The fee revenue from bancassurance channel is expected to continue increasing. Experts forecasted that the growth rate of insurance sector this year will be 20%, in which bancassurance will develop by 30-40%.
After two years cooperating to distribute insurance products through retail channel, in the last week, Orient Commercial Joint Stock Bank (OCB) and generali Vietnam have signed a 15-year strategic agreement to exclusively distribute life and health insurance products through bancassurance channel to meet customers’ needs for health care, risk protection, accumulation and investment to increase assets.
Tina Nguyen, general director of generali Vietnam said that the highlight of this cooperation is the commitment of the two parties to jointly develop solutions for products and services specifically designed for each customer segment of OCB, based on the common strengths of data analysis, application of digital technology, etc.
This is the third largest bancassurance deal in the market since the beginning of 2019. Previously, in September 2019, an exclusive agreement has allowed Shinhan Bank and Prudential Vietnam to meet most demands for financial services of customers, from savings to protection.
Meanwhile, Manulife Vietnam has also reached an agreement to distribute life insurance products through priority channel of Asia Commercial Joint Stock Bank (ACB), in order to meet the diverse needs of the high-end customer segment.
The Vietnam’s insurance market is recognised to be at the exciting development stage of bancassurance, as more and more banks put bancassurance in their development strategies, because they see a safe source of income which helps diversify financial services for customers.
According to Sanjay Chakrabarty, deputy general director in charge of OCB’s Retail Division, the bancassurance development picture in Vietnam market over the time shows that this insurance channel is growing very well.
The average growth rate of annual insurance premiums from 2016 until now is about 30%.
For the insurance revenue of the whole industry, although there is great potential and impressive growth rate (annual premium revenue of the entire market was more than 17 trillion dong in 2016, and 29 trillion dong in 2018), Sanjay Chakrabarty said that the rate of insurance sales to customers in Vietnam is still very low compared to some regional markets such as Malaysia, Thailand, and Singapore.
“The purchase of insurance will be based on an average Gross Domestic Product (GDP) of about 5,000 US dollars. The GDP per capita is currently 2,500 US dollars in Vietnam, 10,000 US dollars in Malaysia, more than 7,000 US dollars in Thailand, etc. The prospect of the Vietnam’s insurance market in the near future is very positive. We believe in investing in this field in the future,” said Sanjay Chakrabarty.
Experts in the industry said that the life insurance market is showing a clear trend that the growth rate of bancassurance is higher than the average growth rate of new insurance premium growth.
Particularly, the context when banks are more and more careful in choosing partners, because the revenue from services such as insurance is increasingly contributing to banks’ total revenue.
For example, the 15-year exclusive agreement between OCB and generali is the result of a mutual exploration over the past two years. In 2017, OCB cooperated with two main partners generali and Dai-ichi Life to sell insurance products in the bank’s retail system.
ACB’s cooperation with Manulife in selling insurance products via priority banking channel is the initial plan of the bank to choose the most suitable partner, before officially selling via exclusive channel. ACB is also currently selling insurance products of AIA through the bank’s other channels.
