TABLE OF CONTENTS 0.0 EXECUTIVE SUMMARY... 1 1.0 INTRODUCTION... 3 What is this report about?... 3 Distribution partnerships with banks and other lending institutions constitute the focus of this report... 3 Rationale... 3 Bancassurance is comfortably the most important distribution channel for life insurance in Italy... 3 Methodology... 4 Survey of banks and other lending institutions... 4 Market data... 4 Definitions... 5 Investment-related life insurance... 5 Retirement savings... 5 Risk life insurance... 5 Critical illness insurance... 6 Income protection insurance... 6 Accident insurance... 6 Health / hospital cash plans... 6 Medical expenses insurance... 6 Personal motor insurance... 7 Household insurance... 7 Creditor insurance... 7 Mortgages, consumer finance and credit cards... 7 Weighted provider share of partnerships... 8 Operating models... 8 Abbreviations and exchange rates... 9 PartnerBASE and market data annexe... 9 Finaccord... 9 2.0 MARKET BACKGROUND... 11 Banks and other lending institutions covered... 11 Introduction to the banking sector... 12 Four, or arguably five, retail banking groups lay claim to a genuinely nationwide network... 12 although these are challenged by an array of ambitious regional competitors... 12 including the 'banche di credito cooperative' and 'casse Raiffeisen'... 12 as well as several insurer-owned banks and banks falling under foreign ownership... 12 Italy also plays host to a considerable number of specialised lending institutions... 12 Italy s banking groups typically encapsulate a number of local or regional banking brands... 13 3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS... 14 Insurance market size and growth... 14 Following sharp declines in 2011 and 2012, the market value rose again in 2013... 14 Distribution share of banks... 16 Banks account for close to 50% of all life insurance business but their share has declined since 2010... 16 Bancassurance provision rates, operating models and partnerships... 16 Investment-related life insurance... 16 A comparatively high proportion of banking institutions work with one more than product provider... 16 FINACCORD (02/2014) I
AXA MPS is the leading provider by weighted share of partnerships... 17... in a market dominated by joint venture and captive underwriters... 17 In total, over a dozen providers of investment-related life insurance are classifiable as captive providers...... 17... although uncertainty surrounds the future ownership status of Carige Vita Nuova...... 17 and there are ten joint ventures... 18 Other providers with a significant presence include Arca, Genertel, Eurovita and UNIQA... 18 Most institutions with no involvement in this area are classifiable as specialised lenders... 18 Retirement savings... 20 Providers of retirement savings include both insurance companies and investment management firms...... 20... with the latter including UniCredit's Pioneer... 20 In the field of retirement savings, Arca is ranked first by weighted share of partnerships... 20 UniCredit Banca works with three insurance companies and an investment management firm... 20 Once again, product providers include a significant number of captive and joint venture entities... 20... although over 20 external companies possess at least one exclusive partnership in this domain... 21 Performance of key bancassurance underwriters... 23 Nearly 30 bank-owned captive or joint venture underwriters are active in the Italian life insurance market...... 23... although fewer compete in the pension funds sector... 23 4.0 PROTECTION-RELATED LIFE INSURANCE... 26 Insurance market size and growth... 26 The market for protection-related life insurance has also returned to growth since the slump of 2011... 26 Distribution share of banks... 27 Bancassurance provision rates, operating models and partnerships... 27 Risk life insurance... 27 AXA MPS and Poste Vita are the leaders in this sector by weighted share of partnerships...... 27... with the former having also been successful in securing distribution with external banks... 27 UniCredit Banca works with three joint venture underwriters in this field... 28 A number of major banking entities ignore risk life insurance in favour of creditor policies... 28 Critical illness insurance... 30 Critical illness cover is hardly ever sold in a stand-alone format by Italian banks...... 30 Income protection insurance... 30... and the penetration of income protection policies is only a little higher... 30 Performance of key bancassurance underwriters... 30 5.0 ACCIDENT AND HEALTH INSURANCE... 33 Insurance market size and growth... 33 Both the accident and health insurance markets fells back between 2009 and 2013...... 33 Distribution share of banks... 34... albeit banks have made some progress as distributors of both policy types... 34 Bancassurance provision rates, operating models and partnerships... 35 Accident insurance... 35 Accident insurance policies are available from close to 60% of Italian banking institutions surveyed... 35 Three joint ventures and two captives rank among the top five by weighted share of partnerships... 35 Arca, MetLife and Chiara Assicurazioni also each hold a number of significant relationships... 35 A number of quite important banking institutions have no arrangement for accident insurance... 35 Medical expenses insurance... 38 Over a half of banking entities researched in Italy are distributors of medical expenses insurance... 38 and underwriters affiliated to the country's large retail banks largely dominate the market...... 38 albeit Europ Assistance is ranked fifth by weighted share of partnerships... 38 Other captives include Cardif, Carige Assicurazioni and Mediolanum Assicurazioni... 38 Over 20 banking entities with more than 250,000 customers do not distribute this type of cover... 38 Health / hospital cash plans... 40 Stand-alone health or hospital cash plans are offered by a minority of banking organisations... 40 RBM Salute, a specialist provider, benefits from one major partnership in this field...... 40 FINACCORD (02/2014) II
and seven other external underwriters also claim at least one exclusive partnership... 40 Performance of key bancassurance underwriters... 42 Bank-owned underwriters grew their total market share of accident cover in each year from 2008 to 2012...... 42... but in aggregate they have lost ground recently in health insurance... 42 6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE... 44 Insurance market size and growth... 44 Personal motor insurance premiums declined in both nominal and real terms between 2009 and 2013... 44 Distribution share of banks... 45 Banks are making steady progress as distributors in both motor and property insurance... 45 Bancassurance provision rates, operating models and partnerships... 46 Personal motor insurance... 46 More than 50 of the banking institutions surveyed are active in the promotion of personal motor insurance... 46 Intesa Sanpaolo Assicura and Poste Assicura can access the distribution networks with most potential... 46 Genertel has secured distribution relationships with several significant regional banks... 46 Two joint venture underwriters also feature prominently in this arena... 46 Other providers with important relationships include Assimoco, Direct Line and Allianz... 46 Entities not distributing personal motor insurance include 19 with more than 250,000 retail customers... 47 Household insurance... 49 Most banking institutions offering household cover do so in conjunction with a single, external underwriter... 49 This market is mainly dominated by underwriters owned or co-owned by Italy's large banks...... 49... albeit Europ Assistance is ranked in third position by weighted share of partnerships...... 49... and as many as 21 different providers are neither captives nor joint ventures... 49 Lending institutions that do not sell household insurance are mainly those that do not offer mortgages... 50 Performance of key bancassurance underwriters... 52 Carige Assicurazioni holds the highest market share among bank-owned underwriters in motor insurance...... 52... and also in total property insurance, as a result of selling via agents as well as bank branches... 52 7.0 CREDITOR INSURANCE... 54 Consumer lending market size and growth... 54 Mortgage lending... 54 Despite the economic turmoil, mortgage balances outstanding have remained fairly stable...... 54 Non-mortgage lending... 55... albeit the value of total non-mortgage consumer lending has fallen back since 2011... 55 Credit and other pay later cards... 56 The number of credit cards in circulation has declined rapidly in recent years... 56 Creditor insurance provision rates, operating models and partnerships... 57 Creditor insurance linked to mortgages... 57 A wide range of operating models is used to source mortgage-related creditor insurance in Italy...... 57... as policies are often underwritten by life and non-life insurers acting in concert... 57 UniCredit Banca's complicated arrangements involve the use of multiple joint venture underwriters... 58 Over 20 external providers of mortgage-related creditor insurance claim at least one relationship... 58 Assimoco co-operates in this area with as many as 13 of the lending institutions investigated... 58 Creditor insurance linked to consumer finance... 60 Loan payment protection insurance is available from the vast majority of relevant lending institutions...... 60... with Cardif especially prominent in this arena... 60... and MetLife also a significant competitor... 60 Once again, a large number of captive and joint venture underwriters are in evidence...... 60... a number of which are domiciled outside of Italy itself... 60 The competition among non-captives is as fragmented and intense as it is for mortgage-related cover... 61 Lending institutions with no arrangement in this area are all comparatively minor entities... 61 Creditor insurance linked to credit cards... 63 Credit card payment protection insurance is less commonly marketed by card issuers in Italy...... 63... and three providers are dominant by weighted share of partnerships... 63 FINACCORD (02/2014) III
Creditor insurance risk coverage... 65 In all segments, close to 90% of policies analysed cover temporary incapacity and unemployment... 65 Creditor insurance market size, growth and forecast... 66 As the lending sector has slowed, growth in the related insurance market has decelerated in recent years... 66 and this trend seems likely to persist through to 2017... 67 FINACCORD (02/2014) IV
LIST OF GRAPHICS / TABLES 0.0 EXECUTIVE SUMMARY... 1 Overview of bancassurance provision rates for different types of insurance in Italy, 2014... 2 1.0 INTRODUCTION... 3 Banks and other lending institutions in Italy contacted by Finaccord, segmented by type... 4 2.0 MARKET BACKGROUND... 11 3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS... 14 Gross written premiums for investment-related life insurance and retirement savings in Italy, 2009 to 2013... 15 Gross written premiums for investment-related life insurance and retirement savings in Italy, 2009 to 2013 (table)... 15 Distribution share of bancassurance in total life, 'class 1' life and unit-linked life insurance, and capitalisation bonds and pension funds in Italy, 2008 to 2012... 16 Bancassurance provision of investment-related life insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 19 Bancassurance provision of retirement savings in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 22 Market share in total life insurance of key bancassurance underwriters in Italy, 2008 to 2012... 24 Market share in pension funds of key bancassurance underwriters in Italy, 2008 to 2012... 25 4.0 PROTECTION-RELATED LIFE INSURANCE... 26 Gross written premiums for protection-related life insurance in Italy, 2009 to 2013... 26 Gross written premiums for protection-related life insurance in Italy, 2009 to 2013 (table)... 27 Bancassurance provision of risk life insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 29 Bancassurance provision of critical illness insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 31 Bancassurance provision of income protection insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 32 5.0 ACCIDENT AND HEALTH INSURANCE... 33 Gross written premiums for accident and health insurance in Italy, 2009 to 2013... 33 Gross written premiums for accident and health insurance in Italy, 2009 to 2013 (table)... 34 Distribution share of banks in total non-life insurance and accident and health insurance in Italy, 2008 to 2013... 34 Bancassurance provision of accident insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 37 Bancassurance provision of medical expenses insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 39 Bancassurance provision of health / hospital cash plans in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 41 Market share in accident insurance of key bancassurance underwriters in Italy, 2008 to 2012... 42 Market share in health insurance of key bancassurance underwriters in Italy, 2008 to 2012... 43 6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE... 44 Gross written premiums for personal motor and household insurance in Italy, 2009 to 2013... 44 Gross written premiums for personal motor and household insurance in Italy, 2009 to 2013 (table)... 45 Distribution share of banks in total non-life, motor and property insurance in Italy, 2008 to 2013... 45 Bancassurance provision of personal motor insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 48 FINACCORD (02/2014) V
Bancassurance provision of household insurance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 51 Market share in total motor insurance of key bancassurance underwriters in Italy, 2008 to 2012... 52 Market share in total motor insurance of key bancassurance underwriters in Italy, 2008 to 2012... 53 7.0 CREDITOR INSURANCE... 54 Residential mortgage lending balances outstanding in Italy (absolute and per capita), 2009 to 2013... 54 Consumer non-mortgage lending balances outstanding in Italy (absolute and per capita), 2009 to 2013. 55 Credit and other pay later cards issued and per capita in Italy, 2009 to 2013... 56 Key data points for the consumer lending market in Italy, 2009 to 2013... 57 Provision of creditor insurance linked to mortgages in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 59 Provision of creditor insurance linked to consumer finance in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 62 Provision of creditor insurance linked to credit cards in Italy, 2014: provision rate, operating models and weighted provider share of partnerships... 64 Risk coverage of creditor insurance policies in Italy, segmented by type of underlying product, 2014... 65 Creditor insurance gross written premiums in Italy, segmented by policy type, 2009, 2013 and 2017... 66 Creditor insurance gross written premiums in Italy, segmented by cover type, 2009, 2013 and 2017... 67 Creditor insurance gross written premiums in Italy, segmented by policy and cover type, 2009, 2013 and 2017... 69 FINACCORD (02/2014) VI