Recently, a large bank announced that it would train its own 4,000 employees to advise insurance buyers (instead of using insurance company advice). Several other banks had also made similar moves. The Securities Investment Newspaper spoke to Tran Nguyen Dan, director of the Institute of Insurance and Financial Risk Management (IFRM), about this story.
The move by the bank to gain the right to train and sell insurance showed what, according to Dan?
In his opinion, the above move was to prove the advisory quality of bank staff as well. Banks were then quite confident about the ability to retrain their employees in the banking sector. However, banks educating themselves on insurance seemed not able to guarantee the insurance quality, because it depended much on what knowledge they could train and who was the trainer. Sales training was actually not too difficult in the context that the bank had a large customer base, quite a good bargaining power with customers. However, the actual knowledge of insurance training about insurance was a different story.
Besides, the commissions paid by insurance companies to banks, as Dan knew, were quite high, including training costs. Therefore, banks announced to train themselves also meaning to legalise a part of the commissions as mentioned above.
Were there any consequences from the self-training and self-insurance of banks?
According to Dan, if their insurance professional training system were good, there would be no problem. How good it was, only the market could have the correct answer, considering the retention rate of contracts of two years onwards as well as the number of out-of-court disputes related to consulting issues.
Dan emphasized, if the training system were not good enough, the consultancy would not meet the standards, and the customers would be the damage, as well as the whole market would be contagious.
In countries, what was the reality about bank insurance seld-training, self-purchase?
Banks in foreign countries did not foolishly train insurance salespeople, because they could be prosecuted for liability if the agent made mistakes related to the training. When they conducted insurance distribution for a specific insurance company, they would send employees to training insurance knowledge at insurance training centers, then the insurance company. The associate would be responsible for training on products and business processes at their company.
By doing this, they minimised the risk of reimbursing the insurance company when the consultants did not have the professional knowledge that the insurance company brought.
There was an opinion that, with the current reality in Vietnam, if bank staff directly consulted insurance, it would be challenging to ensure the insurance’s professional requirements. What did Dan comment on this opinion?
In fact, the performance indicators (KPIs) of bank employees were very terrible, they were really tired of their work, and the burden of additional insurance consultants was overloaded. Also, the assumption that banking knowledge was similar to insurance knowledge was incorrect, so insurance advice would become pressure if bank employees had to do more.
Which core points should banks pay attention to self-training and self-closing contracts?
Dan answered, consulting specialisation was a wise job when arranging a consulting force that had insurance expertise to arrange insurance activities. Banks should allow insurance companies or outsource units with excellent insurance expertise to carry out the training. This was really a risk management task for a potentially risky business such as banking.
