Who is the main regulator with oversight of bancassurance matters?
The Office of Insurance Commission (OIC) and Bank of Thailand (BOT).
Is bancassurance a popular mode of distribution? What types of bancassurance partnership arrangements are available?
Yes.
Bancassurance partnerships are generally divided into the following arrangements:
a) exclusive arrangements;
b) preferred partner arrangements; and
c) conventional arrangements (i.e., bank will distribute the insurance products of insurer without preferential treatment).
What are the main parameters in negotiating a distribution agreement?
The salient terms are:
a) exclusivity;
b) term and renewal;
c) products to be distributed;
d) duties of insurer and bank;
e) fees and timing for such payment; and
f) the mining of the bank’s customer data.
Are insurance companies and banks required to hold any specific license (whether to be obtained on an ad hoc or ongoing basis) in order to enter into the distribution agreements to provide bancassurance services and products?
Banks are required to hold an insurance brokerage license to carry on insurance brokerage business.
Insurance companies must be licensed under the Life Insurance Act or the Non-life Insurance Act, as the case may be.
Are there any legal or regulatory restrictions on the insurance company or the bank providing exclusivity to the other party?
Currently, there is no regulatory restriction for an insurer to appoint a bank as its exclusive distributor.
The length of the exclusivity is a matter of negotiation between the parties.
Assuming full exclusivity is not possible for legal or regulatory reasons, would the bank be able to grant the insurance company preferential treatment? If yes, under what conditions?
Yes, preferential treatment is common in instances where a bank resists an exclusive arrangement. The form of the preferential treatment is a matter of negotiation.
What type of engagement (if any) with the regulators would be legally required in connection with the negotiation/entering into of the distribution agreements?
No regulatory approval is required.
Would the insurance company and/or the bank be required to submit the distribution agreements (and any ancillary documents) to the regulators as part of any notification/approval process? If yes, do the regulators require any specific terms to be included in the distribution agreements?
No statutory or regulatory requirement to submit the agreement.
If the distribution agreements are submitted, would the regulators review/provide comments and require that the agreements be modified?
Would any antitrust/competition analysis have to be conducted with respect to the insurance company and/or the bank prior to entering into the distribution agreements?
It may be prudent to undertake a competition analysis given the broad application of, and significant penalties for breach under, the Trade Competition Act in Thailand.
What are the competition law considerations that might impact the term (e.g., duration) of a distribution agreement?
Various terms and conditions would be considered, especially exclusivity, amount of compensation and amount of insurance products to be offered, as well as market shares of the parties, including whether the parties are considered having dominant position.
For information the Trade Competition Act was recently announced on 5 October 2017 and it is expected that there will be a number of subordinate regulations to provide more guideline and clarity on relevant factors.
Under applicable laws and regulations, would the insurance company be allowed to use customer information (consisting of certain personal and demographic data) possessed by the bank to: (a) develop new products and refine marketing strategies, among others; (b) conduct its own telemarketing or direct mail activities; and (c) cross-sell products?
Yes, although care will have to be taken by the bank in sanitizing the customer information before it is extended to the insurer.
Although there is no specific law in this regard, but generally speaking, individuals have their privacy rights, hence it is advisable for banks to obtain customer consent.
Are there any laws or regulations limiting or prohibiting the dissemination of customer information without the customers’ consent? Are customers allowed to waive any of these limitations or prohibitions?
There are no laws or regulations on this. However, the BOT has issued the guideline to prohibit the dissemination of customer information without the customers’ consent.
Are there any other prohibitions or limitations resulting from applicable privacy laws relating to the sharing of customer information for purposes of marketing and distribution of insurance products?
Are there any prohibitions or limitations in respect of compensation arrangements for bancassurance transactions (up-front/staggered payments, commission payments, bonus payment schemes)?
The compensation payments are regulated by the OIC and vary according to the type of products.
What are the sanctions for non-compliance with the prohibitions or limitations in respect of compensation arrangements?
A monetary penalty is imposed.
Would the regulators request information on compensation arrangements (for specific jurisdictions or globally)?
The OIC has broad powers as a regulator, and therefore can request information on compensation arrangement in Thailand.
Are there any restrictions in relation to the classes of insurance products which may be offered pursuant to a bancassurance arrangement?
None, provided that the bank has obtained the insurance brokerage license before selling.
Are there any products or product lines that the insurance company would be unable to offer to and distribute through the bank?
Would the policy forms used by the insurance company have to be approved by any regulator? Would the insurance company own the intellectual property rights relating to such policy forms?
Yes, the policy needs to be approved by the OIC.
Yes, insurance companies generally own the IP rights to such policy forms.
Are there any prohibitions or limitations in respect of co-branding between the bank and the insurance company?
No, there is no specific regulatory prohibitions or limitations.
Would the bank personnel be required to hold any specific license in order to distribute the insurance products? Are there any reasons why bank personnel may be prohibited from distributing insurance products?
No. However, the bank would generally exercise care regarding the level of access to its customer data.
If the sales person is employed by the bank: (a) is the insurance company required to have oversight or provide special training; and (b) are there applicable laws and regulations allowing the insurance company to compensate the bank for the service provided by its sales personnel?
- There is no statutory requirement for training or oversight responsibility by the insurer. However, it is common for the insurer to provide training to the bank personnel (mostly for
obtaining the insurance brokerage licenses).
- The compensation arrangements between the insurer, the bank and the bank sale personnel are based on the consideration arrangement set out within the distribution agreement.
If the sales person is employed by the insurance company, are there any restrictions on their access to the bank’s branches?
No. However, the bank would generally exercise care regarding the level of access to its customer data.
Are banks allowed to lease space to insurance companies to market its products in the bank’s branches?
Yes. Banks are allowed to lease space to insurance companies.
Are there any investment requirements (e.g., minimum stake to be held by the insurance company in its distribution partner) or any other similar legal or regulatory obligations that may affect the insurance company’s ability to enter into the distribution agreements?
Are there any recent (or pending) developments in laws and regulations that may be relevant to the negotiation and/or the entering into of the distribution agreements (or the provision of services by the insurance company and/or the bank pursuant thereto)?
The current Life Insurance Act and the Non-life Insurance Act are being amended.
Are there any other issues that may affect the insurance company’s ability to enter into the distribution agreements and provide bancassurance services on an ongoing basis to the bank?
