Illustrative image (Source: VNA) Hanoi (VNS/VNA) –The model of distributing insurance products via banks (bancassurance) hascontributed significantly to increasing insurers’ revenue, but experts warnedthat the overheating growth of the business could cause insurers to haveto pay compensations due to mistakes made by bank employees, who also act asinsurance products consultants.
The bancassurance channel has received attention from most insurers with manyof them having signed exclusive cooperation contracts worth trillions ofVietnamese dong with banks.
Data of insurance companies showed that by July 2018, the new premium revenuethrough bancassurance reached over 2.86 trillion VND (122 million USD), up 12percent compared to the same period of 2017 and accounting for about 20 percentof the market’s total new premium revenue.
However, industry insiders said that since the distribution channelis growing too fast, many employees at banks, who also act as insuranceproducts consultants, have not been properly trained. As a result, manyinsurance companies had to pay unfair compensation due to the employees’ errorsin providing consulting services.
The latest case involved an insurance company which was required by law tocompensate a corporate customer with 3 billion VND. The compensation had to bepaid as a result of errors in the consultancy process of the staff at the bankwhich cooperates with that insurer in distributing insurance products.Specifically, the bank staff did not fully explain the terms of exclusion inthe contract with the customer.
Industry insiders said that there were many other cases where the insurancedisputes started from the mistakes of banks (in the role of the insurer’sagent).
However, when the mistakes damage the legitimate rights and interests of theinsured customers, the insurers shall still be the first to takeresponsibility, the experts said.
According to lawyer Tran Quoc Tuan from the HCM City Lawyers Association,insurance agents operate under the authorisation of insurance companies so thatwhen the acts of the agents cause damage to the legitimate rights and interestsof customers, the insurance companies have to take the responsibility. Afterthat, insurance companies shall take measures to deal with the violated agents.
Experts therefore suggested insurance companies should not increase itsdistribution channel through banks too fast and focus more on training forbanks’ staff, those will act as insurance products consultants.-VNS/VNA
The bancassurance channel has received attention from most insurers with manyof them having signed exclusive cooperation contracts worth trillions ofVietnamese dong with banks.
Data of insurance companies showed that by July 2018, the new premium revenuethrough bancassurance reached over 2.86 trillion VND (122 million USD), up 12percent compared to the same period of 2017 and accounting for about 20 percentof the market’s total new premium revenue.
However, industry insiders said that since the distribution channelis growing too fast, many employees at banks, who also act as insuranceproducts consultants, have not been properly trained. As a result, manyinsurance companies had to pay unfair compensation due to the employees’ errorsin providing consulting services.
The latest case involved an insurance company which was required by law tocompensate a corporate customer with 3 billion VND. The compensation had to bepaid as a result of errors in the consultancy process of the staff at the bankwhich cooperates with that insurer in distributing insurance products.Specifically, the bank staff did not fully explain the terms of exclusion inthe contract with the customer.
Industry insiders said that there were many other cases where the insurancedisputes started from the mistakes of banks (in the role of the insurer’sagent).
However, when the mistakes damage the legitimate rights and interests of theinsured customers, the insurers shall still be the first to takeresponsibility, the experts said.
According to lawyer Tran Quoc Tuan from the HCM City Lawyers Association,insurance agents operate under the authorisation of insurance companies so thatwhen the acts of the agents cause damage to the legitimate rights and interestsof customers, the insurance companies have to take the responsibility. Afterthat, insurance companies shall take measures to deal with the violated agents.
Experts therefore suggested insurance companies should not increase itsdistribution channel through banks too fast and focus more on training forbanks’ staff, those will act as insurance products consultants.-VNS/VNA
VNA
