Bancassurance takes on trust challenges
Bancassurance takes on trust challenges
The bancassurance sector is facing challenges amid many partnerships and complaints, requiring stricter regulations and improved governance to restore customer trust.
Chubb Life Vietnam and Hong Leong Bank Vietnam last week formalised a strategic partnership pact to broaden the reach of Chubb Life’s insurance solutions through an innovative distribution channel.
Nguyen Hong Son, CEO of Chubb Life Vietnam said, “This collaborative effort guarantees that the solutions offered align perfectly with customers’ unique requirements. Furthermore, this partnership serves as a catalyst for fostering an understanding of the crucial role played by financial and insurance products in an individual’s life journey.”
Duong Duc Hung, CEO of Hong Leong Bank Vietnam, echoed the sentiments, expressing the bank’s commitment to providing financial solutions that cater to the needs of individual customers.
Elsewhere, FWD Vietnam last week officially announced a partnership with Be Group, a prominent multiservice consumer platform, to enhance public awareness of life insurance and facilitate customers access to simplified, online insurance products that are easily understandable and aligned with the modern lifestyle of the Vietnamese people.
And a recent report by MB Securities revealed that VIB will finalise the renewal of its bancassurance contract with Prudential in 2023, with an anticipated upfront fee of $100 million. This substantial support is expected to assist the bank in achieving its business objectives for the year.
While VIB has consistently ranked among top performers in terms of insurance revenue and branch-level effectiveness – ranking second in APE insurance revenue in 2022 and leading in branch-level effectiveness – its bancassurance segment is also affected.
During the first quarter of 2023, VIB recorded a revenue of VND11.8 billion ($491,700) from bancassurance activities, representing a 44.6 per cent decrease compared to the same period last year.
Despite recent partnerships in the sector, the overall outlook remains gloomy. The industry has been marred by numerous complaints and scandals, particularly concerning insurance sales through banks.
The Ministry of Finance (MoF) in mid-June assigned the Insurance Supervisory Authority the urgent task of conducting inspections at four insurance companies: Prudential Vietnam Life Insurance, MB Ageas Life Insurance, BIDV Metlife Life Insurance, and Sunlife Vietnam Life Insurance.
Among these tasks, the Insurance Supervisory Authority is required to promptly report to the MoF the results of a specialised examination on insurance sales through banks and credit institutions conducted at Manulife Vietnam.
This directive follows Manulife Vietnam’s recent release on June 5, in which the company announced its focus on addressing numerous customer complaints related to the “Tam An Dau Tu” insurance product offered in collaboration with the troubled lender, SCB.
To date, Manulife Vietnam has successfully resolved nearly 60 per cent of the complaints through direct dialogue initiated on April 26, with ongoing efforts to address the remaining 40 per cent. According to the Ministry of Public Security, Manulife has already refunded over VND800 billion ($34 million) as of May 31.
Pham Van Thinh, a National Assembly delegate of Bac Giang province, highlighted existing regulations that allow two common types of life, term, and mixed insurance, to offer a maximum discount of 40 per cent on the first-year premium.
He said that some commercial banks suggested customers obtain loans to purchase life insurance with premiums equivalent to approximately 3-4 per cent of the loan amount over the last three years
“In certain cases, purchasing life insurance became a requirement for expedited loan approval or favourable interest rates. Some commercial banks assigned insurance contract targets and premium revenue to their employees,” he said.
Recognising the inherent disadvantage of borrowers in loan relationships, Thinh proposed consideration of regulations governing commercial banks as insurance agents, particularly in life insurance, to avoid any conflicts of interest and protect borrowers.
Minister of Finance Pham Duc Phoc also stressed the significance of bancassurance in diversifying insurance operations but acknowledged its increasing complexity. “Consequently, a re-evaluation and adjustment of regulations is necessary to ensure the sound and proper functioning of bancassurance,” he said.
