Europe, an internal market for bancassurance

Abstract

The increasing convergence of banking and insurance in the retail area has been over the past years one of the most significant developments in European financial services. This trend towards 'bancassurance' or 'Allfinanz' refers primarily to banks entering the insurance sector by offering insurance products to their retail customers. While the first ventures into bancassurance in Europe occurred as early as the late 1960s when TSB, Lloyds and Barclays entered the life insurance sector, it was not until the mid-1980s that a large number of European banks started entering insurance on a broader scale. Frequently cited success stories, amongst which the Credit Agricole's de novo start-up, Predica, which quickly achieved a leading position in the French market, or TSB in the UK which derives 30 percent of its profits in retail financial services from insurance. have inspired many European bankers to attempt emulating these successful ventures by also entering the insurance sector. By 1993, more than half of the large European banks have incorporated insurance products into their product portfolios. As a result, the former cosy co-existence of the banking and insurance industries has turned into direct competition in the financial services market.