Banks are pushing life insurance products (bancassurance) for profits in the context of low credit growth. (Photo: nld.com.vn)

Bancassurance has become popular in recent years when banks and insurance companies increased cooperation to tap the potential of the profitable and low-risk business segment.

Le Nam from Hoang Mai district, Hanoi, said that when depositing cash at a bank, he was told about a deposit package with more attractive interest rates if combined with life insurance. The deposit interest rate could be 0.5-1 percent per year higher, depending on the value of life insurance he chose.

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 per cent if she bought it together with a bancassurance product.

According to expert in finance and banking Nguyen Tri Hieu, it was necessary for customers to clearly understand about bancassurance terms to avoid disputes.

Bank staff must also be trained to provide accurate and adequate consultancy to customers, he added.

The financial market last year saw a deal worth about 400 million USD between the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and insurance company FWD Vietnam.

FWD Group in April announced it secured regulatory approval to proceed with the acquisition of Vietcombank-Cardif Life Insurance (VCLI), a life insurance joint venture between Vietcombank and BNP Paribas Cardif. FWD said that Vietnam was one of the fastest growing insurance markets in Asia.

Under the deal, Vietcombank would sell life insurance products of FWD for 15 years, which was expected to bring significant revenue to Vietcombank.

Rong Viet Securities Company forecast that Vietcombank would become the leading bancassurance provider thanks to its huge customer network.

Many other banks cooperate with life insurance companies such as Dai-ich-Life Vietnam, ManuLife Vietnam, AIA Vietnam or Prudential.

Some owned their own insurance companies, such as Vietnam Joint Stock Commercial Bank for Industry and Trade, Saigon – Hanoi Joint Stock Commercial Bank and Military Bank (MB).

Rong Viet Securities Company predicted that bancassurance would continue to be the driver for revenue of banks.

According to the Insurance Association of Vietnam (IAV), the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) now led in the bancassurance premiums, followed by Vietnam International Bank (VIB) and MB.

VIB, Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Asia Commercial Joint Stock Bank led in terms of bancassurance growth rate.

IAV’s statistics showed that the life insurance premiums totalled nearly 56 trillion VND (2.4 billion USD) in the first half of this year, representing a rise of 19 percent over the same period last year.

Bancassurance premiums were estimated to currently contribute around 30 percent 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 the COVID-19 pandemic, expanding at just 6.09 percent in January – September against the end of 2019, compared to 9.4 percent of the same period last year./.VNA

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