Page 10 - VET352

COVER STORY

tunately, aggressive sales tactics. Between
2017 and 2022, bundled insurance sales
FOR CONSUMERS saw a meteoric rise, averaging double-digit
growth each year, for an 11-23 per cent
bonanza for the industry. This rapid expan-
TO CHOOSE sion, however, came at a dark cost.
The relentless pursuit of ambitious
sales targets put immense pressure on
With Vietnam’s insurance market directed to pull apart bundled insurance agents and bank staff, leading
to a disturbing trend of questionable prac-
products under amended legislation, it will now be the consumer tices. Misrepresentation of policies, inad-
that navigates their way to a brighter financial future. equate customer understanding, and even
instances of bank deposits being converted
| By DINH PHAN
to insurance contracts without consent
became alarmingly common.
Nguyen Hoa, a victim of this practice,
described being lured into a “gift” under
a savings incentive scheme, only to discover
two years later it was actually a $7,000
insurance contract.
The inevitable result? A surge in com-
plaints and denunciations. In the first
four months of 2023 alone, the Ministry
of Finance (MoF) received 350 complaints
relating to bancassurance, highlighting
issues with product counseling, contract
content, and overall handling.
Alarmed by these developments, the
MoF launched inspections and analyzed
five insurance companies early last year.
And less than a year later, legislators deliv-
ered a resounding blow to the bundled
insurance model by approving the
amended Law on Credit Institutions, set
to take effect in July. This landmark leg-
islation effectively mandates the
unbundling of non-mandatory insurance
and banking products.
For Vietnamese bank customers, it
marks a significant victory. No longer will
they be forced into unwanted insurance
purchases, reclaiming control over their
hard-earned money.
The benefits for insurance customers
are equally compelling. The confusion
between banking and insurance products,
a major source of complaints, will be sig-
nificantly reduced. With proper knowledge
magine the thrill of walking into a mandatory insurance products from other and specialized counselling, customers can
mobile phone store, eager to upgrade financial services. This seemingly simple now clearly understand the terms and ben-
I to the latest model. But then, the sales- step holds the potential to revolutionize efits of their policies, fostering trust and
person throws a curveball. Forget the Vietnam’s banking and insurance land- confidence in the industry as a whole.
phone, they insist, unless you also take scape, impacting both consumers and the Additionally, they can now choose individual
the screen protector you don’t need, the industries in profound ways. insurance options from various providers,
bulky case that clashes with your style, potentially leading to lower premiums and
and an extended warranty you might INSURANCE TAILORED TO YOU, coverage tailored to their specific needs.
never use, all of which are bundled together NOT YOUR BANK “Unbundling has the potential to
at a “discounted” price. Frustrating, right? For many years, Vietnamese bank cus- democratize access to insurance, making
This was the reality for many Vietnamese tomers have been trapped in a familiar it more affordable and accessible for a
consumers facing bundled insurance, how- cycle: seeking a loan or opening an account wider range of individuals,” consumer
ever, particularly when tied to bank only to find themselves strong-armed into advocate Ms. Nguyen Thi Thuy empha-
accounts or credit cards, leaving them buying unwanted life insurance. sized. “This newfound transparency and
feeling locked in and overpaying. This practice, known as “bancassur- flexibility empower both banking and
But change is ringing out. The revised ance”, has experienced explosive growth insurance customers to make informed
Law on Insurance Business, effective July over the past decade, fueled by a potent financial decisions, ensuring their money
1, 2024, mandates the unbundling of non- mix of financial inclusion efforts and, unfor- goes towards products they truly value.”

10 | VIETNAM ECONOMIC TIMES | MARCH 2024 en.vneconomy.vn