Insurance cooperates with bank for mutual development

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Bancassurance helps increasing revenues for banks from insurance service

Enhancing cooperation

At the beginning of August, 2017, FWD Vietnam Life Insurance Company Limited and Nam A Commercial Joint Stock Bank signed an exclusive 15-year bancassurance partnership to provide life insurance products for Nam A Bank’s customers. According to Mr. Anandaraman Sridharan, Director General of FWD, in the first 6 months of 2017, FWD has achieved remarkable growth, in which the distribution channel via bank has contributed significantly to this achievement.

Along with that, AIA Vietnam Insurance Company has also signed a partnership with Dong A Bank. Accordingly, 100% of AIA Vietnam's insurance consultants at Dong A Bank's branches will be equipped with iPoS interactive business support system on iPad to provide customers prompt financial advisory service such as updating information about customers and making insurance benefit illustrations.

Similarly, Sun Life Vietnam Insurance Company Limited has also signed a three-year insurance business partnership agreement with Global Online Financial Solutions Limited (GOFS), one of the leading developing providers of financial services on the Fintech technology platform in Vietnam with Timo Digital Banking service. The signing took place after Sun Life Financial acquired 25% equity of Crescent Asia Limited - the holding company of GOFS.

Under this partnership agreement, Sun Life Vietnam will have the opportunity to introduce the life and health insurance products to Timo's customers. Depending on the product selected, Timo's customers will be able to apply for Life and Health insurance products of Sun Life Vietnam in the Timo mobile application, or will be referred to Sun Life Vietnam’s financial advisors.

According to preliminary statistics from the beginning of 2017 to now, nearly 10 partnership programs between insurance companies and banks have been announced. Not only cooperating with domestic banks, many insurance companies also signed with foreign banks to expand more customers such as cooperation between Cathay Life Insurance Vietnam and Indovina Bank Limited, Post Insurance and Woori Bank Vietnam (Korea), and AIA Insurance Company and HSBC Bank.

Up to now, many insurance companies have signed partnership agreements with nearly ten banks to expand distribution network such as Prudential signed with Maritime Bank, VIB, Eximbank, Agribank, Standard Chartered Bank and Hong Leong Bank ., etc or Dai-ichi also signed with Eximbank, Sacombank, ACB, OCB and HDBank.

Mutual benefits

According to the experts, the cooperation between insurance companies and banks to provide insurance products is a "win-win" cooperation. Accordingly, insurance companies will approach a large number of customers nationwide of banks as well as take advantage of the bank’s staff. Meanwhile, banks also receive benefits from the diversification of their products and services; increase revenues and approach insurance customers.

According to Mr. Phung Duy Khuong, VietinBank's Retail Director, bancassurance will help saving time for bank’s staff and maximizing the needs of their customers. This will help banks increase revenues from service fees, ensuring their sustainable development. On the other hand, the specialist advice from insurance consultants will help raising customer satisfaction and tighten the relationship between customers and banks.

Experts also assessed that the bancassurance has much potential for development in Vietnam. At present, revenue through this channel only accounts for less than 10%, while in developed countries, the rate is up to 70%. By enhancing cooperation over the past time, this rate is also being improved rapidly.

Specifically, in the first six months of this year, revenue from bancassurance of the Military Insurance Company increased 52% over the same period last year. Meanwhile, Military Bank's revenue from insurance business in the first 6 months of this year also reached more than 782 billion VND, while the revenue was not recognized in the same period last year.

Sharing at the recent announcement of the cooperation agreement with HSBC, Mr. Wayne Besant, Director General of AIA Vietnam said that revenue from bancassurance channel accounts for more than 10% of total revenue from insurance premium revenue and the rate will be increasing. In the development of bancassurance channel, AIA Vietnam's strategy is to work with well-selected international and domestic banks with the same views of development and customer care on the technology platform.

Banks “shake hands” with small businesses VCN- ps between banking and businesses are making positive changes since there are more and more support programs, ...

However, for effective cooperation, both banks and insurance companies need to find a common voice in building a specific cooperation model that is suitable with each party’s conditions and strengths. Thereby, offering products that fit the customer’s needs.