Insurance companies in Vietnam have started to work with commercial banks to introduce the Bancassurance Service to the country, hoping to raise revenues and expand their market share.

Bancassurance includes a range of insurance products sold through banking networks and is also known as the Banking Insurance Model or BIM.

One of the first insurers in the country to launch the Bancassurance Service is AIA Vietnam, a subsidiary of the American International Assurance Group. It reached an agreement with the Vietnam Joint-Stock Commercial Bank for Industry and Trade (Vietinbank) to offer life-insurance services to the bank’s customers in mid-November.

Following suit was Prudential Vietnam which officially distributes insurance products through VPBank.

In another move, Ace Life signed a partnership agreement with the HCM City Housing Development Joint Stock Commercial Bank (HDBank). The insurer targets working with 10 other banks to introduce a service in 2010.

According to financial experts, Bancassurance is a form of transaction which benefits three parties, banks, insurers and the banks’ clients.

Clients benefit as they can conveniently access financial services at a lower price. Banks now can offer a new product without the cost of research and design and therefore attract more clients as well as receive commission from policy premiums. Insurers can expand their market share by offering insurance services to clients from partner banks.

Dam The Thai, Director of Customer Services at the An Binh Commercial Joint Stock Bank (ABBank), confirmed that introducing Bancassurance is in accordance with his bank’s long-term development plans.

Meanwhile, Prudential Life Insurance senior executive Pankaj Banerjee said that working alongside the banks is “top priority” for his company. He added that revenues from Bancassurance services will grow to more than 10 percent of his company’s new policy premiums in the next three years.

Financial experts are optimistic about the prospects for Bancassurance and say the service will flourish in Vietnam given people’s rising incomes and the level of confidence in the service. In addition, the banking industry’s development in recent times and the increasing use of automatic teller machines have also made easier to sell Bancassurance products.
However, experts point out that banks and insurers need to introduce robust management procedures and increase the use of modern information technologies to ensure that their businesses flourish./.