There are many insurance companies all over the world. In Africa, Asia, Europe and Australia. These insurance companies specialize in life and non-life insurance businesses.
They carry out their business in risk management. They have team of workers that push their products into the market to reach higher number of people. Insurance companies carry out their functions to put things in order for their customers.
Life insurance companies specialize in selling life insurance services. A life insurance company is a company that provides life cover to individuals and pays a specific sum to the insured beneficiaries upon their death or pays the policyholder after a set period of time. Example of life insurance products or services are term life insurance products and permanent life insurance products. Term life insurance generally provides protection for a set period of time, while permanent insurance, such as whole and universal life, provides lifetime coverage.
Non-life insurance on the other hand is insurance of goods and properties. This type of insurance is also referred to as general insurance. Examples of non-life insurance are marine, fire, burglary, household, auto, and goods in transit insurance. So non-life insurance companies are those insurance companies that manage risks on goods and properties.
Today, banks are still going deeper to have insurance companies both life and non-life. Infact, banks that have good brand names make good amount of money from insurance these days. The name of their banks have given them edge to sell their insurance services to her customers without much stress. Agents that work in this kind of insurance companies own by banks sometimes earn more commissions than those who work in independent insurance companies (meaning they are not attached to any bank).
An example is the FBN holding. This holding is made up of other financial institutions other than insurance and the bank. The acronym FBN stands for First Bank of Nigeria. It is one of the oldest commercial banks in Nigeria.
FBN Holdings Plc. is the non-operating financial holding company of one of the largest banking and financial services organisations in Africa. The companies that make up FBN holdings are Commercial Banking, Merchant Banking, Capital Banking and the Insurance group.
So, if you you go to any commercial bank to open a savings account for instance, it is possible you can still buy insurance from there if the holding has an insurance subsidiary. The subsidiaries are like children of a particular father. So, do not be afraid if you go to any bank to open an ordinary savings account and ended up opening endowment policy unknown to you.
They all handle funds. So, nobody should blame any bank customer that calls an insurance agent a banker. The two set of persons mix up in the same building so it can be confusing sometimes. The difference is when one properly looks at the identity cards of the two set of workers that are in the same building.
Those in the insurance subsidiary have their own office inside the bank building. In their office, they have unit managers, administrators and insurance agents. Sometimes when customers come and open bank accounts, they are called into the insurance office and are marketed by the agents to buy insurance policies. At the end, the holding ends up having one customers having different products from their two subsidiaries. That is bank account and insurance policies.
Sometimes the insurance agents help the bank customers to open bank accounts. They are in the same building so they can assist those customers in filling their forms. In fact, the insurance agents know most banking terms because they do things together. As they are assisting the customers in filling of forms, they are at the same time marketing the customers to buy insurance policies which can be savings plan of the insurance subsidiary.
Also, before some embark in the insurance business, they usually partner with core insurance companies. That is to say that the core insurance companies are the ones that manage the risk aspect but bear the name of the bank. The bank itself takes care of the invested money while some part of the premiums paid by policyholders go to the insurance company that partners with the bank.
That is to say that the bank shares stock with the insurance company that provides the insurance backing to them. Example is what is obtainable in FBN Insurance. The company is jointly owned by FBN Holdings Plc (65%) and the Sanlam Group, one of the largest financial institutions in South Africa (35%).
The payment of bank employees are mainly fixed. So, every month they are paid fixed amount of money as salary. So, the efforts insurance agents put in convincing prospects to register in insurance policies may not be found in core bank marketers. The agents in insurance subsidiary use effective marketing tools within their reach to convince people to register into insurance policies. Bank employees and marketers are not like that.
If you pick insurance policy from any bank insurance company, do not put your mind on interest. Irrespective of the nature of the interest rate given to you by the insurance agent, insurance is not mainly for interest addition. Some policies have interest added to the money before the policyholders are paid but not high. There are reasons for that.
Why some bank insurance endowment and savings plans not come with much interest at maturity of the policies? The simple answer is because the bank insurance company still bear risk as well. When you buy any investment or savings plans from any bank, you still have life insurance coverage on those money. What it implies is that if you die in the course of saving as of when due, the insurance company pays high amount of money to your beneficiary outside the money you have saved with the company.
The payment can be more than times five of what you have saved so far. This is dependent on the type of the savings or endowment plan you signed up for. Sometimes it can be called funeral expenses money. This is so because the savings plan you signed up for still has life coverage. When the person dies in the course of saving and he or she saves as of when due, the insurance company looses money.
They carry out their business in risk management. They have team of workers that push their products into the market to reach higher number of people. Insurance companies carry out their functions to put things in order for their customers.
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| Insurance company owned by bank; source: Prudential Zenith Insurance |
Non-life insurance on the other hand is insurance of goods and properties. This type of insurance is also referred to as general insurance. Examples of non-life insurance are marine, fire, burglary, household, auto, and goods in transit insurance. So non-life insurance companies are those insurance companies that manage risks on goods and properties.
Why Banks Create Insurance Companies Easily
Some persons may be asking why some banks also own insurance companies. The thing is that both banks and insurance companies are all classified as financial institutions. As a result of this, banks can easily have license to build their own insurance companies with less stress.Today, banks are still going deeper to have insurance companies both life and non-life. Infact, banks that have good brand names make good amount of money from insurance these days. The name of their banks have given them edge to sell their insurance services to her customers without much stress. Agents that work in this kind of insurance companies own by banks sometimes earn more commissions than those who work in independent insurance companies (meaning they are not attached to any bank).
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| Bank insurance company's products in one picture; source: Uzochukwu Mike's Zone. |
Things to Know about Insurance Companies own by Banks
(1) The Insurance Arm forms a Holding with the Bank
A holding company is a company that owns other companies' outstanding stock. A holding is made up of different companies that form a unit. Some banks that own insurance companies also have some other financial institutions different from the insurance. It is these units of the financial institutions that work for one "single parent" that form the holding.An example is the FBN holding. This holding is made up of other financial institutions other than insurance and the bank. The acronym FBN stands for First Bank of Nigeria. It is one of the oldest commercial banks in Nigeria.
FBN Holdings Plc. is the non-operating financial holding company of one of the largest banking and financial services organisations in Africa. The companies that make up FBN holdings are Commercial Banking, Merchant Banking, Capital Banking and the Insurance group.
So, if you you go to any commercial bank to open a savings account for instance, it is possible you can still buy insurance from there if the holding has an insurance subsidiary. The subsidiaries are like children of a particular father. So, do not be afraid if you go to any bank to open an ordinary savings account and ended up opening endowment policy unknown to you.
(2) The Staff can Work in the same Building with bankers
Yes it is possible. Sometimes both the bankers and the team of the insurance employees work inside the same place or building. People see all of them as bankers because all are in the same building and carryout financial transactions.They all handle funds. So, nobody should blame any bank customer that calls an insurance agent a banker. The two set of persons mix up in the same building so it can be confusing sometimes. The difference is when one properly looks at the identity cards of the two set of workers that are in the same building.
Those in the insurance subsidiary have their own office inside the bank building. In their office, they have unit managers, administrators and insurance agents. Sometimes when customers come and open bank accounts, they are called into the insurance office and are marketed by the agents to buy insurance policies. At the end, the holding ends up having one customers having different products from their two subsidiaries. That is bank account and insurance policies.
Sometimes the insurance agents help the bank customers to open bank accounts. They are in the same building so they can assist those customers in filling their forms. In fact, the insurance agents know most banking terms because they do things together. As they are assisting the customers in filling of forms, they are at the same time marketing the customers to buy insurance policies which can be savings plan of the insurance subsidiary.
(3) They are like other Insurance Companies
You do not need to be worried after buying any endowment policy from banks insurance companies. You do not need to be troubled on how banks can still own insurance companies and sell insurance products to people. It is normal. Many banks are turning into financial supermarkets. Before the insurance companies of theirs are established, they have good backing from the right body.Also, before some embark in the insurance business, they usually partner with core insurance companies. That is to say that the core insurance companies are the ones that manage the risk aspect but bear the name of the bank. The bank itself takes care of the invested money while some part of the premiums paid by policyholders go to the insurance company that partners with the bank.
That is to say that the bank shares stock with the insurance company that provides the insurance backing to them. Example is what is obtainable in FBN Insurance. The company is jointly owned by FBN Holdings Plc (65%) and the Sanlam Group, one of the largest financial institutions in South Africa (35%).
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| Picture representing life insurance; source: FBN Insurance |
(4) The Agents are more convincing than Bank Employees
The way insurance agents in the insurance companies owned by banks market to their prospects is different from the way bank marketers carry out their own marketing. There are reasons behind this difference. One of the reasons is because the earnings of the agents is based on commission. The higher customers they have and more payment the customers make, the higher commissions they are paid. As a result of this, they make sure they convince the prospects they come across with.The payment of bank employees are mainly fixed. So, every month they are paid fixed amount of money as salary. So, the efforts insurance agents put in convincing prospects to register in insurance policies may not be found in core bank marketers. The agents in insurance subsidiary use effective marketing tools within their reach to convince people to register into insurance policies. Bank employees and marketers are not like that.
(5) Do not Focus more on Interest
The earlier you understand insurance policies the better. Insurance policies be them those ones sold by insurance companies owned by banks or the insurance companies that solely depend on insurance sales are not mainly for interest. Some people buy insurance policies, mainly savings plans, with the mindset of having good interest added to them at maturity. But at the end they are disappointed in terms of interest.If you pick insurance policy from any bank insurance company, do not put your mind on interest. Irrespective of the nature of the interest rate given to you by the insurance agent, insurance is not mainly for interest addition. Some policies have interest added to the money before the policyholders are paid but not high. There are reasons for that.
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| Picture describing Easy Save insurance product of FBN Insurance; source, FBN Insurance |
The payment can be more than times five of what you have saved so far. This is dependent on the type of the savings or endowment plan you signed up for. Sometimes it can be called funeral expenses money. This is so because the savings plan you signed up for still has life coverage. When the person dies in the course of saving and he or she saves as of when due, the insurance company looses money.
References
- FBN Holding (2019), About Us, retrieved October 22, 2019, published by First Bank of Nigeria Holding, Lagos, Nigeria
- Zenith Bank (2019), Insurance, retrieved October 22, 2019, published by Zenith Bank, Lagos, Nigeria
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