The Financial Services Act of prompted changes to remove the regulatory hedges among financial institutions. The present work sets out to explore the non-quantitative aspects of the interface between banks and insurance firms. Without discounting any quantitative analysis, the study diverts from the existing literature by placing equal weight to the so far overlooked qualitative elements.
The paper reviews the various market trends and highlights the differences among major European countries. The diverse and inconclusive bancassurance literature is also briefly reviewed. Having discussed the cultural differences and integration obstacles between banks and insurance firms, the study proposes a three-dimensional radar-shape approach for the financial conglomerate.
More specifically, product complexity, distribution infrastructure and market integration are put forward as the forcing variables underlying the provision platform of modern hybrid financial services.
The analysis further elaborates on a number of market-based synthetic corporate structures drawn from the European experience as a whole. The paper concludes by summarizing the main issues and pointing to avenues for potential research.
At the onset of the 21st century, insurance markets in Europe are evolving in an unprecedented manner. After years spent locked in the regulatory battle over whether bankers should be allowed to make inroads into the insurance business, the two institutions are now experiencing the forms of interface that market practices copiously offer. It has come as a result of cross-border consolidation and their lust for mounting ownership's benefits.
