Affinity & Partnership Marketing in Mutual Funds, Life Insurance and Retirement Savings in Italy

Published by: Finaccord Ltd.

Published: Apr. 1, 2004 - 130 Pages

Table of Contents

0.0 EXECUTIVE SUMMARY

Research background and structure

Financial institutions are by far the dominant form of partner…

… meaning that insurers and fund managers regularly compete for partnerships

In the ins. domain, Aviva, Cattolica and Skandia have been particularly successful

Multi-tied partnerships and ‘open architecture’ are common for mutual fund dist.…

… with both insurer-owned banks and ind. networks providing additional opportunities

Specialised lenders are increasingly active in the fast-growing market for creditor ins

The participation of not-for-profit affinity groups is comparatively sparse…

… and that of commercial non-financial organisations even more limited…

… in part as a consequence of the fragmented nature of consumer markets in Italy

… although a notable exception is Le Poste which has experienced dramatic growth

Financial sector partners will continue to represent the key to distribution

1.0 INTRODUCTION

Finaccord

PartnerBASE™

Rationale

Methodology

Errors, omissions and limit of liability

2.0 STRATEGIES FOR SUCCESS

Introduction

Why consider affinity and partnership marketing?

Affinity and partnership marketing is not a new concept

Proprietary distribution channels present limited organic growth potential

Not all schemes work but some have been hugely successful

Transient relationships mean that incumbents can sometimes be unseated

What makes for a successful relationship?

Successful affinity and partnership marketing schemes must create three sets of winners

All parties need to benefit but the customer remains king

Judicious partner selection is a prerequisite for establishing effective schemes

Brand or ideological fit can be as important as more concrete selection criteria

Strategies for effective affinity and partnership marketing

Optimum results will be achievable only if all elements of the marketing mix are attended to

Affinity and partnership marketing: the way ahead

Financial institutions must emerge from their product silos to create more exciting packages

Injecting some fun into financial services will stimulate affinity marketing schemes

The future prospects for affinity and partnership marketing should be bright

3.0 MARKET OVERVIEW

Introduction

Overview of the household savings and investments market in Italy

Household savings habits are impacted by weak performance of the equity market

Overview of the mutual fund market in Italy

Money market funds thrive amid equity market uncertainties

Overview of the life insurance market in Italy

The life insurance market more than doubles between 1998 and 2003

Overview of the open pension fund market in Italy

The value of the open pension fund market remains comparatively tiny

Overview of affinity and partnership marketing in Italy

Affinity and partnership marketing schemes segmented by financial product

Over 2,200 affinity and partnership schemes break down relatively evenly by fin. product

Affinity and partnership marketing schemes segmented by type of partner

Financial institutions dominate the distribution of consumer financial services in Italy

Aff. and partner. mark. in Italy: mutual funds, life ins. and retire. savings

Schemes segmented by type of product

774 affinity and partnership marketing schemes traced by Finaccord’s research…

Schemes segmented by type of partner

… over three quarters of which are attributable to the financial partner category

All cases of provision segmented by product and by operating model

Multi-tied or fully open distribution systems are most evident for mutual funds

4.0 AFFINITY GROUPS

4.1 Charities

Introduction

Charity involvement in affinity marketing of financial services is currently limited

4.2 Leisure organisations

Introduction

The CRAL are increasingly involved in arranging discounts for their members…

… a variety of partnerships having been traced for life insurance and retirement savings

Life insurance

Fondiaria SAI appears to have been active in targeting leisure organisations

Unit-linked life insurance

Almost one quarter of leisure organisations also offer unit-linked life insurance…

Pension plans

… the same proportion being active in the intermediation of pension plans

4.3 Professional associations

Introduction

Professional services have limited involvement in affinity financial services…

… occupation-specific pension funds and casse di previdenza fulfilling the role in many cases.53

4.4 Sports organisations

Introduction

Sports orgs. offer limited prospects beyond policies directly linked to the relevant sport

Life insurance

Sportass accounts for over three quarters of partnerships for sports-related life insurance

… although some private sector ins. have also been able to make headway in this market

4.5 Trade unions

Introduction

CGIL and CISL dominate the trade union affinity marketing landscape in Italy…

… which means that Unipol and Union Vita enjoy strong positions in this segment

Life insurance

Unipol and Union Vita maintain a virtual duopoly for life ins. marketed through trade unions

Open pension funds

Union Vita offers open pension funds for CISL members

Pension plans

Partnering configurations for pension plans are largely the same as for life insurance

5.0 FINANCIAL PARTNERS

5.1 Banks

Background

Consolidation and rationalisation change the face of retail banking in Italy

Bancassurance opportunities may also be apparent in the fast-growing second tier of banks

Foreign entrants have made limited headway in the Italian retail banking market

Introduction

Consideration of 155 banks accounts for the bulk of the market by share of customers

The bank channel continues to account for over 50% of life insurance sales…

… and is almost completely dominant for mutual fund distribution

Mutual funds

Mutual fund provision is virtually ubiquitous among Italian banks…

… with GPF programs playing an important part in their distribution…

… although there is little homogeneity in the operating models used by banks

The larger institutions veer towards provision of in-house funds only to retail clients

Numerous fund managers compete for bank distribution mandates…

… including both domestic investment management entities and overseas entrants

Life insurance

Life insurance provision is virtually ubiquitous among Italian banks…

… a number of the larger banking groups having established joint ventures for the purpose

Banca Intesa rolls its bancassurance interests into single joint venture with Generali

Unipol maintains its 50% stake in BNL Vita

Aviva has created a number of joint venture companies for life insurance in Italy

Some joint ventures persist even after the banking partner has been acquired

Three of the ‘big six’ banks have established captive life insurers

Arca Vita enjoys exclusive distribution for life ins. through a number of ‘banche popolari’…

… while Cattolica has cultivated distribution partnerships as well as joint ventures

Assimoco Vita, Eurovita and Generali also enjoy a number of exclusive relationships

Slightly over 10% of banks work with more than one partner for life insurance

Unit-linked life insurance

Operating models for unit-linked policies are similar to those used for ordinary life insurance… 81

… although Skandia Vita’s specialisation in this market has allowed it to win many partners.

Open pension funds

Open pension funds are promoted by over three quarters of Italian banks

… with Intesa having been successful in creating dist. agreements with external banks

Pension plans

Partnerships for pension plans are usually the same as those for life insurance

Creditor insurance

Creditor insurance constitutes a significant opportunity for life insurers

A market worth approximately €1.6bn in Italy in 2002 if defined broadly

Creditor insurance, as defined elsewhere in Europe, has made limited inroads in Italy

However, fully-fledged creditor insurance is being introduced by pioneers in the market…

Loan brokers, including estate agents, are also active in creditor ins. distribution in Italy

Most mortgage lenders in Italy offer creditor insurance of one sort or another…

… but few payment cards yet carry the option for customers to purchase creditor insurance

Unemployment coverage is provided by fewer than 25% of all policies on the market

Competitor analysis

Single partnerships dominate creditor insurance operating models in Italy…

… but a complex web of bancass. agreements impedes the progress of specialist providers

Formal joint ventures are an important feature of the Italian bancassurance landscape

5.2 Casse di previdenza

Introduction

Involvement of the casse di previdenza as distributors in these markets is minimal

5.3 Financial networks

Introduction

The SIM sector has been subject to substantial rationalisation in recent years

Mutual funds

All financial networks are active in mutual fund distribution…

… a majority working with multiple, external fund managers

Life insurance

Some financial networks offer partnership opportunities for external life insurers…

Unit-linked insurance

… similar opportunities being in evidence for unit-linked insurance

Open pension funds

Crédit Agricole and HDI establish distribution deals with independent financial networks

Pension plans

Pension plans are offered by 82.1% of financial networks

5.4 Insurers

Introduction

5.5 Specialised lenders

Introduction

Specialised lenders are a diverse category…

… with many active in the fast-growing market for loan-related protection policies

Net Insurance and Cardif are leading protagonists in the creditor insurance market

6.0 NON-FINANCIAL PARTNERS

6.1 Automotive manufacturers

Introduction

6.2 Estate agents

Introduction

A handful of estate agency networks have established partnerships for life insurance…

Life insurance

… although penetration rates are well below those for mortgages and household insurance

Often, mortgage partners will have established their own relationships for life ins. provision

6.3 Football clubs

Introduction

Football clubs become more adept in affinity financial services…

… although involvement in life insurance and related products remains limited

6.4 Retailers

Introduction

Retailing markets in Italy are fragmented by European standards…

… with the top four retailing groups collectively accounting for less than 10% of total sales…. 116

… although the Bersani legislation removed many licensing requirements and restrictions

Carrefour and Mulliez-Auchan lead the foreign conquest of Italy

Retailer involvement in fin. services is concentrated in consumer finance and credit cards

6.5 Other non-financial organisations

Introduction

Le Poste leverages distribution strength in life insurance and mutual funds

GRAPHICS / TABLES

The affinity and partnership marketing universe

Entities contacted for the research, segmented by type

The three winners in successful affinity and partnership marketing schemes

How to identify an effective partner in affinity and partnership marketing

The virtuous circle for effective affinity and partnership marketing

Most affinity and partnership marketing schemes conform to a ‘product silo’ approach

A new generation of affinity and partnership marketing schemes must deliver a more compelling proposition

Segmentation of household savings and investments assets outstanding in Italy, 1998-2003e

Segmentation of total mutual fund assets outstanding in Italy, 1998-2003

Segmentation of life insurance gross premium income in Italy, 1998-2003e

Segmentation of open pension fund net assets in Italy, Q3 2003

Affinity and partnership marketing schemes in consumer fin. services in Italy: segmentation by type of product

Affinity and partnership marketing schemes in financial services in Italy: segmentation by type of partner

Aff. and partner. marketing schemes for mutual funds, life ins. and ret

Aff. and partner. marketing schemes for mutual funds, life ins. and ret

All cases of provision for mutual funds, life ins. and ret. savings in Italy: seg. by product and by op. model

Charities in Italy offering financial services other than credit cards

Leisure organisations offering life insurance in Italy: penetration, operating models and partner market shares

Leisure orgs. offering unit-linked life ins. in Italy: penetration, operating models and partner market shares

Leisure organisations offering pension plans in Italy: penetration, operating models and partner market shares

Professional associations in Italy offering life insurance and retirement savings products

Occupation-specific pension funds in Italy, 2004

Sports organisations offering life insurance in Italy: penetration, operating models and partner market shares

Trade unions offering life insurance in Italy: penetration, operating models and partner market shares

Trade unions offering open pension funds in Italy: penetration, operating models and partner market shares

Trade unions offering pension plans in Italy: penetration, operating models and partner market shares

Banks offering mutual funds in Italy: penetration and operating models

Importance of external mutual fund providers ranked by number of distribution agreements traced with banks

Banks offering life insurance in Italy: penetration, operating models and partner market shares

Banks offering unit-linked life insurance in Italy: penetration, operating models and partner market shares

Banks offering open pension funds in Italy: penetration, operating models and partner market shares

Banks offering pension plans in Italy: penetration, operating models and partner market shares

Approximate gross written premiums for creditor insurance in Italy segmented by underlying product, 2002

Lender penetration of creditor insurance policies by product in Italy

Risks covered by creditor insurance policies in Italy

Operating models for creditor insurance in Italy

Partner market shares for creditor insurance in Italy

Financial networks offering mutual funds in Italy: penetration and operating models

Financial networks offering life insurance in Italy: penetration, operating models and partner market shares

Financial networks offering unit-linked ins. in Italy: penetration, operating models and partner market shares

Financial networks offering open pension funds in Italy: penetration, op. models and partner market shares

Financial networks offering pension plans in Italy: penetration, operating models and partner market shares

Specialised lenders offering life insurance in Italy: penetration and operating models

Estate agents offering life insurance in Italy: penetration, operating models and partner market shares

Football clubs in Italy offering life insurance

Retailers in Italy offering financial services other than consumer finance and credit cards

Abstract

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