The role of banks in being sales conduits for insurance services is underdeveloped in China although the value of the country’s insurance market has expanded rapidly in recent years, a new report said.

The role of banks in being sales conduits for insurance services – bancassurance as it is known – is underdeveloped in China although the value of the country’s insurance market has expanded rapidly in recent years to $328.7 billion in premium income, a new report said.

In 2010, premium income was $239.2 billion, the report, from Finaccord, a market research and consultancy firm, said.

The report also comes at a time when certain forms of insurance policy continue to be popular parts of the wealth management toolbox in Asia and other jurisdictions. (To see an article about this area, click here.)

The Finaccord report looked at 13 different classes of insurance from 108 banking institutions in China. It found that the Agricultural Bank of China, Bank of Dongguan, Ping An Bank and Qingdao Bank offered the most diverse range of policies, offering 11 out of a maximum number of 13.

The development of bancassurance in recent years can clearly be measured by comparing the average number of insurance types offered across all 108 organisations, which stood at 2.94 in 2014 compared to an average of 1.88 recorded in a previous study by Finaccord in 2012 (i.e. an expansion of over 60 per cent).

However, at 54 out of the 108 banks researched, exactly one half still did not offer any of the insurance types researched, the largest of which were Bank of Jilin (with around 9.76 million retail customers) and Wuhan Rural Commercial Bank (with 5.76 million customers).

“Bancassurance has been an important insurance distribution channel in China in recent years with well over 50 per cent of all life insurance premiums collected through it,” Yapei Zhang, a consultant at Finaccord, said.

“Nonetheless, the bancassurance market as a whole remains somewhat underdeveloped in terms of both bank participation and product diversification, with a great majority of bancassurance sales tilted towards life insurance rather than health or non-life cover. In addition, regulations continue to limit the products that can be sold and the regions in which they can be marketed,” Yapei Zhang continued.

Finaccord’s research also classifies bancassurance partnerships according to whether they are set up as joint ventures, strategic long-term relationships or ad hoc distribution partnerships.

In contrast to many other Asian countries (and some in Europe), a distinguishing characteristic of the Chinese bancassurance landscape is that banks and insurers have traditionally not worked closely together.