Development of bancassurance remains at exploring stage in Vietnam

In recent years, bancassurance products have quickly become popular, not only in Vietnam but also throughout Asia.

According to industry experts, when Vietnam’s economy still faces many difficulties, insurance companies would look at their actual profit they could get from this segment, rather than focus on expanding the market shares. In addition, many insurers are having new point of view on the cooperation with bankers to sell insurance products.

In Vietnam, there is currently no standard concept on bancassurance. Typically, insurers define bancassurance as all types of activities to exploit the market share through banking system. That definition does not reflect the actual development of this type of product.

In life insurance sector, bancassurance has been strongly developed in AIA Vietnam, and Prudential, etc. However, the development is just at very basic level, such as locating transaction desks at banks, allowing customers to pay premium and obtaining premium information via bank accounts, etc. A few insurance companies have launched some products mixed between banking and life insurance products. Nevertheless, the revenue was not much, and those products mainly meant to promote and expand market shares.

For non-life insurance firms, bancassurance has been well developed in Bao Viet and BIC. Recently, PTI and Bao Minh have announced to join the race. However, a specialist in the industry said, due to the difference in defining bancassurance of the insurance companies, it is difficult to evaluate which company is stronger in developing in this area.

In developed countries, banks are only in charge of providing information, whereas insurance firms are the providers of insurance applications. In Vietnam, those tasks are not defined distinctly. In particular, Bao Viet defines bancassurance as all products sold through banking channels; whereas BIC only calls products sold by the software to sell insurance through banks bancassurance. In fact, if counting the products sold through banking channel, bancassurance revenue accounts for 50 percent total revenue of BIC. It is because BIC is a member of Bank for Investment and Development of Vietnam (BIDV), from its establishment, revenue through banking channels already accounted for large proportion. BIC is currently offering eight bancassurance products in 109 branches of BIDV nationwide, the banking network has also been expanded to other banks such as SeABank, North Asia Bank, Orient Bank, VRB, and VP Bank, etc.

From September 1 to November 29, 2010, BIC is launching the programme called “Receiving lucky gifts with Bancas” for individual customers buying insurance in BIDV system nationwide. According to that, customers purchasing insurance products at any transaction points of BIDV, for each 300,000 dong premium, will get a code to participate in the programme.
The insurance products include motor insurance, car insurance (voluntary section), 24/24 personal insurance, private home insurance, and insurance for borrowers of BIC Binh An loan.

Prudential is currently cooperating with about five to six domestic commercial banks to sell insurance products via banking channel. However, in the recent time, the cooperation expansion seems to slow down. From the beginning of the year, the company has not yet signed any agreement with bankers.
Prudential is currently focusing on developing the universal agent system and telephone sales channel. It is said that in the first six months of 2010, the business development co-channel of Prudential has grown significantly, with the total premium revenue from new policies reached 46 billion dong, up by 81 percent compared to the same period of 2009. Of that, revenue of bancassurance channel went up by 120 percent and revenue of telephone sales channel increased by 73 percent.
AIA is also planning to cooperate with some bankers in the near future.

From the beginning of the year, Dai-ichi Life Vietnam has also continuously developed new offices and universal agent offices and not yet signed any agreements with any banks. However, according to some information, the company is planning to cooperate with some prestigious bankers to develop bancassurance sales channel.

New participants of the market such as Korea Life Vietnam are also interested in this type of channel. Nevertheless, it is still a plan, since it is said that Korea Life Vietnam has not yet planned to cooperate with any banks.

In fact, for insurers having strategic partnerships with banks in the form of owning shares of each other’s, bancasurrance business is likely to be more successful. For cooperation between insurers and bankers in which bankers are merely distributors of the products, the profit would be less, since the insurers have less control over the sales of banks.

Therefore, focusing on maintaining and strengthening the traditional insurance agent system remains the strategy that insurance companies pursue in this current difficult situation. – Dautu chung khoan

Tags: Vietnam Bancassurance