Therefore, the author has chosen the topic "Developing bancassurance model at commercial banks in Vietnam in the field of life insurance: Researching bancassurance model at State-owned
Trang 1CHAPTER 1
OVERVIEW AND RESEARCH METHODS
1.1 The urgency of the subject
Bancassurance developed first in France and then in Europe and North America (the number of banks
selling insurance products in the US is 20%, Europe is from 70% to 90%, in France is 100%) In the Asia-Pacific
region, bancassurance activities are also popular in countries like Japan, South Korea, and increasingly developing
in emerging markets such as China, Malaysia, Thailand (Clarence Wong, Mike Bamahan & Lucia Bevere, 2007)
In Vietnam, although appearing since the late 1990s in the form of distribution agents, collection agents In the
early 2000s, a number of joint venture models between domestic banks and foreign insurance companies /
financial groups were formed, but after a while, the ownership model was changed Most bancassurance models
in the field of Life Insurance have come into operation (Vietin-Aviva in 2011, BIDV-Met life in 2014, MB-Ageas
in 2016) or have operated for a long time but only recently exploiting a small part of the potential market (VCLI
in 2008), the development of distribution agent models is still very modest Therefore, the author has chosen the
topic "Developing bancassurance model at commercial banks in Vietnam in the field of life insurance:
Researching bancassurance model at State-owned commercial banks" is my topic
1.2 Overview of research situation
Bancassurance is no longer a new concept in the field of banking or insurance Since the 1970s
bancassurance has begun to be deployed in France and then developed in Belgium, Spain and spread to
continental European countries (Benoist, 2002; Fields, Fraser & Kolari, 2007) The concept of bancassurance
is discussed and mentioned in many studies The bancassurance models are synthesized and systematized on
a practical basis in many studies in different markets including developed markets, emerging markets, from
the initial stage of formation to market with many different development models currently
In Vietnam, bancassurance development is an inevitable trend, bancassurance activities have brought
benefits to both banks and insurance enterprises and customers, especially in the open trend of the economy,
integration and development There have been many studies on bancassurance models in Vietnam related to
different aspects Theoretically, the studies of the authors Do Minh Hoang (2009), Vo Quoc Dat (2009),
Trinh Hoang Anh (2010), or the Ministry level research topic of Ngo Viet Trung (2013) are all mentioned
general theories about bancasurance related to models, products, distribution channels
From the overview analysis, it is shown that the research on the topic "Developing bancassurance model in
the field of life insurance at commercial banks in Vietnam: Studying bancassurance models at state-owned
commercial banks "allows the author to study in depth the development of bancassurance model in the field of life
insurance in Vietnam - a relatively popular activity in the insurance market of other countries but not really
developed in Vietnam and there is no in-depth research is absolutely right, there is no overlap with previous
studies
1.3 Objectives, subjects and scope of the research
Research objective: The research objective of the thesis is based on the results of analyzing the
development and operation of bancassurance models of the State-owned commercial banks of Vietnam from
which to propose solutions to promote development of bancassurance models at state-owned commercial
2
Research subjects: Research subjects is the development of bancassurance models of State-owned commercial banks in Vietnam
Research scope:
- About space: is limited mainly to the development of bancassurance models of State-owned commercial banks in Vietnam in the field of life insurance
- About time: focusing on the period of 2013-2017, this is the period when most state-owned commercial banks have participated in bancassurance activities in the form of selecting joint venture bancassurance models (except Agribank)
1.4 Research questions
Based on the research objectives and overview, the topic needs to clarify the following questions:
- What is bancassurance and what are the characteristics of bancassurance?
- What is bancassurance model? What bancassurance models are there?
- What is bancassurance model development and how is it implemented?
- What factors affect the development of bancassurance models of commercial banks in life insurance?
- How do these factors affect the development ofbancassurance models at State-owned commercial banks in Vietnam?
- What are the solutions for developing bancassurance model in life insurance field in Vietnam?
1.5 Model and research methods
1.5.1 Research Model
Figure 1.1 Research model of the thesis
Source: Author's proposal
1.5.2 Research Methods
The thesis applies qualitative research methods in combination with qualitative research to clarify questions and research objectives In addition, survey methods, summary methods, and table methods will be used to collect and process data for research
1.6 Expected research results
Internal factors of the bank
Factors from the insurance company Social and economic
conditions
Bancassurance model of the bank
Trang 23 The thesis will achieve some following results:
- Systematizing and clarifying concepts related to bancassurance activities, bancassurance model,
factors affecting the development of effective bancassurance model, the correlation relationship between
factors affecting the development of bancassurance models in the field of life insurance;
- Experience in developing bancassurance model of banks, financial groups in the field of life
insurance;
- Studying the influence of factors on the development of bancassurance models in the field of life
insurance of State-owned commercial banks in Vietnam, clarifying the advantages and disadvantages,
opportunities and challenges for the effective development of these models in the current context of
Vietnam's integration and globalization
-Proposing solutions to develop bancassurance models in the field of life insurance in Vietnam
effectively with the existing potential
CHAPTER 2
THEORETICAL BASIS AND EXPERIENCE BANCASSURANCE MODEL DEVELOPMENT
IN LIFE INSURANCE 2.1 General theory of life insurance
2.1.1 Definition and characteristics of Life Insurance
2.1.1.1 Concept of Life insurance
Life insurance is a form of insurance to protect against risks related to human life, life and longevity
Basically, this concept is defined on the basis of the insured risk, emphasizing the life insurance factor that
protects people and is related to life, life expectancy
2.1.1.2 Characteristics of Life insurance
Similar to other types of insurance, life insurance has all the following characteristics: It is an
intangible product, insurance basically adheres to the law of large numbers in mathematics, insurance is a
reverse business cycle operation, the price is determined in advance Life insurance is a type of long-term
insurance, the term of life insurance policies is usually at least 5 years Life insurance is managed according
to the technology of accumulation and basically the fee is determined on the principle of average fee, if the
insurance period is too short, it will be very difficult for the insurance company to ensure cash flow as well
as guarantee obligations to customers
2.1.2 Life insurance products
Depending on the nature and risks covered, life insurance is divided into five groups: Term life
4
2.1.3 Life Insurance market 2.1.3.1 The entities participating in the market
- Insurance enterprises: single-member limited liability companies, joint-stock joint stock companies, mutual assistance companies
- Customers participating in insurance include: individual and corporate customers
- Insurance intermediaries include: institutional agents and personal agents, insurance brokers
2.1.3.2 Life insurance distribution channel
Direct distribution channel, intermediate distribution channel, mail distribution channel, telephone distribution channel
2.1.3.3 Factors affecting the development of the life insurance market
- Objective factors: Economic conditions; political and social; regulatory environment; competitive environment
- Subjective factors: Market research, product diversification, distribution network, customer service quality, marketing policy
2.2 Introduction about Bancassurance 2.2.1 Bancassurance concept and Bancassurance model
2.2.1.1 Bancassurance concept
Bancassurance is a type of business restructuring with mergers and acquisitions In other words, it describes the interface between banks and insurance companies with the main goal of increasing profits and reducing costs
2.2.1.2 Concept of bancassurance model
The bancassurance model is the linkage / link between banks and insurance companies / financial groups in creating a development of a business activity in a specific form as an agent or an independent legal entity, this link relates to the legal relationship of ownership, cooperation, and rights of the model of linkage between the two parties
2.2.2 Bancassurance model
The model of bancassurance is divided into five categories, including: pure distribution model, strategic alliance model, vertical joint venture model: bank or financial group/insurance company owning insurance companies/banking, joint venture model and financial group model
2.3 Bancassurance model development
2.3.1 The concept of developing Bancassurance model from the bank
From the bank's perspective, bancassurance development offers the following benefits: Developing bancassurance helps the bank diversify banking services Improving revenue and profit from non-banking services Enhancing the reputation and brand of the bank Bancassurance development provides certain guarantees for the Bank's credit capital Bancassurance development is an opportunity for the
development bank to expand its market to other countries
Trang 31.3.2 Development of life insurance products distributed through Bancassurance channel
Insurance products distributed via bancassurance can be summarized according to many different
criteria:
- Insurance products distributed via bancassurance channel to customers include: products for
individual and household customers, products for businesses and organizations
- Insurance products distributed via bancassurance channel by level of integration include:
Traditional products and integrated insurance products such as credit life insurance products, cardholder
insurance products…
2.3.3 Development of Bancassurance's distribution activities
2.3.3.1 Development of distribution channels
Currently, some bancassurers can use many different distribution channels depending on the type of
bancassurance model selected, including: professional agents, special counselors, salaried agents, bank staff,
brokerage companies, online brokers, other channels
2.3.3.2 Develop bancassurer distribution model
There are three distribution models that bancassurers can develop: Integrated model: distribution of
insurance products through available banking channels; Specialized model (expert): a specialized model that
distributes complex insurance products or investment insurance products through product specialists who work on
behalf of an insurance company Financial planning model: this model is a team approach only
2.4 Influence factors and criteria to evaluate the development of Bancassurance model in life
insurance of commercial banks
2.4.1 actors affecting the development of the Bancassurance model in the field of life insurance
2.4.1.1 The objective factors
Globalization and integration, socio-economic conditions, legal environment, cultural environment,
competition in the market
2.4.1.2 The subjective factors
Differences in corporate culture, coordination of operations, conflicts of member companies in the
union, the management mechanism of the union
2.4.2 The criteria to evaluate the development of the Bancassurance model
- Financial indicators: Charter capital; equity
- Target to the operating network: Number of bancassurance agents
- Targets related to operations and market size: Number of bancassurance products, bancassurrance channel
commissions, total insurance premiums, new market share
2.5 Experience in developing Bancassurance model in the field of life insurance
6
2.5.1 Experience in state management for Bancassurance activities
Experience in China in 2003, experience in Kenya in the early 2000s, experience in Indonesia, experience
in Chile, experience in Morocco, experience in USA, France
2.5.2 Experience in choosing Bancassurance model of banks and financial groups
Experience in Mexico in 2010, experience in USA, experience in Netherlands, experience in Spain
2.5.3 Experience in developing insurance products distributed via Bancassurance channel
Experience in Asian countries, experience in Latin America, experience in Southern Europe, experience in European countries
Trang 4CHAPTER 3
CURRENT SITUATION OF DEVELOPING BANCASSURANCE MODELS IN THE FIELD OF
LIFE INSURANCE IN VIETNAM: THE RESEARCH THE BANCASSURANCE MODEL OF THE
STATE COMMERCIAL BANKS
3.1 Overview of Vietnam's life insurance market and Bancassurance models in the field of life
insurance in Vietnam
3.1.1 The life insurance market in Vietnam
The life insurance market in Vietnam was formed in 1996, when Bao Viet introduced the first two life
insurance products: Education security and life saving insurance At this time, Vietnam's economy has made
remarkable development after the renovation policy of the Government in 1986 took effect The
transformation of the economic model from centralized subsidized planning to a state-controlled market
economy has brought about certain results, economic growth rates in the 1990s and 2000s an average of over
7%/ year, income per capita improved and reached 835 USD in 2007 from 423 USD in 2001 This is one of
the conditions for the life insurance market of Vietnam to form and develop Following Bao Viet, in 1999
three foreign life insurance companies and joint ventures were licensed to operate in Vietnam, including:
Prudential Vietnam Life Insurance Co., Ltd, Chinfon-Manulife Life Insurance Company Limited (now
Manulife Vietnam) and Bao Minh Life Insurance Co Ltd-CMG (now known as Daiichi Life Vietnam); in
2000 added AIA life insurance company By the end of 2017, Vietnam life insurance market has 17
operating companies, including 01 domestic insurance company, 04 joint venture companies operating under
the bancassurer model (insurance companies belonging to banks) and 12 companies with 100% foreign
capital
3.1.2 Bancassurance models in the field of life insurance in Vietnam
By the end of 2016, Vietnam life insurance market had 18 life insurance companies operating, of
which 16 companies developed bancassurance models under 4 linked models Distribution agency model
with the participation of AIA, Dai-ichi Life, FWD, Hawha Life, Phu Hung Life, Manulife, Prevoir,
Prudential, VCLI Models of strategic alliances or strategic distribution include Cathay Life, Chubb Life,
Generali, and Aviva The current corporation model has Bao Viet Life
3.2 Current situation of developing the Bancassurance model of state-owned commercial banks in the
field of life insurance
3.2.1 Bancassurance models of state-owned commercial banks
- VCLI is a life insurance company established under the Investment License No 55GP / KDBH dated
October 23, 2008 under a joint venture bancassurance model between three partners, the Bank for Foreign
Trade of Vietnam (Vietcombank) and BNP Paribas Cardif Group and Bank of East Asia
- VietinBank Aviva Life Insurance Co., Ltd is a joint venture bancassurance model between VietinBank
and British Aviva International Insurance Company established under the license No 64 GP / KDBH dated
July 29, 2011 of the Ministry of Finance The charter capital of VietinBank Aviva is VND 800 billion, of which
the capital contribution ratio of VietinBank is 50%, Aviva International contributes 40% and Aviva Ltd 10%
- BIDV MetLife Life Insurance Co., Ltd is a joint venture bancassurance model between Bank for
8 operating under the Establishment and Operation License No 72 / GP / KDBH issued by the Ministry of Finance on July 21, 2014, amended for the second time on October 26, 2015 with a charter capital of VND
1,000 billion
3.2.2 Development of Bancassurance models of state-owned commercial banks in Vietnam
a Financial capacity:
Table 3.1 Charter capital of life insurance companies in Vietnam
Order Company name Establish Charter capital
(VND billion)
1 Bao Viet Life Corporation (BVL) 2004 2.500
2 Prudential Vietnam Life Insurance Co., Ltd
1999 1.136
3 Manulife Co.Ltd (Vietnam) 1999 1.820
4 AIA Life Insurance Company Limited 2000 1.264
5 Chubb Vietnam Life Insurance Co., Ltd 2005 1.165
6 Prévoir Vietnam Life Insurance Co., Ltd 2005 1.079
7 Dai-ichi Vietnam Life Insurance Co., Ltd
2007 2.153
8 Cathay Vietnam Life Insurance Co., Ltd 2007 3.344
9 Hanwha Vietnam Life Insurance Co., Ltd
2008 1.891
10 Vietcombank - Cardif Life Insurance Co., Ltd
11 Fubon Vietnam Life Insurance Co., Ltd 2010 1.400
12 Generali Vietnam Life Insurance Co., Ltd
2011 2.183
13 VietinBank Aviva Life Insurance Co., Ltd
14 Sun Life Vietnam Life Insurance Co., Ltd
2013 1.350
15 Phu Hung Life Insurance Joint Stock Company
16 BIDV MetLife Life Insurance Co., Ltd 2014 1.000
17 FWD Vietnam Insurance Co., Ltd 2007 1.395
18 MB Ageas Life Insurance Co., Ltd 2016 1.100
Source: Insurance Administration and Supervision Department of Vietnam
Although the financial capacity of bancassurers is still modest compared to the total market capacity, However, with the advantage of customer base, foreign joint venture's experience in product development, risk management and insurance appraisal, business development, Joint-venture insurance companies of state-owned commercial banks still have safety and stability in the market, Business results belong to the group of
Trang 59 fast growing enterprises in the market, this can be seen through the development of market size of enterprises
in the following section
b Product development
Table 3.5 Products of Bancassurer models of state-owned commercial banks as of December 31, 2017
Mixed life insurance 2 2
Investment-linked insurance - 4 2
Nguồn: website of VCLI, MetLife, Aviva
c Development of distribution channel
Table 3.8 Number of agents operating by December 31 every year of Bancassurer models of
state-owned commercial banks (2013-2017)\
BIDV
MetLife
The whole market of Life
Insurance
Quantity (agent) 226.133 294.593 404.607 497.635 592.193
Source: Vietnam Insurance Association (2013–2017)
The data show that bancassurance models of state-owned commercial banks use strategic agent distribution
model with associated banks / capital contributors
3.3 Analyzing the impact of factors on the development of Bancassurance models at state-owned
commercial banks
3.3.1 Determine the impact of factors on the operation of the Bancassurance model
Table 3.13 Regression results on factors affecting the performance of Bancassurance models at
state-owned commercial banks
10
Source: Research results of the author
The regression analysis results show the variables (1) MHLK: Link model of banks and insurance companies, (2) HTPT: Market development activities of insurance companies to banks , (3) Product: Product; (4) PVBH: Insurance coverage (degree of protection and multi-purpose of products) has a positive effect on operating results (positive beta and P-value is less than 0.05) This shows that improving one of these 4 factors can improve business results of bancassurance models of the current state-owned commercial banks Meanwhile, the remaining variables stop as if they have no effect on the operation results (P-value is greater than 0.05)
3.3.2 Determine the influence of factors on the development of the Bancassurance model
Regression analysis results show that the variables HTCC, HT, CL and SPPH have a positive impact
on the development of the bancassurance model at state-owned commercial banks (positive beta coefficients and small P-value more than 0.05) This shows that improving one of these 4 factors can promote better development of the bancassurance model that state-owned commercial banks are pursuing he remaining factors do not affect the linking activity (P-value is greater than 0.05)
3.4 Evaluate the development of Bancassurance models at state-owned commercial banks
3.4.1 Results 3.4.2 Limitations and causes
CHAPTER 4
SOLUTIONS TO DEVELOP BANCASSURANCE MODELS IN THE FIELD OF LIFE
INSURANCE IN VIETNAM
4.1 Potential development of Bancassurance models in the field of life insurance in Vietnam
4.1.1 Prospects of Vietnam's life insurance market 4.1.2 Potential for developing Bancassurance at state-owned commercial banks in the field of life insurance
4.1.2.1 About financial capacity
Basically, financial capacity and stability, profitability are factors proportional to the development of bancassurance This factor creates stability for the development of banks, insurance in general and bancassurance model in particular
Trang 64.1.2.2 About the network
In Vietnam, state-owned commercial banks are banks with a network of branches and transaction
offices covering the whole country, which can bring advantages in the distribution system and the ability to
reach customers when participating bancassurance Compared with joint stock commercial banks operating
in Vietnam, state-owned commercial banks have advantages in size, facilities, protection network, brand and
experience
4.2 Solutions to develop Bancassurance models in the field of life insurance in Vietnam
4.2.1 Direct solutions
4.2.1.1 Strengthening the linkage model between banks and insurance companies
Building a centralized steering model that unifies the connection of the parent bank to the bancassurance
model and developing a unified direction from the parent bank to the branches Urging to supervise the
combination of branches - general agents and insurance branches in each locality Establishing an
appropriate mechanism for sharing customer information while ensuring compliance with laws related to
customer information security regulations
4.2.1.2 Diversifying distribution channels
VCLI, BIDV Met Life, Aviva Vietnam may consider diversifying the distribution channel system by
the following channels: Continue to develop agency distribution channels through the banking system with
agents who are bank employees; Developing cross-selling channel; Developing online distribution channel
(online) distributing life insurance products; Developing brokerage distribution channels, direct sales
channels
4.2.1.3 Diversifying life insurance products
Personal products development: At present, such as situation analysis, VCLI, Aviva have just
focused on developing protective products, traditional savings products, BIDV Met Life focusing on
universal life insurance and health insurance, Therefore, these 3 bancassurers need to focus on developing
new lines of insurance in line with the trend of the global and domestic insurance market including:
Developing joint products; Developing affiliate investment unit products; Developing retirement product
lines; Group product development; Developing group health insurance
4.2.1.4 Improving the quality of human resources
- Enhancing the quality of human resources as employees at VCLI, Aviva, BIDV Met Life
- Improving the quality of agency human resources of VCLI, Aviva, BIDV Met Life
- Diversifying training methods: first-class learning, classroom training, role-based training, model-based
training, computer software training, job-based training, training through experienced people, trained through
job rotation
4.2.2 Supported solutions
4.2.2.1 Developing appropriate policies for compensation, benefits and commissions
Salary policy can be done according to the job and stick to the common income of the industry
12 Clear reward policy: Reward regimes must be stipulated and applied as part of a cooperation agreement between banks and insurance enterprises
4.2.2.2 Enhancing marketing to promote businesses and products images
VCLI, Aviva, BIDV Met Life need to develop a strategy to develop image and brand This strategy may use different measures depending on the company, but may use different measures: (1) hrough mass media such as newspapers, radio, television, movies, posters to create the impression, recognition of the company's image (2) VCLI, Aviva, BIDV Met Life can use events by regularly organizing customer conferences for target groups, thereby promoting the company's image and receiving feedback from customers to research and find the right direction for themselves in the future (3) VCLI, Aviva, BIDV Met Life can also develop material incentive tools for customers to remember and identify the brand for corporate customers as well as regular insurance customers or potential customers
4.4.2.3 Application and technology development
The process of technology application and development must meet the following requirements: Firstly, it is necessary to ensure a synchronous and transparent element between the insurance company and the bank, which is the condition for the application of the soft and achieve the effect; Second, the application software must ensure throughout the process from application risk assessment, reinsurance (if any), management of claims and insurance payments, risk management and data recovery
4.3 Some recommendations
4.3.1 Recommendations to State management agencies 4.3.2 Recommendations to the State-owned commercial banks of Vietnam
CONCLUSION
The topic focuses on developing bancassurance model at state-owned commercial banks in Vietnam in the field of life insurance The study shows the trend of integration and restructuring in the field of bancassurance in Vietnam in life insurance: the three current bancassurance models are the presence of leading insurance companies/financial groups of foreign The study also clarifies the product development, distribution channel development based on taking advantage of the strength of state-owned commercial banks and thereby showing the link between the development of models and The subject is state-owned commercial banks in Vietnam The limitations were also clarified in the research, focusing on the relationship issues in association, corporate culture, distribution model, quality
of distribution channels The proposed solutions are considered based on objective conditions in the near future as well as on the existing limitations of the development of bancassurance models at state-owned commercial banks Basically, the solutions are suitable to the current context of state-state-owned commercial banks in Vietnam
However, the thesis still has certain limitations such as the inability to clarify in more detail the executive direction between the parties involved in the bancassurance model, the survey data is
Trang 713 comments and devoted exchanges of scientists and teachers to be able to improve and further develop in the future research process