Banks Still Keen on Insurers


THE sales of insurance products through banks will not grow sharply this year as the yields "are not attractive," but banks may still invest or raise their stake in insurance firms, KPMG said in a report yesterday.

The banks posted a significant decline in sales of insurance products through the bancassurance channel last year after the China Banking Regulatory Commission banned insurance staff from selling their products in the banks, KPMG said.

Some of the large banks experienced a 20-30 percent decline in bancassurance premiums last year after they fell 15 percent in the first half of 2011, according to the latest available data, which didn't provide detailed figures.

"The yields on insurance products are not as attractive as other wealth management products, and concerns with inflation are creating higher customer expectations and hampering the sale of participating and long-term products," the report said. "We expect companies will find it difficult to deliver significant growth in this market (this year)."

But banks may still invest in insurers as demand for insurance in China is seen to rise in the long term. In the last 12 months, China Construction Bank, China Merchants Bank, the Agricultural Bank of China and the Industrial and Commercial Bank of China have raised or announced plans to raise their stakes in an insurance firm.

The report said bank-owned insurers can tap the opportunities and demand for insurance via the banks' network in the long term.

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