FWD Group has struck a deal to sell its bancassurance partnership contract with TMB Bank to Prudential Life Assurance Thailand in a deal worth 20 billion baht, according to the Hong Kong-based insurer.
The move came after FWD completed acquiring SCB Life Assurance and signed a 15-year bancassurance agreement with Siam Commercial Bank (SCB).
TMB is in the process of integrating with Thanachart Bank (TBank), which has a partnership deal with Prudential.
The merged bank decided to review bancassurance business agreements and become a strategic partner with Prudential only, said chief executive Piti Tantakasem.
The merged bank yesterday signed a new agreement with Prudential under a 15-year bancassurance contract, which will take effect from Jan 1, 2021.
Under the bancassurance acquisition agreement, the novation agreement will start from April 1, 2020 for a transition period of nine months, with the remaining term of FWD's bancassurance contract to be transferred entirely to Prudential Thailand at the end of this year.
TMB will realise 1.3 billion baht worth of transition service fees from the two insurers by year-end.
To facilitate customer service at both banks during the transition period in 2020, TMB will continue to sell FWD's life insurance products this year and will gradually onboard Prudential products through various channels operated by TMB.
TBank will continue selling the life insurance products of Prudential exclusively. Under the existing TBank-Prudential 15-year agreement, there are about 500,000 Prudential life insurance policies offered by TBank.
Mr Piti said FWD and Prudential's policyholders who took out insurance policies from TMB and TBank would not be affected.
The two foreign insurers have a long-term commitment to the Thai market, he said, and this shows the confidence of foreign investors in the local market amid the coronavirus pandemic.
Thailand's insurance penetration rate is still low at 7% of GDP, compared with an average of 20% in developed countries, representing high growth potential.
The bank needs to improve financial literacy and encourage Thais to realise the benefits of financial protection, Mr Piti said.
"The coronavirus outbreak is altering Thais' perception of healthcare and making them keen to take out a health insurance policy," he said. "Typically, health insurance also provides coverage for this coronavirus, but this pandemic is encouraging people to take up insurance protection."