Making the sale of insurance coverage clear and managing the standard of consulting throughout this course of are the important thing to making sure the long-term sustainable improvement of bancassurance—the distribution of insurance coverage merchandise by way of banks.
A “gold mine” known as insurance coverage
2022 was one other “bumper” 12 months for fairly a number of banks concerning the income from insurance coverage premiums. Following the earnings season within the fourth quarter of final 12 months, the rating of banks based mostly on their earnings within the insurance coverage phase has been decided.
Army Business Joint Inventory Financial institution (MB) once more occupies the best place. The financial institution has reported a pre-tax revenue of over VND18.15 trillion for 2022, up 37% in opposition to the previous 12 months. Its insurance coverage enterprise and companies income alone reached greater than VND10.18 trillion, practically VND1.8 trillion larger than in 2021. The positive aspects from the insurance coverage made up 71.5% of the financial institution’s complete income from basic companies. It’s noteworthy that MB’s insurance coverage income has snowballed lately, from simply VND4.2 trillion in 2019 to just about VND5.85 trillion in 2020 after which over VND10 trillion final 12 months. Such spectacular achievement is attributed to the truth that MB at the moment owns two subsidiaries energetic within the insurance coverage sector, Army Insurance coverage Company (MIC) and MB Ageas Life Insurance coverage Firm Restricted.
The following one on the listing is Vietnam Prosperity Joint Inventory Business Financial institution (VPBank), with a revenue after tax of some VND16.92 trillion, a surge of greater than 47% from 2021. The insurance coverage phase introduced in practically VND3.35 trillion for VPBank final 12 months, up 42% year-on-year. The financial institution’s insurance coverage income accounted for 32% of its complete service revenue, equal to the end in 2021. In March 2022, VPBank and AIA Vietnam Life Insurance coverage Firm Restricted renewed their unique cooperation settlement on bancassurance with a time period of 15 years.
In accordance with the estimate of pay as you go expenses based mostly on many latest offers, Yuanta Securities thought VPBank might renegotiate the unique distribution of insurance coverage for a share of VND8 trillion. As introduced by VPBank, since such an settlement was signed for the primary time in 2017, it has at all times been among the many group of banks with the best life insurance coverage gross sales and is at the moment ranked third out there. In November 2022, VPBank accomplished one other capital acquisition and thus is now holding a 98% stake in OPES Insurance coverage Joint Inventory Firm (specializing in non-life insurance coverage merchandise).
The third largest financial institution with regards to insurance coverage income is Vietnam Technological and Business Joint Inventory Financial institution (Techcombank). In 2022, the financial institution earned a revenue after tax of over VND20.43 trillion, of which the revenue from its joint insurance coverage companies made up greater than VND1.75 trillion, an increase of 12.3% in opposition to the previous 12 months. At current, along with its accomplice Manulife, Techcombank is working a program combining funding with insurance coverage.
The following entry is Vietnam Worldwide Business Joint Inventory Financial institution (VIB), whose commissions from the sale of insurance coverage amounted to greater than VND1.3 trillion, up practically 9% from 2021. VIB is now a distribution channel for Prudential’s insurance coverage merchandise.
In fifth place is Tien Phong Business Joint Inventory Financial institution (TPBank), with VND876 billion yielded by insurance coverage gross sales and consulting, a slight fall of 8% in comparison with one 12 months earlier than. It is a uncommon case of a financial institution whose income within the insurance coverage phase went down. TPBank is at the moment providing the merchandise of Manulife and Solar Life.
Many others are among the many prime banks with huge positive aspects from insurance coverage premiums, together with VietinBank, BIDV, Sacombank, HDBank, and OCB. Within the case of VietinBank, the financial institution, and Manulife, in late January 2022, introduced a 16-year unique partnership with an upfront charge of round US$30 million, payable over six years. It’s estimated that within the first quarter of final 12 months alone, VietinBank registered some US$5 million within the pay as you go premiums of bancassurance.
At a extra modest degree, small banks solely obtained tens of billions of dong from insurance coverage, however their development charges are actually outstanding. For instance, Petrolimex Group Business Joint Inventory Financial institution (PG Financial institution) final 12 months made a complete of VND33 billion from its insurance coverage operations, a quantum leap of greater than 310% from 2021.
In direction of sustainable improvement
Though the potentials of bancassurance are nice, promising lots of income and revenue for banks sooner or later, there have not too long ago been fairly a number of circumstances associated to the distribution of insurance coverage merchandise by way of the banking system, sparking combined public opinions. Particularly, it has been reported that many purchasers are required to take out financial institution loans as a part of their insurance coverage insurance policies. In late 2022, when banks have been working out of “room” for credit score development, many debtors claimed they have been requested to purchase an insurance coverage bundle equal to a sure proportion of the worth of the loans.
In response to such complaints, the State Financial institution of Vietnam (SBV), on February 21, 2023, requested credit score establishments to forestall their employees/affiliated items from forcing their shoppers to purchase insurance coverage in any type. That is to guard the professional rights and pursuits of shoppers utilizing monetary and banking companies and to make sure that credit score establishments strictly adjust to the provisions of the regulation. As per the central financial institution’s assertion, “in case their workers/items are discovered to have coerced prospects into shopping for insurance coverage, credit score establishments must take full accountability earlier than the regulation for such a observe.”
Notably, leaders of the Banking Supervision Company and the Insurance coverage Supervision Authority mentioned they’d arrange a joint hotline to obtain and promptly deal with all complaints and proposals by residents, businesses, and companies associated to offering insurance coverage companies at credit score establishments. In brief, banks could solely encourage their prospects to take part in an insurance coverage scheme voluntarily, not compelling them or utilizing this as a situation for mortgage disbursement.
With the aggressive intervention and coordination between the Ministry of Finance and the SBV, one can hope the observe of obliging prospects to purchase insurance coverage will quickly come to an finish. Nevertheless, that is removed from easy because the pursuits of banks are immediately concerned. Even so, with regard to the widespread pursuits of the entire society, particularly those that have transactions with banks, it’s important that the sale of insurance coverage ought to be made clear and the standard of consulting throughout this course of correctly managed to make sure the long-term sustainable improvement of bancassurance.