The Overseas Assurance Corporation (OAC), in partnership with the Overseas-Chinese Banking Corporation (OCBC), is the largest life bancassurer in Singapore today. For the first half of 2001, OAC's share of the bancassurance single-premium and annual-premium markets were 43% and 37% respectively, according to the Life Insurance Association of Singapore.

Launched in 1998 as an alternative distribution channel to the tied-agency and broker channels, bancassurance is today the sole distribution channel for OAC's life insurance products. In 2000, OAC and OCBC embarked on a new bancassurance strategy in which OCBC sales staff are trained to sell the whole range of financial products including insurance products. OCBC repositioned itself as a one-stop financial services provider to meet the total financial needs of its customers.

This repositioning by OCBC in serving its retail customers, and the refocusing on the bancassurance channel by OAC, was done as part of the restructuring of the two insurance arms of OCBC. In December 2000, OAC merged with Great Eastern Holdings (GEH) as a wholly-owned subsidiary. GEH also has a wholly-owned subsidiary in Great Eastern Life. With the merger, OAC was positioned to excel as a life bancassurer and Great Eastern Life (GEL) was positioned to expand further on the strength of its agency channel.

A key factor in the building of this strong partnership between OAC and OCBC is the exclusive and dedicated resource alignment and planning between the two companies. OAC provides the products, training, marketing support, underwriting and policy servicing, while OCBC Bank provides the overall strategic planning, sales capability and marketing research, project management and best-practice development.

Execution
During the first year of partnership with OCBC Bank, beginning in late 1998, sales and marketing efforts were concentrated in the branches. It was a tremendously successful alliance that exceeded expectations. In 1999, OAC's life bancassurance partnership with OCBC Bank contributed to 63% of OAC's regular premium business. This strong growth helped to position OAC as the fifth-largest insurer in terms of regular premium business. Total premium income was US$66m in 1999.

The key success factors included the development of packaged regular premium LIFE (Living Investments for Everyone) products, exclusively designed for OCBC Bank, leveraging of OCBC Bank's brand name and customer relationship management infrastructure, customised product training, fast and efficient underwriting and policy-issue process developed specifically for the bancassurance channel, and quality customer support.

More importantly, there was solid teamwork and commitment from both the OAC and OCBC Bank management and staff.

Product ideas are brought to the Product Roundtable, comprising representatives from OAC and OCBC, to brainstorm and develop. Besides competitors' insurance products, products are also judiciously assessed against personal banking products, ensuring they meet the needs of OCBC's customers. From the early packaged regular premium products, the product suite has been widened to include single premium endowment and investment-linked policies, traditional and investment-linked annuities, and basic whole life, endowment, term insurance and critical illness riders to allow the flexibility for customisation according to the needs of individual customers. A level-commission product with substantial cash value from the first policy year is being developed for launch, which will provide better value for the customer.

Generalist sales staff who provide total financial planning products and services demand simple products with simplified underwriting rules that allow for speed of delivery and ease of servicing. Some of the underwriting measures taken to meet these needs include:

  • use of short application forms for single premium policies (where the risk element is small compared to that of regular premium policies);
  • use of questionnaires and lien – a reduction in sum assured – respectively in lieu of additional medical requirements and extra premium loading for the underwriting of substandard single premium policies (where the risk element is small compared to that of regular premium policies);
  • adopting a higher non-medical limit for Mortgage Reducing Term Assurance (MRTA) policies to facilitate hassle-free MRTA business;
  • follow-up with customers who require medical examinations while keeping sales staff updated of the progress; and
  • the establishment of a fast and efficient underwriting process to ensure timely policy issue and delivery within agreed benchmarks with OCBC Bank.While liberalising traditional standards of underwriting to achieve the desired speed and efficiency, we are distinctly mindful of the need for underwriting prudence and monitoring of the actual experience.

    OCBC Bank became the first bank to provide one-stop banking and insurance services in Singapore, through the opening the OCBC Bancassurance Service Centre at OCBC Bank's main banking hall in August this year. The OCBC Bancassurance Service Centre is a partnership between OAC and OCBC Bank which services both walk-in and telephone enquiries (via a link to OCBC Bank's IVR telephone system). OAC is a well-established composite insurer with more than 80 years of general insurance experience. The corporation started to use the bancassurance channel for our general insurance products in 2000. Simple general insurance products have been developed for OCBC Bank's credit card holders and customer base.

    Direct marketing tools include media advertising, direct mail, telemarketing and e-commerce marketing. It is a series of events or campaigns carefully planned and executed over an extended period of time. It is usually deployed to measure and analyse consumer behaviour and spending patterns through the use of effective database segmentation and marketing. Most often, the success or failure of each event or campaign is dependent on the target audience, and the application of marketing approaches to suit these audiences, and to meet its marketing objectives.

    Key success factors include the use and application of fundamental tools, starting with the right product, backed by a good and reliable integrated marketing system for policy registration and issue, billing, tracking, proper reports for detailed analysis, excellent before-and-after sales customer servicing, right up to good data warehousing for future cross-selling and loyalty activities. Besides direct mail, telemarketing is a key sales tool for general bancassurance, with well-crafted telescripts and training to highly-motivated staff and a reliable database. Direct marketing is carried out as a joint initiative between OAC and OCBC Bank. The bank provides the customer base, and the insurance company provides the product and services. It is very much a win-win partnership.

    The OCBC Bank's recent acquisition of Keppel TatLee Bank offers another opportunity for bancassurance business. In partnering with OCBC Bank in bancassurance, OAC is poised to capture an increasing market share of the life and general insurance business in Singapore in the years ahead. OAC aims to excel as a leading centre for bancassurance and, in doing so, to contribute to the growth of the Great Eastern Group as the dominant insurer of choice in ASEAN and beyond.