The Ministry of Finance said that 57% of AIA insurance sold through banks was canceled after the first year, and some employees were not qualified but still sold insurance.
The Department of Insurance Management and Supervision (Ministry of Finance) has just announced the conclusion of the inspection of the sale of insurance through banks (bancassurance) at AIA Vietnam Life Insurance Company in 2022.
During this period, AIA distributed insurance through 6 banks including VPBank, BVBank, KienlongBank, CitiBank, HSBC, PVBank. Of which, the insurance distribution partner with the highest new operating revenue was VPBank. By the end of 2022, AIA had paid the initial support amount to the largest partner, VPBank, of more than 7,200 billion VND.
In 2022, AIA's premium revenue sold through banks will reach nearly VND5,300 billion, accounting for 28% of total premium revenue. If calculated based on new contract sales, the banking channel will contribute 42% of AIA's total new premium revenue.
Accordingly, the company issued more than 73,400 new contracts through the banking channel. The cancellation rate after the first year was 57%, calculated by insurance premium.
In addition to AIA, the rate of abandoning insurance contracts sold through banks after the first year, according to a previous inspection by the Ministry of Finance at other businesses, is also high, from 32% to 73% (in 2021).
| Business | Banking partners | Bancassurance fee revenue per year (2021 or 2022) (Billion VND) | Cancellation rate after first year (%) |
| AIA | VPBank, BVBank, Kienlongbank, Citibank, HSBC, PVBank | 1,548 | 57 |
| Sunlife | TPBank, ACB | 2,000 | 39-73 |
| Prudential | VIB, MSB, Pvcombank, SeABank, Standard Chartered, VietBank, UOB, Shinhan | 6,200 | 41 |
| MB Ageas | MB, M.Credit | 4,460 | 32 |
| BIDV Metlife | BIDV | 1,550 | 39 |
At AIA's bank insurance distribution partner, VPBank, 167 employees of this bank introduced customers to participate in more than 230 joint insurance contracts even though they had not been granted an agent training certificate, or had not been certified to have completed a course on joint insurance products.
In addition, the inspection showed that more than 3,000 bank employees of VPBank, BVBank, KienLongBank... were trained by AIA to introduce customers to participate in unit-linked insurance but did not ensure full training content and duration according to regulations of the Ministry of Finance. Accordingly, these bank employees only introduced customers to participate but did not participate in consulting, offering and arranging contract signing.
According to the inspection results, allowing untrained insurance agency employees to approach customers and not complete all steps according to the agreement between AIA and the bank, but still receive full commissions and bonuses is not in accordance with regulations.
In addition, in 2022, AIA spent more than 376 billion to pay "fixed allowances" and bonuses to individual insurance agents in the bancassurance channel, but the Ministry of Finance determined that the method of determining and calculating the bonus amount was not in accordance with legal regulations.
Accordingly, the Insurance Supervision and Management Department requested the General Director of AIA Vietnam to review and strengthen the management of insurance sales activities through banks to reduce contract cancellations and ensure the rights of buyers. The issuance of bancassurance regulations must ensure that customers are consulted in accordance with their needs and financial situation, and are clearly aware of their rights, fees, and risks...
In fact, after the "boom" period, cross-selling insurance through banks has also recorded a more rigorous and healthy shift. Some insurance companies have required banking partners to commit to the contract retention rate, but most companies have not yet made this figure public.
At a recent meeting, Ms. Nguyen Thu Phuong, Deputy Director of the Department of Insurance Management and Supervision (Ministry of Finance), said that the agency had completed the inspection of five insurance companies. Her unit also publicly announced the inspection results of Dai-ichi Life Insurance Company in early February on the Department's information portal.
The main violations of insurance companies are mainly related to the issuance of regulations and supervision of insurance agents that are not in accordance with regulations; the management and use of insurance agents are still in violation; and accounting and bookkeeping are still negligent.
Administrative violations have been punished. Currently, this agency is coordinating with the Tax Department to handle issues related to tax debts.
Quynh Trang
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