Citibank is auctioning the rights to sell life insurance products across its branch network to Asia’s emerging affluent, according to a person familiar with the matter.
The US bank may divide the rights between several insurers, the person said.
Citi is taking advantage of a surge of interest from global insurers in selling their products to Asia’s fast-growing middle class.
North American, European and Japanese insurers are beset by low growth at home and rising regulation costs. They have been buying other insurers in Asia and teaming up with local banks to sell their products in an effort to boost profits.
Insurers from Canada's Sun Life to Japan's Meiji Yasuda Life have been stumping up high prices to buy small stakes in other insurers in the region in the hope of capturing some of the growth for themselves.
Reinsurer Swiss Re forecast that the value of life insurance premiums in Asian emerging markets would grow at a rate of 9.9% in 2014, compared with 3.9% globally.
The auction could raise billions of US dollars for Citi but the US bank has not yet decided the balance between taking an upfront payment for the rights and a share of the commissions going forward, the person said.
Insurers distribute their products in different ways. Some have armies of salesmen in Asia who sell policies door-to-door.
This has been the favoured approach in Asia where referrals from families and friends can be a more effective sales method.
Another channel is via bank branches. Insurers place salesmen in the branches or train bank personnel to sell insurance policies alongside banking products.
This sales avenue has been gaining traction in Asia. It is cheaper for the insurer than maintaining large numbers of salesmen. However, they have to split commissions with the bank.
So-called bancassurance partnerships have become longer recently as banks have sought to sell distribution rights whilst interest from global insurers is fierce.
Insurers are also keen to develop long-lasting partnerships, which will allow them to see the fruits of their initial investment in training and technology.
The deal comes as governments and development agencies across Asia are promoting insurance products to their citizens.
They are trying to plug the gap left by shrinking cradle-to-grave state safety nets, which are becoming unaffordable as their populations expand.
Savings and insurance products help cushion citizens if a wage earner in the family dies prematurely, lower state pensions and make healthcare more affordable.
However, governments are also clamping down on mis-selling of products via banks, and insurance experts expect regulation to continue to tighten across the region.
In China new regulations have knocked the sale of insurance products via banks hard.
Insurers also sell policies over the internet. While this channel has largely replaced the door-to-door salesmen in Europe and North America, sales over the internet are largely in their infancy in most of Asia.
Citi spokespeople could not be reached for comment.
