The headquarters of the Ministry of Finance in Hanoi. (Photo: VNA) The ministry inspected four life insurers, including Prudential Vietnam, MB Ageas Life, BIDV MetLife and Sun Life Vietnam, with a focus on sales of insurance policies through banks. The move was in response to numerous complaints that some banks forced customers to buy life insurance policies in order to access loans. Others have said their savings deposits were partially used to purchase life insurance without their knowledge.
Under the inspection's conclusion report, the ministry named violations of the insurers as the following: not providing direct advice to customers; not fully guiding procedures as required by the laws; not ensuring the quality of advice on insurance products; agents and bank employees using agent numbers to guide customers to enter information and failing to comply with the premium list approved by the Ministry of Finance.
The ministry also unveiled that many instances of insurance agents' and bank employees' actions did not comply with legal regulations in the process of selling insurance. Specifically, there were 39, 41, 21 and 44 violation cases of such kind at Prudential Vietnam, MB Ageas Life, BIDV Met Life and Sun Life Vietnam, respectively.
According to the inspection results, at many insurers, insurance distribution channels through banks (bancassurance) accounted for 50% of the number of new life insurance policies and revenue. However, after the first year, the contract cancellation rate of customers at the channel was up to 70%.
At Prudential Vietnam, in 2021, insurance premium revenue through bancassurance was nearly 6.2 trillion VND (261 million USD). New insurance premium revenue through the bancassurance channel reached 3.7 trillion VND (156 million USD), equivalent to nearly 55% of total new premium revenue.
Prudential issued more than 94,000 insurance policies through the bancassurance channel in 2021. However, after the first year, up to 41% of customers cancelled or invalidated their contracts. This means about 38,000 insurance policies of borrowers cancelled their insurance policies after them having been disbursed.
Banks that sold Prudential's insurance products included International Commercial Joint Stock Bank, Maritime Commercial Joint Stock Bank, Public Commercial Joint Stock Bank, Southeast Asia Commercial Joint Stock Bank, Standard Chartered Bank Limited, Vietnam Thuong Tin Commercial Joint Stock Bank, United Overseas Bank One Member Limited and Shinhan Bank Vietnam One Member Limited Liability Company.
At MB Ageas Life, in 2021, premium revenue through the bancassurance channel reached nearly 4.5 trillion VND (190 million USD), equivalent to 78% of the company’s total premium revenue. New insurance premium revenue through the bancassurance channel was 2.82 trillion VND (119 million USD), equivalent to 74% of total new insurance premiums.
MB Ageas Life issued more than 66,700 new insurance policies through the bancassurance channel, but nearly 4,000 of them were cancelled during the consideration period. After the first year, 32.4% of new insurance policies through the bancassurance channel were cancelled.
MB Ageas Life mainly sold insurance through Military Commercial Joint Stock Bank and MB Shinsei Finance Company Limited (or M.Credit Finance Company).
Regarding the finance ministry’s inspection results, MB Ageas Life said all personal agent violations recorded in the ministry’s inspection conclusion were violations according to the company's internal regulations and were actively detected and handled by MB Ageas Life before the finance ministry delivered its inspection plan.
MB Ageas Life’s representatives said the detection of the shortcomings will help the company improve and streamline its management, business and customer service quality in accordance with legal changes since 2022 when the new Law on Insurance Business and its guiding documents took effect.
BIDV MetLife, although only selling insurance products through the Joint Stock Commercial Bank for Investment and Development of Vietnam, had a premium revenue from the bancassurance channel accounting for 99.2%, equivalent to more than 1.55 trillion VND (65 million USD). In 2021, the insurer’s new insurance premiums sold through the bank reached 452 billion VND (19 million USD), accounting for 98.3% of total new insurance premiums, but 39.4% of the customers cancelled their contracts after the first year.
In 2021, Sun Life Vietnam's premium revenue through the bancassurance channel, including Asia Commercial Joint Stock Bank (ACB) and Tien Phong Commercial Joint Stock Bank (TPB), reached nearly 2.04 trillion VND (86 million USD), equivalent to 61.15% of the insurer’s total premium revenue.
In 2021, Sun Life issued 80,117 new insurance policies through the bancassurance channel. The rate of cancellation and termination of insurance policies after the first year of policies issued through TPB and ACB was 73% and 39%, respectively.
Under the inspection conclusion, the Ministry of Finance also asked the four insurers to add hundreds of billions of Vietnamese dong to their revenue in order to calculate corporate income tax as the insurers made wrong cost accounting according to the laws./.
VNA
