BaoViet Group, Vietnam’s leading financial insurance corporation, is focusing on bancassurance as one of its strategic products to grab the fledgling local market.
To meet increasing demand, plus maximising convenience, saving time and costs for customers, BaoViet Holdings has invested in diversifying bancassurance, and widened distribution channels besides traditional ones such as direct sales, brokers and agents.
BaoViet Group bancassurance partners include domestic and foreign banks, which have sterling reputations, modern technology infrastructure and abundant customer bases. Since 2007 BaoViet Group has received strategic support from HSBC in providing insurance products, when the global banking giant acquired a 10 per cent stake in the group.
Currently, many insurance companies have difficulty in coordinating with banks to provide bancassurance products, many banks still focus on core businesses and the two sides lack a highly committed long-term, strategy to invest in bancassurance. However, it is an advantage of BaoViet Group to have BaoViet Bank, whose 52 per cent chartered capital is held by the group, as a product provider.
“BaoViet Group has a deep understanding of the insurance market in the country. Moreover, the mutual understanding between BaoViet Group and BaoViet Bank helps to eliminate the barriers when providing bancassurance products,” said Hoang Viet Ha, Bao Viet Group’s chief operating officer.
Beside support from partners, BaoViet Group also did research and offered a wide range of bancassurance products, focusing on customers’ health and assets protection. Those products are designed to associate with other banking services such as mortgage loans, business loans, deposit, credit card or payroll services, which are attracting many corporate and individual customers.
With such a strategy, BaoViet Group’s insurance premium revenue and customer base through banks grew by 40 per cent per year and the contribution of bancassurance revenue to total insurance revenue also increased five-fold compared to 2008, when the group first implemented this type of service.
However, like any other insurance agencies, the group faces many challenges in distributing bancassurance products as customers are not familiar with the extra cost of insurance and often underestimate the risks that they might face. Moreover, the complicated nature of bancassurance products makes banks spend time and money on training customer consulting staff.
“Thus, the direction of BaoViet Group is to construct a sustainable and modern bancassurance model with customers being the centre of all activities, on the base of strategic relationship with banks,” said Ha.
Moreover, the bancassurance market’s potential in Vietnam is also a firm foundation for BaoViet Group to invest more strongly in this market. Vietnam’s banking sector is expected to have a better health in the coming years when the restructuring process is drastically implemented. Especially, this trend is supported by the fact that foreign banks have been setting up 100 per cent foreign-owned banks in Vietnam. The Ministry of Finance is also completing a draft guidance circular on the bancassurance market, which will assist its development.
“We expect to see larger business opportunities from bancassurance in the coming time given an economic recovery toward 2015, customers’ increased interest in bancassurance and upcoming more favourable regulations,” said Ha.
By Trinh Trang