Hard times: Farmers planting rice on a paddy field at sunrise in Hanoi. The report showed that insurance distribution through banks accounted for 50% of the number of new life policies and revenue and that cancellations after the first year was up to 70%. — AFP
HANOI: The sale of insurance products through agency channels, including banks of some insurers, saw many violations, especially those regarding the consultation of bank staff and brokers, according to a Finance Ministry report.
The ministry inspected four life insurers, Prudential Vietnam, MB Ageas Life, BIDV MetLife and Sun Life Vietnam, with a focus on sales of insurance policies through banks.
The move came in response to numerous complaints that some banks forced customers to buy life insurance policies in order to access loans.
Others have said their savings deposits were partially used to purchase life insurance without their knowledge.
Through the report, the ministry listed violations and included: not providing direct advice to customers, not following procedures as required by the law, not ensuring the quality of advice on insurance products, agents and bank employees using agent numbers to guide customers to provide information and failing to comply with the premium list approved by the Ministry of Finance.
The ministry also revealed that in many instances, insurance agents and bank employees did not comply with legal regulations in the process of selling insurance.
There were 39, 41, 21 and 44 cases of this kind at Prudential Vietnam, MB Ageas Life, BIDV Met Life and Sun Life Vietnam, respectively.
According to the report, insurance distribution channels through banks (bancassurance) accounted for 50% of the number of new life insurance policies and revenue.
However, after the first year, the contract cancellation rate of customers at the channel was up to 70%.
At Prudential Vietnam, in 2021, insurance premium revenue through bancassurance was nearly 6.2 trillion Vietnamese dong (US$261mil or RM1.2bil).
New insurance premium revenue through the bancassurance channel reached 3.7 trillion Vietnamese dong (US$156mil or RM728mil), equivalent to nearly 55% of total new premium revenue.
Prudential issued more than 94,000 insurance policies through the bancassurance channel in 2021. However, after the first year, up to 41% of customers cancelled or invalidated their contracts.
This means about 38,000 borrowers cancelled their insurance policies after they had been disbursed.
Banks that sold Prudential’s insurance products included International Commercial Joint Stock Bank, Maritime Commercial Joint Stock Bank, Public Commercial Joint Stock Bank, South-East Asia Commercial Joint Stock Bank, Standard Chartered Bank Limited, Vietnam Thuong Tin Commercial Joint Stock Bank, United Overseas Bank One Member Ltd and Shinhan Bank Vietnam One Member Limited Liability Company.
In 2021, at MB Ageas Life, premium revenue through the bancassurance channel reached nearly 4.5 trillion (US$190mil or RM887mil), equivalent to 78% of the company’s total premium revenue.
New insurance premium revenue through the bancassurance channel was 2.82 trillion Vietnamese dong (US$119mil or RM555mil), equivalent to 74% of total new insurance premiums.
MB Ageas Life issued more than 66,700 new insurance policies through bancassurance, but nearly 4,000 of them were cancelled during the consideration period. After the first year, 32.4% of new insurance policies through bancassurance were cancelled.
MB Ageas Life mainly sold insurance through Military Commercial Joint Stock Bank and MB Shinsei Finance Company Ltd.
MB Ageas Life said all the violations noted in the inspection were were detected and handled by MB Ageas Life before the finance ministry delivered its report.
MB Ageas Life’s representatives said the shortcomings will help the company improve and streamline its management, business and customer service quality in accordance with legal changes of 2022. — Viet Nam News/ANN
