Banks are pushing life insurance products (bancassurance) for profits in the context of low credit growth. (Photo: nld.com.vn) Hanoi (VNS/VNA) - Banks are pushing the sale of life insurance products (bancassurance) in thecontext of low credit growth since the beginning of this year due to theimpacts of the COVID-19 pandemic.
Bancassurance has become popular in recent years when banks and insurancecompanies increased cooperation to tap the potential of the profitable andlow-risk business segment.
Le Nam from Hoang Mai district, Hanoi, said that when depositing cash at abank, he was told about a deposit package with more attractive interestrates if combined with life insurance. The deposit interest rate could be0.5-1 percent per year higher, depending on the value of life insurance hechose.
Similarly, Thanh Trang from Dong Da district, who was seeking a home loan,was also told she could be get a lower lending rate by up to one percent if she bought it together with a bancassurance product.
According to expert in finance and banking Nguyen Tri Hieu, it was necessaryfor customers to clearly understand about bancassurance terms to avoiddisputes.
Bank staff must also be trained to provide accurate and adequateconsultancy to customers, he added.
The financial market last year saw a deal worth about 400 million USD betweenthe Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) andinsurance company FWD Vietnam.
FWD Group in April announced it secured regulatory approval to proceed with theacquisition of Vietcombank-Cardif Life Insurance (VCLI), a life insurance jointventure between Vietcombank and BNP Paribas Cardif. FWD said that Vietnam wasone of the fastest growing insurance markets in Asia.
Under the deal, Vietcombank would sell life insurance products of FWD for 15years, which was expected to bring significant revenue to Vietcombank.
Rong Viet Securities Company forecast that Vietcombank would become theleading bancassurance provider thanks to its huge customer network.
Many other banks cooperate with life insurance companies such as Dai-ich-LifeVietnam, ManuLife Vietnam, AIA Vietnam or Prudential.
Some owned their own insurance companies, such as Vietnam Joint StockCommercial Bank for Industry and Trade, Saigon – Hanoi Joint Stock CommercialBank and Military Bank (MB).
Rong Viet Securities Company predicted that bancassurance would continue to bethe driver for revenue of banks.
According to the Insurance Association of Vietnam (IAV), the VietnamTechnological and Commercial Joint Stock Bank (Techcombank) now led in thebancassurance premiums, followed by Vietnam International Bank (VIB) and MB.
VIB, Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) and AsiaCommercial Joint Stock Bank led in terms of bancassurance growth rate.
IAV’s statistics showed that the life insurance premiums totalled nearly 56trillion VND (2.4 billion USD) in the first half of this year, representing arise of 19 percent over the same period last year.
Bancassurance premiums were estimated to currently contribute around 30percent of the total life insurance premium, from just 10 percent in 2016.
Credit growth was low in January-September as the economy took a hit from theCOVID-19 pandemic, expanding at just 6.09 percent in January – Septemberagainst the end of 2019, compared to 9.4 percent of the same period last year./.
VNA
