High profit but great risk
Insurance expert Dang Dinh Chinh shared that he was told by a number of insurance agents that the commission and remuneration that some insurance companies paid to the bank was over 100 percent, even paid to agents like TCA, BRICS over 110 percent, calculated on the first year premium.
An insurance agent of Prudential said that in order to increase sales and market share, some insurance companies paid commissions and remuneration to agents up to 160 percent. For example, if you collect one billion dong of insurance premium, the insurance company must pay 1.6 billion dong to that agent.
“Many agents shared with each other that some insurance companies returned up to 160 percent to some financial agents, including TCA, but it was not verified,” an insurance agent of Aviva said.
Dang Dinh Chinh commented: “There are insurance companies having no standards in choosing affiliated organisations. Some companies pay up to 118 percent. Especially, they pay 120130 percent to banks. It is not natural for bankers to sell insurance. Most bankers now have a life insurance sales target, but do not have a non-life insurance sales target. ”
Insurance expert Tran Nguyen Dan said that bankers are present in almost all life insurance companies to sell this service. The channel of selling insurance through banks (bancassurance) has caused these teams to sell insurance products more aggressively than the system of agents.
Some individual agents and other insurance experts said that the above 160 percent figure was true and continuously a hot topic in the market.
Securities Investment has contacted a number of insurance companies that are believed to have paid and the agents have received high commissions and remuneration, they answered that it was a sensitive and confidential figure.
TCA general director, Le Hoang Hai, denied the above figure and said, “160 percent is the dream of TCA. The rate of payment is confidential with partners, cannot be disclosed, but 160 percent is impossible. ”
The top leaders of the two insurance companies are believed to pay the highest in the market, saying that this is an exclusive cooperation contract with the banks, which is highly confidential, so it is not allowed to publish.
Although the parties have not confirmed the official number, but according to many experts, the rate of payment over 100 percent is common in the life insurance company and the risk is loss if that contract is not maintained long-term and cancelled from the early years, especially the second year. The insurance sector calls it the contract game (using virtual contracts).
“If life insurance companies continue to pay higher than 100 percent of the total commissions and remuneration for the agent system (including regular group, bancassurance and general agentGA) as currently, this team will be more in-depth in creating virtual contracts or as real contract for virtual needs. That way, they create a huge amount of revenue for insurance companies and receive income in return. In the first year, the insurance company has not suffered a loss, but when it comes to the second year, when most of the “virtual” insurance contracts are invalidated because the customer does not continue to pay fees, it is considered the company risk of blow-ins “, Dan warned and proposed, the Ministry of Finance needs to check the rate of payment to maintain the contract at each insurance company.
“If the insurance company can maintain the contract, collecting fees from the second and third year onwards, then there is no risk”, lawyer Nguyen Khac Thanh Dat said.
Regarding the ratio of maintaining insurance contracts, Le Hoang Hai said: “The rate of maintaining insurance contracts is a pride of TCA. This May may have a record of maintaining the insurance policy for Hanwha Life products that the company is cooperating80 percent. This ratio is the most important indicator of the quality of life insurance consulting activities, similar to the bad debt ratio for banks “.
Some personal insurance agents of Prudential, in which Ho Thi Ngoc Nhu agent said, the company always strictly controlled the rate of maintaining insurance contracts, if it did not reach the maintenance rate ratio, many financial benefits would be cut.
In legal aspect, Dat said, the current law only stipulated the maximum rate of insurance commission payment, and other remuneration (including management remuneration) was not regulated. Accordingly, even when paying the total insurance commissions plus other high-level remuneration of 160 percent, the insurance company did not break the law.
“Advanced countries apply a high rate of insurance commissions, but the legal system is tight. If the customer cancels the contract, the agent must return the commission.” Dat said.
