Insurance payouts for the Tam Nong reached VND 700 billion/year

The business operations of non-life insurance have demonstrated maturity and future development potential. However, alongside market growth, there have been some issues such as unclear insurance advice leading to customer financial losses, and cases of pressure on borrowers to purchase insurance. These issues have impacted the overall market, including the (Bancassurance).

Starting from July 1st, the Law on Credit Institutions officially prohibits credit institutions, foreign bank branches, managers, executives, and employees from tying the sale of non-compulsory insurance products to the provision of banking products and services in any form.

As a result, insurance sales activities will be more tightly regulated, potentially slowing down the income growth from insurance sales for banks compared to previous years.

Ms. Bui Thi Thanh Xuan, Deputy General Director in charge of the Executive Committee at Vietinbank Insurance, shared that the Vietnamese insurance market still has room for growth, evidenced by the rapid increase in insurance products and revenue in recent times. However, recent incidents in life insurance have negatively affected public trust and have had a spill-over effect on non-life insurance.

The banks have already outlined additional changes in their business operations, focusing on three key areas to maximize efforts in providing more information to customers and ensuring their rights in non-life insurance. These areas include emphasizing communication efforts, concentrating resources to enhance the quality of advisors and customer care, and researching and developing products tailored to individual needs to better serve customers.

Over the past 10 years, the average growth rate of the non-life insurance market has been around 10-15%. However, in 2023, this growth rate only reached 2-3% due to a customer trust crisis, as shared by Mr Nguyen Hong Phong, CEO of Agribank Insurance during a discussion on insurance distribution through banking channels on July 3.

Mr. Nguyen Tien Hai, Chairman of the Board of Directors of Agribank Insurance, mentioned that Agribank Insurance is a pioneer in providing non-life insurance products for agriculture under commercial terms to the Tam Nong area - an area vulnerable to damage and with limited financial capability, aiming to protect the business activities of the local residents.

The insurance payout for the Tam Nong sector was about VND 800 billion in 2022, supporting millions of farmers from falling into bad debts or losing their assets. In 2023, this amount decreased to VND 700 billion, with a similar projection for 2024. The entities also disbursed over VND 20 trillion in insurance for customers with loans at three state-owned commercial banks when they faced difficulties.

According to Mr Hai, it is necessary to clarify and enhance transparency regarding existing issues in the insurance industry so that genuine enterprises can continue to implement insurance policies and meet the needs of the people.

The new regulations will ensure more transparency in insurance sales through banks based on the voluntary basis of customers. However, Mr. Tran Hoai An, CEO of BIC (BIDV), mentioned that the entities are still waiting for specific guidelines to unify their understanding of the nature of insurance for collateralized assets and to avoid conflicts with the Insurance Business Law..., which allows banks to act as insurance agents and utilize insurance as a risk mitigation tool when lending.