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Best’s Commentary: Increased Regulatory Scrutiny of Bancassurance to Impact Vietnam Insurance Industry

A change in Vietnam law pertaining to the distribution and purchase of insurance products through the bancassurance channel is expected to constrain sales growth over the near term, more so for life side products than the non-life side of the business, according to a new AM Best report.

The Best’s Commentary, “Increased Regulatory Scrutiny of Bancassurance to Impact Vietnam Insurance Industry,” states that amendments to Vietnam’s Law on Credit Institutions is geared toward improving financial conduct and restoring consumer confidence in the country’s bancassurance channel.

The new law takes effect in July and focuses primarily on credit institutions operating in Vietnam, such as banks, foreign bank branches and leasing companies; however, it includes a restriction prohibiting credit institutions from bundling the sale of non-compulsory insurance products alongside any financial services. The amended law is expected to benefit consumers by giving policyholders the ability to choose only products they require at competitive prices. AM Best expects that the regulatory shift will generate near-term headwinds for Vietnam’s insurers.

“Bancassurance is an important distribution channel, especially for the life segment, accounting for approximately 20% of total life insurance premiums and 14% of total non-life insurance revenue in 2022,” said Ken Lau, senior financial analyst, AM Best. “Some insurers derive a higher proportion of premiums from bancassurance due to strategic partnerships or corporate affiliations with banking groups.”

Business acquired through Vietnam’s bancassurance channel has grown considerably in the run-up to 2023, owing to rising insurance demand, economic growth and increased tie-ups between banks and insurance companies. However, following complaints from the clients of banks and insurance companies related to unfair sales practices and the subsequent regulatory scrutiny, revenue sourced through bancassurance may have peaked. Many banks reported double-digit declines in revenue from insurance services in the first three quarters of 2023 from the prior year period.

The fallout has had a material impact on the broader insurance industry, resulting in an 8.3% decline in insurance premiums to VND 227 trillion (USD 9.2 billion) in 2023, the first fall in a decade after years of double-digit growth, according to the report. The contraction was attributable mainly to a year-over-year decline of 12.5% in life insurance premiums, according to estimates from the General Statistics Office of Vietnam.

To access the full copy of this Best’s Commentary, please visit .

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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