What forms of the bancassurance alliance model is ... - Emerald

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insurance entities have more similarities than differences, characteristics that may
favor joint production and business synergies. Through diversification, the
bancassurance approach reduces the resources required to manage risk, which in
turn results in lower costs (Hughes et al., 1999). Korhonen and Voutilainen (2006) and
Korhonen et al. (2006, 2005) applied the expert panels and the analytical hierarchy
process (AHP) to explore the most prefer alternative alliances between banks and
insurance companies from executive management perspectives, supervisory
authorities, and customers, respectively. Wu et al. (2008) adopt the modified Delphi
method to construct the framework of mutual fund performance and the AHP model to
design an assessment method for mutual fund performance.
According to the context of Taiwan’s current conditions with regard to finance and
financial systems, the aim of this paper is to searching for the preferable bancassurance
alliance model to customers. Both the banks and insurance companies involved in a
strategic alliance can be domestic or foreign with operations in the Taiwan area, and
insurers can be life or non-life companies with operations in the Taiwan area.
The selection of an alternative is a multi-criteria decision-making (MCDM) problem.
First, we defined three criteria and nine sub-criteria for use in evaluating six alternative
models of financial alliance. The criteria and sub-criteria were introduced at the
suggestion of the industry experts and the advanced or well-informed customers, and
other elements were based on the methodology of previous studies. Each expert was
interviewed individually. Then, the same experts were assembled as a panel to find the
preferable bancassurance alliance model to customers. As a decision support system,
we used the AHP developed by Saaty (1980).
This paper is organized as follows: Section 2 briefly describes the AHP
methodology. Sections 3 applying the AHP and the sensitivity analytic develop an
evaluation method. Finally, we conclude the paper with general remarks and
suggestions for further research.
2. Analytic hierarchy process methodology
As a decision method that decomposes a complex MCDM problem into a hierarchy
(Saaty, 2000), AHP is also a measurement theory that prioritizes the hierarchy and
consistency of judgmental data provided by a group of decision makers. AHP
incorporates the evaluations of all decision makers into a final decision, without
having to elicit their utility functions on subjective and objective criteria, by pair-wise
comparisons of the alternatives (Saaty, 1990), with the calculation procedure as
follows.
2.1 Establish the hierarchy structure
When deals the complex issue, we can be performed decompose the hierarchy
structure. Based on the human cannot comparison above the seven kinds things at
the same time, so we must assume each elements of the hierarchy not suitably
surpasses seven elements. Under this limited condition, it may carry on the reasonable
comparison and easier ensure the consistency (Saaty, 1980). The first hierarchy of the
structure that is we want to achieve goal. Under the end hierarchy is the choice projects
or replacement alternatives, as well as the each middle hierarchies are the appraisal
factor or criteria.