Introduction

One of the most significant developments in European financial services over the past years has been the increasing conver-gence of banking and insurance in the retail area. This trend to-wards bancassurance or Allfinanz refers primarily to banks enter-ing the insurance sector by offering insurance products to their retail customers. While the first ventures into bancassurance in Europe occurred as early as the late 1960s when TSB, Lloyds and Barclays entered the life insurance sector, it was not until the mid-1980s that a large number of European banks started entering insurance on a broader scale. Frequently cited success stories include Credit Agricole’s de novo start-up, Prédica, which quickly achieved a leading position in the French market, or TSB in the UK which derives 30 percent of its profits in retail financial services from insurance. These examples have inspired many European bankers to attempt emulating these successful ventures by also entering the insurance sector. By 1993, more than half of the large European banks have incorporated insur-ance products into their product portfolios. As a result, the for-mer cosy co-existence of the banking and insurance industries has turned into direct competition in the financial services mar-ket. Today, cross-industry penetration has already reached a stage where analysts increasingly speak of a ‘retail financial ser-vices industry’ rather than referring to retail banking and insur-ance as separate and distinct sectors.