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wAnalysis and prospects of the French bancassurance market
By Yanick BONNET, DISFA, IA, Senior Actuary, Managing director GEMA Pierre ARNAL, DISFA, IA, Consulting Actuary, Senior Partner, ACTUARIS

"Bancassurance" was created in France in the 70/80's, motivated by a new context of the life insurance market, new needs on the part of the consumers. The positioning of the banks permitted the"bancassurers" to exceed 60% of market shares in 2000. Since then, bancassurance has been highly successful, as today most of the major French banks have set up their own insurance companies, which take in a significant part of the life insurance market. This success coincided with a favorable taxation for life insurance products, as well as with the consumers' growing needs, in terms of middle andlong term savings, which were due to an inadequacy of the pension schemes in France. The links between bank and insurance have taken place through various ways (distribution agreements, joint ventures, creation of a company ex nihilo) and have given rise to a complete upheaval concerning marketing strategies and the setting up of insurance products' distribution. To start with, the bancassurersfocused on the sale of products linked to their banking activity, but then diversified their offers and can now be found in most insurance branches (life / non life), with a recent development centered on health, property / casualty insurance. The objectives of this paper are : to describe the French bancassurance market, the various players and their specifications to study the conclusions to bedrawn from the past experience, concerning technical and marketing approaches, product distribution and synergy created in the financial groups to analyze the current development of the model and the European regulation in term of financial conglomerates and solvency of banking groups or insurance groups.



The French bancassurance market

I.1 Background The starting point of thetremendous development of bancassurance is due to the French law of 1984, which unabled credit institutions to wide their activities. As the legal scope had changed, the banks could carry out additional and related activities, such as life insurance. This rapid expansion took place mostly in the 80's. Consequently, they could reach a 39% market share of life insurance in 1990. Since then, thedistribution through banks networks has been composed of two periods : the first one goes from 1990 until 1996 with a steady development up to 61% market share the second one more stable then (see table #1)

French life insurance market 1990-2000
1990 1991 Intermediaries 57% 52% (brokers, agents, employees) Desks 39% 42% (banks and post Direct sales 4% 6% Total
100% 100%

1992 49% 46% 5%

199344% 51% 5%

1994 42% 54% 4%

1995 38% 56% 6%

1996 35% 59% 6%

1997 33% 61% 6%

1998 35% 59% 6%

1999 2000 35% 33% 60% 61% 5% 6%

100% 100%

Table #1 : premiums divided up by distribution – from FFSA For all that, it is significant to mention that the life insurance premium incomes in France has tripled during that time. The increases accordingto the different distribution in between starts from 46% to 315%. In practice, most of the deposit banks own subsidiary dedicated to life insurance. The top 10 subsidiaries represents 40% of the French Insurance market's assets in 1999. (see table #2) Top 10 bancassurer's assets Life Insurance Company Predica Ecureuil Vie Natio Vie Sogecap Assurances Fédérales Cardif Fructivie Socapi Suravenir ACMVie Banking Group Credit agricole Caisse d'Epargne BNP Paribas Société Générale Crédit Lyonnais BNP Paribas Banques Populaires CIC Crédit Mutuel Crédit Mutuel Bretagne Crédit Mutuel Top 10 TOTAL TOTAL Market Table #2 : Top 10 bancassurer's assets in 1999 – from CCA Total assets in 1999 (EUR bn) 66 350 41 085 29 460 27 635 21 715 18 060 15 655 13 690 9 940 9 655 253 245 630 000

The Credit...