Should banks be allowed to sell insurance?
Đài tiếng nói VN - 8/12/2015 4:37:05 PM
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Imagine going to your bank to make a deposit or get some cash and being offered a life insurance policy or even auto or motorbike insurance by the bank clerk.
Futuristic? Well, the future may be nearer than you think.
Consumers in Vietnam can now buy life, health, auto or homeowners insurance through their banks and the laws now permit them to underwrite and sell insurance nationwide for the first time.
Leading the push by banks to get into the insurance business are Vietcombank and Vietinbank, two of the nation's largest banks, both of which have subsidiaries that can be used to sell insurance nationwide.
As of July 2015, Bac A Commercial Joint Stock Bank (Bac A Bank) has also teamed up with Petrolimex Insurance Corporation (PJICO) to start selling insurance products to its customer base.
Meanwhile, the Export-Import Commercial Joint Stock Bank (Eximbank) has started to sell various insurance policies to its customers provided by the Bao Minh Insurance Corporation.
Not to be left out, the Saigon Commercial Bank (SCB), MBBank, NCB, PVcombank and TPBank have struck deals with the Military Insurance Company (MIC) and Bao Long Insurance Corporation to have their banking staff tout insurance policies.
The die is cast say most leading bank executives as they think it is inevitable that the banking industry in Vietnam will fairly quickly start partnering up with insurance companies and enter the insurance business.
Despite the optimism of bank executives there are many that seriously question the propriety of banks selling insurance as there remain legitimate questions as to whether the banks are looking out for their customers’ best interest, others have said.
Or are they simply looking out to make a profit at the expense of their customers?
Although legal barriers are falling fast around the world, most banks globally aren't rushing into the insurance business and are holding back to see if this is really a profitable trend that they want to delve into.
But make no mistake about it, banks in Vietnam are scrambling to increase revenue from their non-lending businesses and lucrative alternatives such as getting into the insurance business are preoccupying them.
However many experts caution that insurance shouldn’t be on the short-term agenda of banks that are struggling to reduce their real estate loan problems— though admittedly insurance is the kind of product that is attractive to banks.
Not surprisingly, the insurance industry is not pleased at the prospect of banks' jumping into the business.
Insurance officials cite the problems that banks face in commercial real estate and the past failures of banks and the bad debt problems of Vietnam as proof that banks should not be allowed to sell insurance.
We question banks' ability to work in insurance when they have proved they could barely handle their real estate loan business, said one leading insurance company spokesperson recently.
If banks selling insurance should fail, then customer deposits could be at risk and the possibility of that happening is a legitimate concern that the Vietnam government should have and key restrictions should be in place to protect customer deposits they have said.
However, the government need not restrict banks from selling insurance, the government’s interest should be limited to protecting customer deposits in the event that banks fail in their endeavour to hawk insurance.
Most notably insurance in Vietnam remains a new business for which bank personnel in Vietnam are not adequately prepared for and it is virtually impossible to find those with professional knowledge and necessary skills to sell insurance, they said.
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