Top 10 Issues to Consider in a Regional Bancassurance Deal | Japan | Asia Pacific Insurance

What are the issues to consider in respect of exclusivity rights in a bancassurance agreement?

There is no regulatory restriction for the insurance company or the bank to provide exclusivity, although it may be prudent to undertake a competition analysis given the broad application of, and significant penalties for breach under, the Antimonopoly Act in Japan.

What are generally the obligations of an insurer in terms of providing manpower support?

Although it may not be an insurer’s typical obligation, it is possible to oblige an insurer to provide support to the bank by sending individuals to guide and train the bank’s staff or second personnel to assist with the marketing and sale of the bancassurance products.

What are the typical rights and provisions in relation to insurer’s right to access the bank’s customer database and also the obligations of an insurer that is in receipt of such information?

As the banks are under a strict duty to maintain confidentiality and secrecy, banks may not normally allow the insurer the right to access their customer database especially non-public financial information, unless the customer gives consent.

What are the issues to consider in respect of compensation payable by the insurer to the bank and cost of distribution of bancassurance products?

We are generally not aware of any issues related to compensation/cost of distribution of bancassurance products.

What can parties do if the insurer is unable to develop or refuses to develop a bancassurance product or cease offering a bancassurance product?

It is possible to have a provision allowing the bank to terminate the exclusive relationship if the insurer is unable to develop or refuses to develop a bancassurance product or cease to offer a bancassurance product.

What are the possible terms and issues relating to intellectual property that has been jointly developed (JDIP) pursuant to a bancassurance agreement?

We are generally not aware of any issues related to JDIP. It may not be common for insurers and banks to jointly develop intellectual property.

What happens to the facilitation fee for the promotional and marketing activities paid by the insurer to the bank in the event of an early termination?

The position will vary depending on the reason for the early termination and which party is at fault.

A pro-rata refund of the facilitation fee in the event of an early termination may not be fair to the banks as the banks would typically invest and incur more costs and expenses during the initial years of a bancassurance agreement to promote and market and put in place a business structure to supports the objectives of the bancassurance agreement. How can the parties address this issue?

The parties can have a provision requiring the insurer to pay a larger amount in the first period among some separate periods.

Can a party ask for an indemnity for any losses, expenses and damages suffered as a result of an act by a bank staff and conversely can a bank to ask for an indemnity or any losses, expenses and damages suffered which is attributed to the other party?

Yes, it is possible to have such indemnity clause in the bancassurance agreement.

What are the issues to consider when forming a bancassurance steering committee?

Composition of bancassurance steering committee (BSC); frequency of BSC meetings; quorum for BSC meetings; matters falling within the scope of the BSC; decision-making process and proposed resolutions if there is a deadlock in the BSC are typical issues to consider when forming a BSC.

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