Customers consult services at an office of Canadian insurer SunLife. After many local banks joined bancassurance partnership, the value of bancassurance partnership agreements has sharply increased. (Photo sunlife.com.vn)Manybanks have unveiled their first-quarter financial reports with soaring profitsin the last months, even compared to pre-COVID-19 times. Soaring profits notonly come from escalating interest income but also a jump in earnings frombancassurance.
CEOof Vietcombank Nghiem Xuan Thanh said in the first quarter this year, his bankrecorded more than 8.6 trillion VND (373.9 million USD) in pre-tax profitduring the period, a 70 percent jump on-year. Of this figure, 390 billion VNDcame from the revenue of the bancassurance activities (bancassurance isan arrangement between a bank and an insurance company allowing the insurancecompany to sell its products to the bank's client base. This partnershiparrangement can be profitable for both companies).
Duringthe bank’s annual general shareholder meeting, the bank’s board of directorssaid the exclusive insurance partnership between Vietcombank and FWD Group(a multinational insurance company based in Hong Kong) was thebiggest transaction in Vietnam. Last year, Vietcombank ranked 13th in life insurancedistribution channels. It took 8th place in the first quarter of 2021.
NguyenDuc Thach Diem, CEO of Sacombank, said that in the first four months of thisyear, profits from bancassurance reached more than 400 billion VND. Sacombankand Japanese-owned Dai-ichi Life Insurance Company of Vietnam signed anexclusive 20-year bancassurance partnership agreement in 2017.
Underthe agreement, Dai-ichi Life Vietnam would be the sole insurer selling lifeinsurance products through Sacombank’s network.
NguyenThi Phuong Thao, HDBank's standing vice chairwoman, said that HDBank's profitsto be gained from bancassurance activities were expected to reach 1 trillionVND in 2021.
HDBankand Dai-ichi Life Vietnam signed a long-term exclusive bancassurancepartnership agreement in 2015. However, the bank has just restarted itsbancassurance activities from the end of the fourth quarter of 2020.
Accordingto industry insiders, four years ago, the value of bancassurance partnershipagreements fluctuated around 100 million USD for 15-year cooperation. Aftermany local banks joined this lucrative segment, the value of bancassurancepartnership agreements has sharply increased.
Earlierlast year, Vietcombank and FWD made a deal of about 400 million USD, while ACBBank signed a 370 million USD partnership agreement with Canadian insurerSunLife.
SSISecurities Corporation of Vietnam reports that two major exclusivebancassurance partnership agreements signed between ACB and SunLife Vietnam andVietinBank and Manulife Vietnam will create many changes in life insurancemarket share.
PhamDoan, standing vice chairman of the Board of Directors and General Director ofLienVietPostBank, said his bank was also among the top commercial banks withthe highest insurance sales in the market.
LienVietPostBanksigned an exclusive partnership agreement with Dai-ichi Life Vietnam for 5years and the agreement will finish in 2022. The bank will negotiate to signexclusive partnership agreements with other partners. This year, the bank setsa target of earning revenue of 700 billion VND from bancassurance activities.Last year, the bank posted 451 billion VND.
Inanother development, after receiving complaints from clients who are forced bycredit institutions to buy compulsory insurance products in order to get bankloans, the Ministry of Finance states that it asked insurers tostrengthen supervision on their insurance agents at credit institutionsand commercial banks.
Authorisedagencies also required insurance companies to work with commercial banks to uncoverand strictly handle any insurance agents forcing clients to buy insuranceproducts.
TheMinistry of Finance also said that to make the insurance distribution channelsat banks more effective and not cause inconvenience to insurance buyers, theministry will continue working with the State Bank of Vietnam to improvepolicies and strengthen their management and supervision activities as well.
Anyinsurance companies or agents found violating the law will be strictly handledby authorised agencies.
TheState Bank of Vietnam (SBV) issued Document No.7928/NHNN-TTGSNH on October 30,2020 providing guidelines on insurance operations by credit institutions andforeign bank branches for insurance business.
TheSBV highlighted that banks are not allowed to associate compulsory insurancepurchase with credit granting to customers – in short, “forcing” customers tobuy insurance in order to get bank loans is not permitted./.
VNA
