider the inclusion of thrift banks in its cross-selling regulation. The regulation is basically bancassurance but from the point of view of banks.
The BSP ruling allows only commercial banks to practice cross-selling, that is, the subsidiary of the commercial bank can sell its products through the bank’s branch network. However, the commercial bank must have at least five-percent equity control of the subsidiary.
The PELAC official pointed out that banc-assurance is practiced all over the Asia Pacific region, and the practice does not prejudice any bank, foreign or local, commercial or thrift banks.
"The bank is like the shopping mall, it is only the venue with the burden of responsibility to the public laying on the shoulder of the insurer," they added. – Ted Torres