Bancassurance forecasted to face difficulties this year

15-Jan-2020 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

Talking to Dau tu Chung khoan newspaper, deputy general director of a market-leading insurance company said that bancassurance channel is likely to face difficulties in 2020, after booming in 2019.

The leader gave two reasons for his statement. Firstly, the source of customers will gradually run out after being fully exploited in the previous years. In 2020, customers may continue to renew their contracts at the same insurance premium, thus the total premium revenue will not change.

Secondly, since there have been reactions from the distribution units due to the pressure in terms of revenue over the past time, year 2020 may be more strictly controlled, thereby affecting the revenue from this channel.

In fact, on the last days of 2019m the State Bank of Vietnam (SBV) Long An branch sent official documents to directors of banks in the province requesting them to make report on the types of insurance they are offering, whether customers are being forced to buy insurance when completing loan procedures, etc.

In addition, according to Phung Dac Loc, former general Secretary of Vietnam Insurance Association, the fact that a customer opens accounts at many banks causes the competition level to increase. Thus, banks and insurance companies have to increase spending on services, incentives, etc. in order to retain old customers as well as gain new customers.

Chu Quang Minh, general director of Best Life Joint Stock Company an enterprise operating in the form of a corporate insurance agent also expressed concerns that in 2020 there may be many cancelled contracts (customers do not want to renew contracts after being forced to buy insurance for the first year in 2019 in order to be approved for loans).

The shortage of renewable revenue can affect bancassurance revenue this year.

This concern is also a common worry of many market members about the virtual contracts which were not being bought according to customers’ real needs. They were a problem of traditional agent channel for years, which distorted the market.

In fact, there were times when many life insurance companies had to work hard to handle their large amount of virtual contracts, leading to a decline in revenue.

Another challenge pointed out by some life insurers Is that bancassurance has not yet achieved expectations in terms of customer confidence, despite the high revenue growth.

Insurance companies expected that one of the reasons for the strong spending on banks is to raise awareness of depositors about insurance through bank staff who are financially knowledgeable, well-trained, etc. thereby increasing confidence of people in insurance. However, the reality has not met expectations.

Certainly, besides concerns, there are optimistic judgments on bancassurance channel.

Le Hoang Hai, general director of TC Advisors Joint Stock Company (TCA) another corporate insurance company, said that bancassurance market will continue to be exciting in the near future.

According to Hai, for the last two years, TCA has affirmed that its main competitor is not the system of traditional agents but bancassurance.

“I still see that banks work professionally. In life insurance segment, traditional agent network of the whole industry only increased by five percent. A number of companies saw reduction in revenue of agent channel such as Dai-ichi Life, Prudential, etc. and some businesses in the Top 5 even announced that they would completely abandon the total agent channel. In 2019, the market increased mainly in bancassurance and in 2020, this trend will continue to be maintained,” Hai emphasized.

 


Category: Finance, Vietnam

Print This Post