Non-exclusive requirement for insurance distribution in banking

That is one of the notable contents in the official dispatch recently sent by the State Bank of Vietnam (SBV) to commercial banks regarding a number of issues related to credit granting activities, internal control/audit work and insurance agency activities.

Accordingly, the State Bank of Vietnam advised commercial banks to consider conducting insurance agency activities with more than one life insurance company to diversify life insurance products distributed to customers, meeting their needs.

In addition, the bank strengthens internal inspection, control, and audit of insurance agency activities, paying attention to insurance agency activities for investment-linked insurance products.

Proactively implement preventive measures, stop and strictly handle violations of the law according to regulations.

For investment-linked insurance products, the State Bank requires banks to advise on the correct procedures as instructed and other procedures issued by insurance companies.

In the process of consulting customers, banks must analyze customer information including the customer's needs and financial capacity, conduct a survey of the customer's risk tolerance level. From there, they provide appropriate product advice for customers.

The purpose of this is to ensure that all customers are clearly explained about the benefits of the product, aware of the specific risks of the selected product before signing the insurance application; there is written evidence that the customer has been fully advised, understands the selected insurance product and that this insurance product is suitable for the customer's needs and financial capacity.

The State Bank requires commercial banks to strictly control the sale of insurance to customers.

The State Bank of Vietnam recommends that commercial banks consider implementing insurance agency activities in which insurance company employees directly advise customers on insurance products instead of commercial bank employees.

At the same time, it is strictly forbidden to influence or incite customers to replace or cancel their current insurance contract to participate in an investment-linked insurance contract.

Since 2022, the State Bank has repeatedly issued warning documents to rectify the activities of insurance agents at banks and credit institutions.

In particular, the State Bank has added the content of inspecting insurance business activities through banks and insurance agents to the 2023 inspection plan at a number of joint stock commercial banks.

Regarding the operations of insurance companies, the National Assembly Standing Committee proposed to have a separate topic to audit the life insurance market situation or through auditing credit and insurance institutions to clearly answer the contents of the National Assembly's resolution.

Source