Combination of credit institutions and insurance companies strategic for SMEs

The integration of banking and insurance services has gained strategic importance in the financial sector, driven by the need to diversify income streams and improve customer engagement. Services for SMEs are taking on a driving role for the sector, especially in the light of the analysis of corporate insurance expenditure, which is far removed from international markets. Various organisational models have been adopted to offer bancassurance services, from commercial partnerships to multi-brand strategies: the subject of the Sda Bocconi study, carried out in collaboration with Aon, "Bancassurance: solutions and opportunities to protect SMEs", an analysis that makes use of interviews with banks and insurance companies. "The main objective of this report," comments Giampaolo Gabbi, director of the Finance Knowledge Area - Sda Bocconi School of Management, "is to contribute to the public and professional debate, making concrete data, innovative analyses and strategic recommendations available to sector operators, SMEs and all interested stakeholders.

The average annual expenditure on insurance coverage shows that Italian SMEs invest significantly less than companies in other industrialised countries. The research data indicate that companies in the Belpaese, on average, spend about 14,013 euros to protect themselves against risks, compared to a global average expenditure of 22,600 euros and with a significant gap compared to the levels reached by countries such as Ireland, China and Australia, where investment exceeds 26,000 euros per year. This gap represents a strategic opportunity for banks, allowing them to strengthen their role as a reliable financial partner and increase revenues through a new revenue stream.

"SMEs represent the core of the Italian economy. It is essential to set up a series of safeguards, active protection and passive protection, that can guarantee their subsistence and prosperity," comments Andrea Parisi, managing director of Aon's Italy and Eastern Mediterranean area. "Banks, also thanks to their capillary presence in the territory, are one of the most important social and economic agents supporting the development of entrepreneurship. The combination of territorial proximity and the trust they enjoy among entrepreneurs can make them one of the vehicles for the provision of insurance products specifically designed for SMEs, enabling their lasting and sustainable development

The different models through which collaboration between the banking and insurance worlds is structured are based on specific motivations. All are primarily oriented towards proactively responding to new market opportunities. Business partnerships and joint ventures are perceived as flexible and suitable for quick reaction to changing market conditions. Conglomerates, on the other hand, are preferred to address competitive challenges and expand product scope, reflecting their potential to offer vertical integration and a broad, shared resource base. Finally, reducing operating costs is a secondary motivation, more relevant for multi-brand strategies. The survey also explores the perceived benefits of respondents' model choices to implement their bancassurance strategy. Commercial partnerships are perceived as the most advantageous model, especially in terms of increasing the customer base, loyalty and improving profit margins. In contrast, joint ventures and conglomerates score lower, reflecting possible operational difficulties and higher integration costs. The multi-brand strategy seems to be effective for improving profit margins and reducing operating costs, but less useful for increasing loyalty and the customer base.

Crossing the analysed dimensions, the study focuses on the relationship between perceived benefits and revenue impact. The data are broken down by two levels of revenue impact, one significant and one moderate. The results show that institutions benefiting from a significant increase in revenues tend to value above all the ability of bancassurance to respond to market opportunities, face competition and expand their offerings. In contrast, institutions with moderate revenue growth place greater emphasis on reducing operating costs.