Revealing the bank that makes 'huge' profits from selling insurance

Many banks have recorded increased revenue from insurance service fees. For example, KienlongBank earned nearly VND40 billion from insurance in the third quarter, up nearly 73% over the same period.

Financial report Techcombank 's third quarter revenue showed that insurance service fees brought in VND594 billion in the first 9 months of this year, up nearly 30% over the same period. Techcombank and Manulife Vietnam have cooperated in insurance sales for 8 years. However, since October 14 Techcombank and Manulife Vietnam terminated their cooperation. After that, bank This contributed capital to establish Techcom non-life insurance company.

Techcombank increases insurance revenue sharply.

Another bank that also recorded high growth in the insurance sector is KienlongBank. Accordingly, in the third quarter, revenue from insurance brought KienlongBank nearly 40 billion VND, an increase of nearly 73% over the same period.

Similarly, VPBank also had a significant recovery in the insurance cross-selling segment. In the first 9 months of this year, insurance revenue brought VPBank 2,820 billion VND, an increase of nearly 52%.

At SeABank , revenue from service agency insurance brought in more than 87 billion VND, an increase of more than 14% over the same period last year.

Previously, in 2022 and 2023, banks faced an "insurance crisis" after many complaints related to the conversion of savings deposits into insurance. Many bank borrowers also "accused" of being forced to buy insurance...

In conclusion Finance Inspector announced in 2023, the highest rate of contract cancellation through the banking channel. Typically, the rate of insurance contracts that lapse after the first year of BIDV Metlife is 39.4%, MB Ageas 32.4%, Prudential 41%, AIA 57%, Sunlife from 39-73% (depending on the bank issuing the contract). Some other businesses also have a similar rate of contract lapses above.

However, the increase in insurance revenue through the banking channel has caused many banks to increase their ownership of non-life insurance companies. Specifically, VPBank, in addition to being the exclusive partner of AIA Vietnam, in November 2022, the bank completed the acquisition of OPES Insurance (a non-life insurance company) by owning 98% of the charter capital.

LPBank officially took over Xuan Thanh Insurance from February this year and changed its name to LPBank Insurance.

Techcombank contributed 11% of capital to establish Techcom Non-Life Insurance Company. In addition, major banks such as Agribank, BIDV, VietinBank, Vietcombank, etc. all own a non-life insurance company.

Law on Credit Institutions The new law, which will take effect in 2024, strictly prohibits credit institutions, foreign bank branches, managers, operators, and employees of credit institutions and foreign bank branches from linking the sale of non-compulsory insurance products to the provision of banking products and services in any form.

Insurance expert Tran Nguyen Dan said that selling insurance through banks is one of the distribution channels and selling products of life insurance companies. In many countries around the world, this is a sales channel that takes advantage of both banks and life insurance companies. However, in Vietnam, in recent times, there have been market distortions that have affected customer confidence. After losing confidence, life insurance premium revenue has decreased, causing this cooperation to no longer bring good results as before.

“The fact that ministries and branches come up with radical solutions and coordinate supervision will help the banking distribution channel develop healthily. This is also an opportunity for banks and life insurance companies to review and adjust terms to suit the new situation. When canceling cooperation, the most important factor is that life insurance companies must ensure that they maintain customer benefits as per the signed contract,” said Mr. Dan.

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