App-Based Insurance Will Be Even Better Tailored to Customer Needs

The material was created in cooperation with PIU

Have you ever wondered how you can buy vacation insurance not only through an insurance app, but also through a bank app or through a bank advisor? Even on the day you start your trip? And did you previously purchase loan repayment protection or car insurance from a bank? This is precisely how the distribution channel known as bancassurance works, where banks sell insurance policies. It's an additional source of revenue for them and an opportunity to offer their customers a broader range of products, while providing insurers with an additional distribution channel for their products.

Recent years have brought a fundamental shift in the range of insurance products sold by banks, partially forced by legal regulations and supervisory recommendations. But financial institutions themselves have also changed, now incorporating the word "reputation" into every context and emphasizing the importance of putting customer needs first.

"Over the last 25 years, Poland has undergone a significant transformation, and bancassurance has not been spared, and today, products sold through this channel offer even better customer protection. Self-regulation—best practices, recommendations, and legal changes—has streamlined the market, but they have also slowed the pace of development," said Piotr Wrzesiński, Vice President of the Polish Chamber of Insurance, recently at the 14th Bancassurance Congress.

In 2024, the gross written premium in the bancassurance channel amounted to over PLN 6.3 billion, but a decade ago it was over PLN 10 billion (protection insurance was a minority then).

– Today we are facing a challenge related to technology, but if we skillfully use the opportunities it offers us and are supported by the regulator in the form of peace of mind, bancassurance has a chance to develop rapidly – ​​predicts Wrzesiński.

This is a transitional period

In Europe, there are countries where banks sell over 50–80% of life insurance. In Poland, the figure is currently over 16% (and 4% for property insurance). However, insurers are hoping for broader cooperation with banks, and bankers are declaring their willingness to sell policies, albeit under significantly different terms than a few or a dozen years ago.

"The market is currently witnessing a significant shift in offerings. We're moving from lump-sum premiums to regular premiums, which is evident in our results. We're also adapting our products to current and future customer requirements," noted Agnieszka Gocałek, Chair of the Bancassurance and Affinity Sales Team at the Polish Chamber of Insurance and Managing Director for Bank and Strategic Partner Relations at PZU.

Maciej Podlewski, Director of the Department of Supervision of the Management System and Insurance Distribution at the Polish Financial Supervision Authority, agreed, emphasizing that the market is undergoing a transformation in its product offerings. He believes there's potential for growth, but the value delivered to the customer is particularly important – the quality of sales, insurance service, and claims settlement.

According to Agnieszka Gocałek, insurers and bankers are stuck with each other, aiming for dynamic growth in the coming years. The reason? Thanks to banks, they can reach more customers and have more opportunities to offer them insurance products. "As the data shows, customers check their banking app 36 times a month, and they usually meet with an insurance agent once a year," said the head of bancassurance at PZU.

Financial Ombudsman Dr. Michał Ziemiak also emphasized the importance of better tailoring products to customer needs. He also cited data that is positive for the industry and market development, indicating a decline in the number of customer complaints one year after the introduction of Recommendation U, in 2024. However, this year, the number remains at a similar level.

The bank knows the most

Monika Siemaszko and Mateusz Niedźwiecki, representing Sollers Consulting, acknowledged that many European banks treat bancassurance strategically, and thanks to it, in some southern European countries, such as France and Portugal, 50–80% of life insurance policies are sold. Stand-alone, property, travel, and health insurance are also increasingly being sold digitally through this channel. The key here is excellent customer knowledge and their current needs, allowing the customer to purchase the product in an environment (application) they are familiar with.

Tomasz Raczyński, Director of the Insurance Department at mBank, confirms that insurance is visible in banks' strategies and allows them to provide customers with the services they need, and thus indirectly maintain them.

According to experts, the challenge facing the industry is the introduction of new regulations and directives, such as CCD2, which require, for example, a temporary separation (deferral) between the sale of loans and insurance. This is the case in Germany, for example, which accounts for one-fifth of the European bancassurance market and where this "break" lasts seven days.

This resulted in the need to change the way we reach customers and build better relationships, but also resulted in the highest upselling of insurance (conversion) through the call center.

Thanks to new technologies, the financial sector will be able to offer customers tailored products. "Rumors about the death of bancassurance are exaggerated. Regulations have actually helped the industry gain strength, and today we have more transparent, relationship-based models. But openness to change is required. And regulations are not a brake, but an opportunity," added Monika Siemaszko.

Experts also emphasized that "the sales commission isn't necessarily the most important factor, because banks can attract customers through bancassurance offerings they wouldn't otherwise have. "And we need to look at products that complement the banking offering and provide a sense of security for borrowers and their loved ones," adds Agnieszka Gocałek.

There is room for growth here

Representatives of the bancassurance industry are looking for answers to questions every day about what actions can be taken to increase market dynamics and reach customers even better.

Piotr Wrzesiński estimates that customers already have the greatest access to insurance in banks, and this year the shift of customers to investment products offered within life insurance is particularly visible.

"There's nothing wrong with investment products; they just need to be done well so that people know what they're for. It's important that the client is aware of this and needs them. Investment insurance, for example, can be a key element in the process of transferring wealth, and the topic of succession will become increasingly important as our society becomes more affluent," notes Agnieszka Gocałek.

According to Maciej Podlewski from the Polish Financial Supervision Authority, the bank, as an institution of public trust, should be an exemplary distributor selling insurance products in an ethical manner.

"Indeed, I also treat the bank as a platform for customer contact. It's a place for education and conversations with customers. Let's remember that simple sales methods are over. Today, a customer can talk about a product in a branch, then they have access to the bank system and call center, and then they end up buying insurance through an app at 1 a.m.," notes the PZU director.

Experts believe that new technologies and artificial intelligence could come to the industry's aid, especially since Poland still faces a significant insurance gap and new generations of customers are changing the way they purchase insurance.

As Karolina Kozłowska-Kawycz, Director of the Risk Management Office at PKO Ubezpieczenia, emphasizes, one of the key goals of the insurance market, including bancassurance, is to reduce the insurance gap. Poles are still underinsured, as evidenced by floods. Yet insurance is readily available, for example, in banks. Today, a single app can combine the offer, purchase, service, and claim reporting.

According to Marta Grondkowska, Director of the Insurance Banking Office at BNP Paribas Bank Polska, banks are an excellent place to sell insurance. The industry must communicate this message to customers so they know they can also come to the bank for insurance. She believes that customer trust and product customization for specific sales channels are key to market growth.

"Customers today no longer want paperwork, and what we offer them will continue to change. The question is whether, using AI, we can create modular products for customers that they can choose," ponders Agnieszka Gocałek. "Insurance used to be a luxury, but today it's meant to be a simple service designed to provide financial protection against accidental events. Insurance doesn't have the power to prevent accidents, although preventative measures are becoming an increasingly important activity for insurance companies, but it can financially mitigate their effects," she concludes.

Opinion

I am convinced that new technologies, including generative artificial intelligence, will help accelerate the development of the bancassurance market in Poland in the coming years. Already, when creating new insurance products, we are guided by the "mobile first" motto, and together with our banking partner, we are looking for the best contexts in which a customer might need insurance. This is especially true for the younger generation, such as Generation Z. Young people generally – due to their age – don't think about insurance, and it's hardly surprising. However, because banks have more frequent customer contact than we do and significantly greater knowledge about them, together we can identify those moments when insurance will be useful. This is already happening with travel insurance and real estate insurance, not to mention loan insurance, which is the foundation of bancassurance.

However, banks and insurance companies are trying to expand the range of products offered through the bancassurance channel, including car and life insurance. The latter is generally more complex and often requires consulting, so when offered through mobile channels, it must be tailored to them: it is typically simpler and has a limited health risk assessment process, thus protecting against fewer risks. These are the times we live in: customers expect faster, easier processes, and convenience – this applies to bancassurance as well.

The material was created in cooperation with PIU