Vietcombank seeks bancassurance partnership

The deal between Vietcombank and its partner is expected to be for at least ten years and be worth as much as US$1 billion over the life of the contract.

Vietcombank chose Credit Suisse Group AG to advise it on finding a new insurance distribution partner.

According to Bloomberg, insurers have been attracted to a growing middle class in Vietnam, which chalked up average economic growth of 6.3% during 2005-2017.

Deemed as win-win deals for both commercial banks and insurance companies, bancassurance partnerships have been developing in Vietnam in recent years. 

The model creates a convenient and reliable sales channel for insurance firms while giving banks stable source of non-interest income through sales commissions.

Last year, several bancassurance deals were inked, including Sai Gon Thuong Tin Commercial Joint Stock Bank’s 20-year agreement with Dai-ichi Life Holdings Inc. and Techcombank’s 15-year deal with Manulife Financial Corp.

Contributions of bancassurance sales in Vietnam jumped from 1 percent in 2013 to more than 10% in 2017. This is a much smaller amount than in other Asian markets like Thailand, Indonesia, Singapore and Hong Kong (China), where bancassurance makes up between 30% and 50 % of overall insurance distribution.