Investment insurance market. Demand for products and programs
The emergence of investment insurance products has significantly changed the landscape of the life insurance market. The prevailing share of premiums on investment and insurance products – 80%, is provided by the banking channel, according to Beinsure Report: Life Insurance Value Chain — Distribution & Product Management.
The dominant role of banks in this segment is due, firstly, to the already established cooperation in the implementation of traditional life insurance products, and secondly, the need of banks to expand the product line for VIP clients.
prospects
The emerging trend of increasing the share of accumulative products in total insurance premiums, following the results of the next five years, will lead the market to a fundamentally different structure.
If the scenario of moderate growth of the national economy, 3-3.5% per annum in terms of GDP, and a significant redistribution of assets in the financial system is realized, then the growth rate of the life insurance market will be fixed at the level of 35-40% per year (taking into account the decrease in the impact of credit insurance). At the same time, within five years, accumulative life insurance programs and their share in total collections will increase to 55-60%.
Such development and market structure will be achieved with further dynamic expansion of the investment product segment following the example of the countries of Central and Eastern Europe.
Clients
According to experts’ data accumulated over three years of sales of investment products, the prevailing share of clients is men – 57%. The average age of male clients is 49 years, women – 47.8 years.
Demand for investment insurance products is due to the desire of clients to diversify the risks of losing the purchasing power of their portfolio.
Investment products account for up to 20-25% of the client’s portfolio. At the moment, most private investors still prefer “risk-free” fixed income instruments (deposits, certificates).
Investment insurance programs are characterized by a combination of capital protection guarantees and potentially higher investment income than conservative banking instruments, which leads to a steady increase in their popularity.
The investment strategy of the product allows, firstly, in the medium and long term to receive additional profitability, potentially comparable or even exceeding the profitability of the underlying asset. Secondly, to ensure a 100% return on invested funds, even if the market shows a negative trend (capital protection is guaranteed by an insurance contract).
Author: Oleg Parashchak
