Bancassurance the catalyst for insurers to deepen footprint

April 05, 2022 | 10:00
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Banks have managed to navigate their way through the chaos of the last few years by diversifying their non-interest income thanks to bancassurance services.
Bancassurance the catalyst for insurers to deepen footprint
Bancassurance the catalyst for insurers to deepen footprint, photo MB Bank

A spokesperson from military-backed lender MB Bank told VIR that the bank’s annual premium equivalent sales reached $4.7 million in February and $8.3 million in March.

“Our solid technological base and self-determination capacity are the impetus for us to lure more customers into this industry. Digitalising insurance services is a part of the bank’s broader push to create an all-encompassing and seamless customer experience,” the representative said.

The other top four banks, ACB, VPBank, Sacombank, and Techcombank, ranked in that order as of February.

Han Ngoc Vu, CEO of VIB, revealed that the bank’s bancassurance activities have yielded fruits and played a crucial role in its operation. Last year, VIB bancassurance represented 12 per cent of the total market share, thus cementing its triumph in the sector.

Mirae Asset Securities predicted, “VIB is negotiating to have new bancassurance upfront fees. The fees are expected to be recorded in 2022, thus amplifying the bank’s non-interest income.”

Vietcombank could also bag a fortune thanks to its exclusive partnership with pan-Asia insurer FWD. Fee income from bancassurance this year could witness an impressive growth of 60 per cent, before showing signs of sluggish pace in 2023, as estimated by brokerage Viet Dragon Capital Securities. Last year, Vietcombank recorded its insurance commission revenue from bancassurance at around $30.4 million, up 60 per cent on-year.

Besides Vietcombank, a collaboration between FWD and partners such as Agribank, HDBank, NamA Bank, and ABBank is also a growth catalyst to deepen the insurer’s reach.

Meanwhile, VietinBank is slated to receive roughly $5 million in prepayment fees thanks to its exclusive bancassurance agreement with Canadian group Manulife in Q1, according to a report from KB Securities.

A 16-year monopoly deal between VietinBank and Manulife was announced earlier this year. The upfront fee is projected to be $30 million and will be paid over six years.

Likewise, lender SCB has also bagged $44.78 million in revenues last year owing to collaboration with Manulife, thus fostering its position in the bancassurance landscape.

Sang Lee, CEO of Manulife Vietnam said, “We have continued to diversify product and service offering through strategic bancassurance and other key partnerships. In fact, Vietnam was singled out in the results announcement, with a key highlight being the growth potential of our exclusive 16-year bancassurance partnership with VietinBank.”

Since their partnership began more than four years ago, Sacombank and Dai-ichi Life Vietnam delivered high-quality financial services to more than 560,000 Vietnamese customers via Sacombank’s nationwide transaction network.

Insurance contracts with a total premium of over $278.3 million have been signed, and nearly 1,500 claims have all been handled so far.

VinaCapital assessed that banking stocks and profit would be largely influenced by bancassurance tie-up agreements, which could generate a large sum of upfront fees for lenders.

According to Manulife Asia’s Care Survey, in Vietnam, 91 per cent of respondents said they intend to buy new insurance in the next 12 months, with life (55 per cent), health (45 per cent), and accident protection (41 per cent) sitting at the top of their list.

Bancassurance has continuously been placed on the priority of banks’ non-interest income, as financial institutions are strengthening their growth momentum.

According to a Deloitte consumer study in Vietnam last year, household healthcare expenditure increased by 58 per cent. It indicates that Vietnamese people exhibit a significant motivation for healthcare, as they want to safeguard their families.

The General Statistics Office revealed that the whole insurance market’s premium income in Q1 of 2022 rose by 13 per cent on-year, with the life sector increasing by 15 per cent and the non-life sector increasing by 9 per cent on-year.

Freshly published statistics from the Insurance Association of Vietnam showed the entire insurance premium income of the life insurance sector was anticipated to be hitting close to $498 million by the end of January, representing an increase of 18.5 per cent on-year, while income from the non-life insurance market reached over $324 million, up 15 per cent on-year.

However, the State Bank of Vietnam earlier this year mandated that banks refrain from pressuring their consumers into purchasing insurance. Any activities taken in connection with mandatory insurance in order to obtain loans will be strictly enforced.

The decision was taken after it was claimed that certain clients were compelled to purchase insurance products in order to get loan packages, notwithstanding their demands.

By Luu Huong

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