The headquarters of the Ministry of Finance in Hanoi. (Photo: VNA) The ministry inspected four life insurers, including PrudentialVietnam, MB Ageas Life, BIDV MetLife and Sun Life Vietnam, with a focus onsales of insurance policies through banks. The move was in response tonumerous complaints that some banks forced customers to buy life insurancepolicies in order to access loans. Others have said their savings deposits werepartially used to purchase life insurance without their knowledge.
Under the inspection's conclusion report, the ministrynamed violations of the insurers as the following: not providing directadvice to customers; not fully guiding procedures as required by the laws;not ensuring the quality of advice on insurance products; agents and bankemployees using agent numbers to guide customers to enter information andfailing to comply with the premium list approved by the Ministry of Finance.
The ministry also unveiled that many instances of insuranceagents' and bank employees' actions did not comply with legal regulations inthe process of selling insurance. Specifically, there were 39, 41, 21 and 44violation cases of such kind at Prudential Vietnam, MB Ageas Life, BIDV MetLife and Sun Life Vietnam, respectively.
According to the inspection results, at many insurers, insurancedistribution channels through banks (bancassurance) accounted for 50% of thenumber of new life insurance policies and revenue. However, after the firstyear, the contract cancellation rate of customers at the channel was up to 70%.
At Prudential Vietnam, in 2021, insurance premium revenue throughbancassurance was nearly 6.2 trillion VND (261 million USD). New insurancepremium revenue through the bancassurance channel reached 3.7 trillion VND (156million USD), equivalent to nearly 55% of total new premium revenue.
Prudential issued more than 94,000 insurance policies through thebancassurance channel in 2021. However, after the first year, up to 41% ofcustomers cancelled or invalidated their contracts. This means about38,000 insurance policies of borrowers cancelled their insurance policies afterthem having been disbursed.
Banks that sold Prudential's insurance products includedInternational Commercial Joint Stock Bank, Maritime Commercial Joint StockBank, Public Commercial Joint Stock Bank, Southeast Asia Commercial Joint StockBank, Standard Chartered Bank Limited, Vietnam Thuong Tin Commercial JointStock Bank, United Overseas Bank One Member Limited and Shinhan Bank VietnamOne Member Limited Liability Company.
At MB Ageas Life, in 2021, premium revenue through thebancassurance channel reached nearly 4.5 trillion VND (190 million USD),equivalent to 78% of the company’s total premium revenue. New insurance premiumrevenue 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 policiesthrough the bancassurance channel, but nearly 4,000 of them were cancelledduring the consideration period. After the first year, 32.4% of new insurancepolicies through the bancassurance channel were cancelled.
MB Ageas Life mainly sold insurance through Military CommercialJoint Stock Bank and MB Shinsei Finance Company Limited (or M.Credit FinanceCompany).
Regarding the finance ministry’s inspection results, MB Ageas Lifesaid all personal agent violations recorded in the ministry’s inspectionconclusion were violations according to the company's internal regulations andwere actively detected and handled by MB Ageas Life before the finance ministrydelivered its inspection plan.
MB Ageas Life’s representatives said the detection of theshortcomings will help the company improve and streamline its management,business and customer service quality in accordance with legal changes since2022 when the new Law on Insurance Business and its guiding documents tookeffect.
BIDV MetLife, although only selling insurance productsthrough the Joint Stock Commercial Bank for Investment and Development ofVietnam, had a premium revenue from the bancassurance channelaccounting for 99.2%, equivalent to more than 1.55 trillion VND (65million USD). In 2021, the insurer’s new insurance premiums sold through thebank reached 452 billion VND (19 million USD), accounting for 98.3% of totalnew insurance premiums, but 39.4% of the customers cancelled their contractsafter the first year.
In 2021, Sun Life Vietnam's premium revenue through thebancassurance channel, including Asia Commercial Joint Stock Bank (ACB) andTien Phong Commercial Joint Stock Bank (TPB), reached nearly 2.04 trillion VND (86million USD), equivalent to 61.15% of the insurer’s total premium revenue.
In 2021, Sun Life issued 80,117 new insurance policies through thebancassurance channel. The rate of cancellation and termination of insurancepolicies after the first year of policies issued through TPB and ACB was 73%and 39%, respectively.
Under the inspection conclusion, the Ministry of Finance alsoasked the four insurers to add hundreds of billions of Vietnamese dong to their revenue in order tocalculate corporate income tax as the insurers made wrong cost accountingaccording to the laws./.
VNA
