Demand for high net worth offshore insurance-linked investment structures in emerging markets is both large and underserved by private banking businesses, according to research from Scorpio Partnership.
Current estimates are that less than five per cent of all wealth management portfolios in emerging markets include an insurance component.
Scorpio research indicates that life policy-linked instruments within portfolio solutions are expected to increase to 15 per cent within five years. This would suggest a high/ultra high net worth market of assets that could incorporate insurance-wrapped cover of almost USD1.2trn.
“This is an untapped frontier of wealth management,” says Sebastian Dovey, managing partner at Scorpio. “To date, in the offshore emerging market context most private banks have scratched the surface of demand for insurance solutions. The attitude appears to be that insurance is too complex to sell and so focus is shifted elsewhere on the product palette. It is our view that in the search for new and sustainable revenue streams the more forward thinking banks will now adjust course to incorporate these solutions as there is demand and the complexity is surmountable.”