Challenger bank Starling announced a range of partnerships in early 2018, including one with insurtech player KASKO, in what may be a glimpse into the future of the bancassurance channel, according to GlobalData Financial Services
The partnership will result in KASKO (backed by AXA) having a widget on Starling’s online marketplace, meaning customers can login using their Starling details.
Other financial services, such as pensions, savings, and mortgages, will be available here, as customers will have access to a range of products within one app, with one set of login details.
Innovation in the bancassurance channel has been sparse, and its share of insurance distribution has remained static in recent years, despite easy access to customers.
Furthermore, mainstream banks appear to be, if anything, pulling back from insurance, with Lloyds cutting 1,000 jobs in February 2018 largely from its insurance-focused team. The future of the bancassurance space may then be less about the main players, such as Lloyds, and more about digital, tech-savvy challenger banks.
Starling is not the first digital challenger bank to move into the insurance sector. It follows mobile bank N26, which set up a digital insurance service in Germany in 2017 after partnering with robo-advisor Clark.
GlobalData’s UK Personal Lines Insurance: Distribution and Marketing report, published in January 2018, found that the banking channel’s share of the insurance market fell from 11.5% in 2012 to 9.8% in 2016.
This highlights that the bancassurance channel is struggling, and that innovation is much-needed. Therefore, more flexible and modern banking services may be better suited to appeal to consumers who are increasingly looking for a more digital service from insurers.