In the first half of the year, insurance companies paid significant commissions to agent banks

In the first half of the year, insurance companies paid significant commissions to agent banks, reaching up to 90% of the cost of policies sold in certain segments. This is caused primarily by increased competition for partner banks in conditions of concentration of the banking market. At the same time, with new measures by financial authorities to counter the imposition of insurance, these costs may increase. However, insurers remain profitable or compensate for losses by selling other products.

In the first half of 2023, the volume of commissions paid by insurance companies to banks increased by 75%, to 116 billion rubles, compared to the same period last year, follows from the Expert RA review. However, this result remained 12% lower than the same indicator in 2021. The main drivers of this growth were credit life insurance (growth by 89%, to RUB 49 billion) and accident and illness insurance (by 68%, to RUB 55 billion). This was mainly due to the rapid recovery of the consumer lending market (see “Kommersant” dated October 7), as well as the growing interest of credit institutions in high-margin commission products.

In particular, the commission of credit institutions in insurance against accidents and illnesses amounted to 89% of insurance premiums, in fees for credit life insurance, the share of banks was 64%. Commissions for insuring other property of citizens and insuring financial risks each accounted for 57% of insurers’ fees. According to independent expert Andrei Barhota, over the past three years the share of bank commissions in insurance premiums has increased by 5–10 percentage points. This is primarily due to increased competition from insurance companies for partner banks, he believes.

Insurers confirm the intensification of the struggle for agent services.

“Banks provide direct access to “warm” clients, therefore, an important and effective sales channel for insurers,” explains Igor Ivanov, vice president of RESO-Garantiya. At the same time, according to him, against the backdrop of the concentration of the banking market, “competition for partnerships with those who not only remain, but are developing and growing is intensifying.”

However, the large share of bank commissions in collections does not prevent insurance companies from making a profit. “The final cost of bancassurance products, which include credit insurance contracts, usually consists of the cost of the insurance service, which is determined by the insurer, and the cost of using the bank’s sales channel, which is determined by the bank itself. Therefore, the amount of the premium after settlements with the bank is usually sufficient to generate income from the provision of insurance services,” explains B1 partner Tatyana Samsonova.

In addition, insurance coverage for policies related to lending is quite limited, which is why the number of insured events and the loss rate for them is low, says Ekaterina Serova, director for ratings of insurance and investment companies at Expert RA. According to Vladimir Shur, director of Kept’s practice for working with financial sector companies, in the case of credit insurance, a company can operate at a loss, although the commercial sense of working with the bank remains, in particular access to its client base, cross-selling of more profitable products , the “status” of accreditation with a large bank, when profits can be generated by other products.

At the same time, the long-term history of banks imposing insurance on their associated insurers has once again attracted the attention of regulators.

In October, the Central Bank and the FAS wrote a letter recommending stopping such practices. However, according to experts, this may affect commissions by an even greater intensification of competition for partner banks and a further increase in their share in fees. Despite the fact that most insurers are already accredited by banks, such recommendations may lead to a change in sales patterns, Mr. Barhota believes. For example, banks may begin to redistribute insurance companies, offering clients in more marginal areas insurers with the highest commissions, the expert notes.

Yulia Poslavskaya