The ‘gold mine’ of bancassurance exploited more strongly in 2020

16-Nov-2019 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

It was estimated that the bank currently had a net profit of about 70 percent from bancassurance, and revenue from this channel also accounted for an increasing proportion of the total fee revenue of insurance enterprises. Thus, this channel would be exploited more strongly in the next year.

A representative of a company having its market share in the Top 5 of non-life blocks revealed that in 2018, their premium revenue from bancassurance channel had reached more than 700 billion dong. It was expected that by the end of 2019 this figure would have reached 1 trillion dong. Also, the bancassurance revenue of this insurance company was accounting for 20 percent of total fee revenue and would increase more strongly in 2020.

From the beginning of 2019 to then, the bancassurance market continued to achieve impressive growth in both life and non-life fields.

According to preliminary statistics of enterprises, as of October 31, 2019, if the life market revenue reached 8 trillion dong, the receipt of the bancassurance channel from 10 big banks reached over 7 trillion dong.

With the non-life sector, although there were no official figures, many businesses achieved bancassurance revenue growth of up to 30%. PostTelecommunication JointStock Insurance Corporation (PTI), Petrolimex Insurance Corporation (PJICO), Baoviet Insurance Corporation (Bao Viet), Vietinbank Insurance Company Ltd (VBI), Agriculture Bank Insurance Joint Stock Corporation (ABIC), BIDV Insurance Corporation (BIC), etc, were businesses that were selling insurance very well through this channel.

Currently, non-life businesses were providing three main groups of insurance products for banks. The first was the products associated with collaterals, such as auto insurance, condominiums, properties, factories, machines, etc.

That was a product group that had always been prioritised by both banks and insurance companies because borrowers were required to buy to ensure the value of the pledged assets.

The second was the products associated with unsecured loans having no collaterals. This was a product linked to the life of the borrower to ensure that the insurance company would replace the borrower paying the entire mortgage left in case of unfortunate circumstances.

The third was voluntary insurance, such as health insurance, travel insurance, etc. These products accounted for a small proportion of the total revenue from bancassurance but were bundled products to take advantage of thousands of sales assistants, as well as ‘quality’ customers who had money at banks.

A representative of a bank said that insurance fee revenue was bringing high profits to the bank because banks did not have to pay too much expense, but still had a large and stable net revenue source.

Assuming that the commission revenue from the sale of insurance of a bank was 500 billion dong, the cost to pay was only about 30%, and the bank’s net profit was about 70%. Because of high profitability, banks would boost this market segment the following year. There were even banks that aimed for bancassurance revenue in 2020 from non-life products to increase four times to five times compared to 2019, the representative said.

Currently, non-life insurance businesses were also racing to cooperate with banks.

In addition to competing with fees and product benefits as before, insurance enterprises also focused on improving information technology to simplify sales, data entry, even compensation.

For example, recently, PTI had successfully implemented a series of online sales interfacing for sales staff of Vietnam Maritime JointStock Commercial Bank (MSB), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), and Asia Commercial Joint Stock Bank (ACB), etc.

Previously, to buy insurance products, customers of the bank would have to wait for the employees of the insurer to consult and issue the application, then the bank staff could directly print and send the electronic certification for customers.

According to insurance enterprises, insurance revenue from bancassurance of the non-life sector would continue to grow strongly in the next time due to fierce competition in the credit activities of banks.

Bancassurance would also be a new source of revenue to help banks increase profit margins. Therefore, strengthening close cooperation with banks to deploy products would be one of the top priorities of insurance enterprises in the near future.

 

Category: Finance, Vietnam

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