Financial Institutions Rush into Partnerships, Facing Regretful Consequences

Financial Institutions Rush into Partnerships, Facing Regretful Consequences

Banks and insurers have seen their incomes rise through bancassurance, but it has become apparent that many customers were coerced or misled into purchasing insurance policies.

The period from 2015 to 2021 marked the flourishing era of bancassurance, a collaboration between banks and insurance companies where the latter sells its products through the former. Despite repeated warnings from the State Bank of Vietnam, banks continued to make the purchase of life insurance a prerequisite for obtaining loans, to no avail.

Bancassurance has experienced remarkable growth over the past seven years. In 2016, it only accounted for 10% of new sales in the life insurance industry. However, by 2022, it had caught up with the traditional distribution channel. The introduction of bancassurance has accelerated life insurance penetration, achieving the same level of growth in just 20 years compared to previous methods.

A recent inspection conducted by the Ministry of Finance on four insurance companies revealed that at least 30% of customers who bought insurance through banks only paid the premium for the first year. In some cases, this rate reached 70%.

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