Local newspapers have recently reported cases in which clients of banks are tricked into taking life insurance policies. 

In some cases, people fall into a trap set by bankers and are startled when they are informed that they have taken out insurance policies.

Analysts say these swindling cases have been taking place a long time, but they have not caught the attention of state management agencies until recently.

A victim said in early October 2022 when the insurer refused to reimburse money, she lodged a complaint to management agencies. The Insurance Supervisory Authority (ISA) under the Ministry of Finance (MOF) received her complaint, but then forwarded the complaint to the insurance company.

To date, the company has said nothing. It has not replied to the complaint and has not contacted the client. 

She said that the irresponsible handling of state agencies is disproportionate to the functions and duties assigned to them.

Bancassurance activities must be carried out on a voluntary basis which is clearly stipulated in the Insurance Law. 

However, some insurance companies join hands with banks to trick clients and make profits, disregarding laws and state management agencies. 

A bank officer said he was taught how to trick clients into taking insurance policies. When he first meets a client who comes to the bank to ask for a loan, he sets a high interest rate. If the client hesitates to get a loan because of the high interest rate, he will make an attractive offer – if the client takes out an insurance policy, the bank will accept to lend at a lower interest rate. The offer is often chosen by the client.

Because of recent scandals, bank officers now tend to avoid using the word insurance, but use other words instead such as ‘flexible deposit’, 'deposit in association with investment’ and ‘deposit in the 4.0 era’.

Bank officers try to prove to clients that the clients have opportunities to use a new deposit option that is better than normal services and will offer more benefits.

For each insurance policy sold, bank officers receive compliments from managers and also get commissions for selling them.

Meanwhile, many clients, who are their ‘victims’ , complain because they took out insurance policies against their will. 

Many of them have had to pay VND50-100 million in premiums a year. They cannot cancel contracts, but don’t have financial capability to continue to pay premiums and have fallen into a dilemma.

Recently, many commercial banks have worked with insurance companies to sell insurance policies via banks. 

With tens of trillions of VND worth of revenue, they can receive commissions and advanced fees worth hundreds to thousands of billions of dong each year. The profit from selling insurance policies is a big source of income for banks.

Commenting about the importance of insurance policy sales for banks, analysts say for some banks, the revenue from insurance policy sales accounts for 70 percent of their non-credit profits. 

Meanwhile, there is nearly no risk, and insurers pay very high commissions.

In 2022, according to the Vietnam Insurance Association (VIA), total insurance premiums reached VND251.306 trillion, an increase of 15 percent compared with the same period last year. 

Of this, the non-life insurance sector grew by 15.33 percent and life insurance 15 percent. Some banks by the end of 2022 had sold insurance policies to nearly 1 million clients.

The market has become problematic and questions have been raised about the responsibility of state management agencies.

Tran Thuy