Nearly 60% of AIA insurance sold through banks is cancelled after the first year.

According to the Ministry of Finance , 57% of AIA insurance policies sold through banks were canceled after the first year, and some employees were selling insurance despite not meeting the eligibility requirements.

The Insurance Supervision and Management Department (Ministry of Finance) has just announced the conclusions of its inspection of bancassurance sales at AIA Vietnam Life Insurance Company in 2022.

During this period, AIA distributed insurance through six banks: VPBank , BVBank, KienlongBank, CitiBank, HSBC, and PVBank. Among these, VPBank had the highest new premium revenue. By the end of 2022, AIA had repaid its largest partner, VPBank, over 7.2 trillion VND in initial support payments.

In 2022, AIA's insurance premium revenue sold through banks reached nearly VND 5,300 billion, accounting for 28% of total premium revenue. If calculated based on new contract sales, the banking channel contributed 42% of AIA's total new business premiums.

Accordingly, the company issued more than 73,400 new policies through the banking channel. The cancellation rate after the first year was 57%, based on premiums.

Besides AIA, the rate of policy cancellations after the first year, according to previous inspections by the Ministry of Finance at other businesses, was also high, ranging from 32% to 73% (in 2021).

Businesses	Banking partners	Annual bancassurance premium revenue (2021 or 2022) (Billion VND)	Cancellation rate after the first year (%)
AIA	VPBank, BVBank, Kienlongbank, Citibank, HSBC, PVBank	1,548	57
Sunlife	TPBank,ACB	2,000	39-73
Prudential	VIB, MSB, Pvcombank, SeABank, Standard Chartered, VietBank, UOB, Shinhan	6,200	41
MB Ageas	MB, M.Credit	4,460	32
BIDV Metlife	MB	1,550	39

At VPBank, AIA's bank insurance distribution partner, 167 bank employees referred customers to more than 230 universal life insurance policies despite not having received agent training certificates or certifications for completing courses on universal life insurance products.

Furthermore, the inspection revealed that over 3,000 bank employees from VPBank, BVBank, KienLongBank, etc., were trained by AIA to introduce customers to unit-linked insurance products, but the training content and duration did not fully comply with the regulations of the Ministry of Finance. Accordingly, these bank employees only introduced customers to the products but did not participate in advising, selling, or arranging contract signing.

According to the inspection results, allowing insurance agency employees who were not adequately trained to approach customers, and who did not fully follow the steps agreed upon between AIA and the bank, to still receive full commissions and bonuses, is against regulations.

Furthermore, in 2022, AIA spent over 376 billion VND to pay "fixed allowances" and bonuses to individual insurance agents in the bancassurance channel; however, the Ministry of Finance determined that the method of determining and calculating the bonus payments was not in accordance with legal regulations.

Accordingly, the Insurance Supervision and Management Department requested the General Director of AIA Vietnam to review and strengthen the management of insurance sales through banks to reduce contract cancellations and ensure the rights of policyholders. The issuance of bancassurance regulations must ensure that customers receive advice tailored to their needs and financial situation, and are clearly aware of their rights, fees, and risks.

In fact, after the "boom" period, cross-selling insurance through banks has also seen a shift towards stricter and healthier practices. Some insurance companies have required their banking partners to commit to a contract retention rate, however, most companies have not publicly disclosed these figures.

At a recent meeting, Ms. Nguyen Thu Phuong, Deputy Director of the Insurance Management and Supervision Department (Ministry of Finance), stated that the agency had completed inspections of five insurance companies. Her unit also publicly announced the inspection conclusions of Dai-ichi Life Insurance Company on the Department's information portal in early February.

The main violations by insurance companies primarily relate to the issuance of regulations, improper supervision of insurance agents; violations in the management and use of insurance agents; and negligence in accounting and bookkeeping.

Administrative violations have been penalized. Currently, this agency is coordinating with the Tax Department to handle issues related to tax arrears.

Quynh Trang

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