BAY introduces ready-made life insurance policy

The move is aimed at strengthening the cross-selling of products and driving premiums.

BAY executive vice president Kris Chantanotoke said yesterday that the new ready-made policy, Krungsri Life Prompt, had been developed to comply with the bank’s "Krungsri Make Life Simple" strategy.

Moreover, the instant policy will assist the cross-selling of products, because customers who walk into branches do not generally have enough time to hear all about what banks are offering, he said.

Krungsri Life Prompt has, therefore, been designed to reduce the overall time that customers have to spend on such matters and shorten the complicated application process. For example, customers can now purchase a life-insurance policy without having to answer many health questions.

BAY offers three types of short-term-saving insurance policies from two insurers – Ayudhya Allianz CP and Thai Life Insurance – based on annual premiums of Bt30,000, Bt40,000 and Bt50,000.

"The products of AACP and Thai Life Insurance will continue to be the existing policies, but we have just adjusted the format of selling into the box and made it an easy application process. We project attracting premiums of Bt500 million from Krungsri Life Prompt this year," Kris said.

The internal rate of return of Krungsri Life Prompt is 22.24 per cent on average, he added.

"We wanted to change the format of selling insurance through bancassurance after having done the same in non-life insurance over the past two years. The format of an insurance policy through bancassurance should be instant and uncomplicated."

BAY expects Krungsri Life Prompt will result in a phasing out of the bank’s non-instant life-insurance policies within three years.

Other banks are expected apply the same format soon, he said, after they see the positive effect it has on walk-in customers and the cross-selling of products to those with little time to listen to staff explaining all the details.

BAY will focus on short-term savings insurance in view of the upcoming cut in the level of deposit protection from Bt50 million per account-holder per bank to Bt1 million, while lower interest rates are also persuading investors to turn to savings-linked insurance, Kris said.

Moreover, bancassurance is a popular channel for BAY customers, as demonstrated by premium growth of 52 per cent during the past five years, against 19 per cent for all channels.

The proportion of BAY premiums sold through bancassurance has gradually increased, from 12 per cent in 2007 to 33 per cent last year and an expected 35 per cent this year, he said.

The bank targets gross premiums of Bt7.5 billion this year, up from Bt6 billion last year, with 30 per cent being first-year premiums.

Premium growth is important to fee income, he said, adding that fee income from bancassurance this year was expected to rise to 15 per cent of the total, from 11 per cent last year.