Credit card-linked insurance and assistance market worth €4bn in Europe

The market for packaging and cross-selling insurance and assistance policies linked to payment cards and bank accounts is lively and competitive in most European countries, according to research by consultancy firm Finacord.

The value of this market was around €4bn across 20 countries in Europe in 2011 in terms of gross written premiums and other revenues, equivalent of €4 for every credit and debit card in issue across these countries.

At present, the bulk of this market is paid for by customers, estimated at €3.21bn, while around €790m is funded by banks and other card providers. Finnaccord expects both sides of this market to grow in many countries.

Banks and card providers are likely to increase their expenditure on insurance and assistance benefits packaged automatically with banking products, in order to make their products stand out in increasingly competitive environments, the report said.

The research indicates that the number of added-value bank accounts where customers pay a fee is also likely to rise.

This type of account was found to exist in 12 of the 20 countries covered by this research, and is most prevalent in the UK, where there are known to be close to 10 million such accounts. The total number of payment cards in circulation is still growing in countries such as Russia.

Alan Leach, director at Finaccord, commented: "Our analysis of around 5,000 payment cards and bank accounts offered by over 850 banks and other payment card providers across Europe showed that these providers are innovating constantly, bringing in policies related to computer assistance, concierge services and online shopping, for example.

"However, three quarters of the market is still made up of creditor insurance and policies related to personal and identity protection."

Finaccord's research indicates that this €4bn market comprises around €1.61bn spent on creditor (credit card payment protection) insurance, around €1.44bn allocated to policies related to personal and identity protection (mainly card protection insurance and similar variants), and around €944m to other types of cover related to payment cards and bank accounts.

A combined total of around €2.97bn spent by banking institutions and their customers in Europe's five largest markets for these types of cover (namely, in descending order, France, the UK, Turkey, Italy and Spain), and €1.03bn in the other 15 countries considered.