Regulatory shake-up threatens Vietnam’s bancassurance sales

Bancassurance activities will face stricter management, under the amended Law on Credit Institutions.

The recent amendment of a regulation under the Law on Credit Institutions, which bans commercial banks from selling insurance together with banking services, will be fatalistic on banks’ bancassurance takings, analysts point out.

Under the amended Law on Credit Institutions, effective from July this year, bancassurance activities will face stricter management, leading to a projected decline in bancassurance income growth compared to the 2019-21 period, according to analysts from MB Securities Company and Yuanta Vietnam Securities Company, reported Viet Nam News agency.

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This regulation comes amidst a notable decrease in revenue from selling insurance through banks (bancassurance) observed in the first nine months of 2023. 

Financial reports from various banks indicate a decline in insurance revenue, with total revenue dropping by 26.1% compared to the same period in the previous year.

For instance, MB experienced a 16.9% decrease in insurance sales revenue, leading to a 28.21% drop in net profit from insurance activities. 

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Similarly, VPBank, Techcombank, VIB, and TPBank reported declines in revenue from insurance activities ranging from 23.6% to 57.5%.

Vietcombank Securities Company (VCBS) highlights that bancassurance income in the banking industry was further impacted by fraudulent activities and economic difficulties, estimating a 10-15% decrease in profits from insurance premiums in 2023 compared to the previous year.