Current status of applying Bancassurance model in Vietnam insurance market

- Developing banking networks and services creates conditions for the development of insurance product distribution channels through banks. A good banking infrastructure is an important factor that creates favorable conditions for insurance through banks to develop. Each bank needs to have branches covering all provinces and cities in the country; only then can it create favorable conditions for customers to easily access the products of banks as well as insurance companies.

- Improve the level of information technology of banks and insurance companies. This level must reach a certain level to ensure data connectivity on customer base, collection and payment mechanisms, periodic payments... especially centralized management software so that both parties can monitor the results of cooperation regularly.

- Strengthen and innovate the application of information technology in management, focusing on building a general management information system for banks and innovating the application of information technology in financial and accounting management, information technology in management of new business areas such as life insurance, banking, fund management, etc.

2.2.2. Establishing insurance-bank cooperation

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- Both sides need to quickly research and develop investment products and joint products to jointly provide a complete “insurance – banking” product package for customers. Insurance companies must cooperate with banks to improve the quality of after-sales services and expand after-sales programs for customers: borrowing money from banks through insurance contracts, incentives in using ATM cards, etc.

- Develop an effective cooperation plan between banks and insurance companies to avoid competition for customers.

- In the equitization process, banks and insurance companies should boldly invest in holding each other's shares to create the premise to raise the level of consolidation between insurance and banking to a higher level in the future.

- Banks can consider implementing Bancassurance with many insurance companies or an insurance company can consider implementing Bancassurance with many banks to improve efficiency and expand product distribution strategy, thereby improving the efficiency of providing "insurance - banking" services to different customer groups. This linkage will better meet customers' insurance purchasing needs because customers may prefer to transact or purchase insurance only at a certain insurance company as well as at a certain bank. However, depending on specific conditions, it can be implemented in many different forms: the bank acts as an agent of the insurance company or the insurance company arranges insurance staff to work permanently at the bank.

- Currently, the banking system is still hesitant to share customer information with insurance companies. Therefore, these two organizations need to be more proactive in creating conditions and encouraging partners to provide information to each other so that Bancassurance has more conditions to develop.

- Conduct financial cooperation between domestic insurance service providers in areas such as: cooperating with each other in the circulation of insurance products, in concluding large insurance contracts, etc., thereby creating position and strength in financial cooperation with international insurance companies.

2.2.3. Improving current Bancassurance products

- This improvement is in the direction of allowing customers to pay fees in multiple installments corresponding to the entire term of the contract; using technical interest rates

as high as the bank's mobilization interest rate to reduce fees, thereby creating conditions for

Customers can access products more easily. On the bank side, it is necessary to quickly amend regulations that are not suitable for customers, such as interest rates should only be calculated on outstanding debt; allowing customers to repay early when they are able.

- Banks need to understand the difference in pricing and cost structure between traditional banking products and insurance products. Banks tend to price on average, whereas the price of insurance products often includes prepayment costs, monitoring and management costs and administrative costs. Banking products often include a heavy element of guarantee while insurance products tend to transfer risks to the other party. Therefore, banks and insurance companies need to clearly understand the differences in each other's products to create a seamless approach to customers.

- Design to launch more Bancassurance products to work with banks to provide a complete "insurance - banking" product package for customers, especially life insurance companies should design investment products in conjunction with banks to deploy these investment products through the bank's customer system to meet customers' needs for ensuring safety when investing.

- Commercial banks need to research and combine some pure insurance products with banking products and services to provide to customers, specifically: savings with 24/7 personal insurance; residential credit, installment home loans, student credit with critical illness insurance, personal insurance... Insurance products are now considered as additional products that commercial banks provide to customers.

- Banks and insurance companies need to develop products that have been successfully tested in markets around the world. These are products such as:

annuities, insurance products linked to credit balances

(Credit life), depositors' insurance products, disability insurance, ... or Bancassurance products linked to mortgage loans, such as mortgage loans linked to term insurance with decreasing insurance amounts...

2.2.4. Do good marketing and maintain close relationships with customers

- Strengthen the consulting function for customers. As mentioned above, people are still limited in accessing financial and insurance services, so when buying insurance products through banks, it is inevitable that they will feel confused. Therefore, banks and insurance companies must provide a team of knowledgeable and enthusiastic consultants to be able to undertake the consulting function for customers, helping them choose insurance products that suit their needs and financial capabilities.

- Banks can develop relationships with customers through introducing new banking products related to insurance products with convincing benefits, satisfying diverse and rich needs of customers, attracting and initiating relationships with customers through sending promotional letters, directly exchanging about insurance products. At the same time, it is necessary to do well in advertising and propaganda so that people can better understand and use Bancassurance products.

- Through direct contact with customers of bank employees as well as insurance employees, banks and insurance companies can build a relatively complete and comprehensive database of customers. From there, both sides can easily exploit the database in a long-term and effective manner, contributing to creating favorable conditions to be able to meet increasingly high demands.

reasonable needs of customers, closer and more attached to customers, accompanying customers.

- For banks with a network of secondary branches (transaction offices) operating after hours, especially at supermarkets, banks can deploy the sale of insurance products at supermarkets (Shopassurance). Because supermarkets are also one of the channels for selling banking products and insurance products quite effectively because the number of daily customers is relatively large, so the marketing efficiency will be very high.

- Continuously expand the scope of services from industry to agriculture, from urban to rural areas to match the potential of the industry in particular and the entire economy in general.

2.2.5. Focus on training professional staff

- Organize Bancassurance training courses for bank staff nationwide to best prepare for product distribution cooperation. The courses will provide students with the most general and basic knowledge about insurance and products that will be deployed through the Bancassurance channel. For simple products, sales staff can be used, but for more complex products, it is necessary to consult with special consultants. In addition, bank employees selling insurance need to be trained in products and sales skills. In addition to initial basic training, bank employees need to be regularly trained to update information and improve knowledge.

- Developing high-quality human resources suitable for the development requirements of the bank, including sending domestic experts to study and work abroad. And in the future, it is necessary to develop

Bancassurance becomes a formal field of study with systematic training in universities.

universities. At the same time, build policies to attract "brainpower" in the financial sector from developed countries through hiring consultants or hiring management experts.

- In addition, the bank can focus on and exploit the team of bank employees who have been consulting for insurance companies as well as the bank can learn some experiences from insurance companies with international experience in customer relations, product distribution and marketing strategies, etc.

- Flexible use of insurance sales staff. Banks and insurance companies need to pay more attention to the training and communication methods of employees with customers. While bank employees do not have enough knowledge about insurance products, do not have enough time and financial motivation; insurance company employees do not have good communication experience with the bank's diverse customer base. Therefore, it is necessary to flexibly use and combine the insurance sales team. It is possible to combine with bank employees, financial consultants, insurance brokers, insurance agents with each other depending on the cooperation model between the bank and the insurance company, the complexity of the product, the level of the sales team, and the time the two parties have cooperated.

2.2.6. Improve the quality of insurance services

It can be said that service quality plays a key role in determining the success of an insurance company in its market development activities, which means that this also affects the success of Bancassurance activities. Service activities often last from introducing products to potential customers until paying and settling insurance benefits. Therefore, improving

High quality insurance services are essential.

- Improve the quality of insurance services in the market through the ability to compensate for losses, the level of payment of insurance service contracts, customer care policies, strict implementation of commitments... to increase the quality of insurance services, thereby attracting more customers to use the product. For the new exploitation stage, it is necessary to improve the quality of consulting skills of agents, educate the attitude and awareness of agents. Risk assessment must be accurate and quick, guide customers to prepare documents for risk payment procedures, resolve insurance benefits enthusiastically and thoughtfully,...

- Research and develop insurance products, financial products and combined financial insurance products to suit the increasingly diverse needs of customers. Banks also need to review and improve compensation procedures to create convenience for customers while ensuring strict compliance with state regulations and minimizing the possibility of insurance fraud.

2.2.7. Improving the financial potential of insurance companies

- Enhance the financial potential of Vietnamese insurance enterprises in the context of deep integration into the world economy by maintaining financial security for themselves in order to achieve financial stability, transparent financial situation in providing insurance services, and at the same time enhance the financial potential of insurance enterprises through equitization and attracting investment capital from the stock market.

- Many enterprises increase their financial potential by increasing capital (such as Bao Viet, Bao Minh, Bao Long, Toan Cau, Bao Nong, Bao Quan, ...). Enterprises also continuously increase investment in the economy, linking with domestic and foreign enterprises to improve their competitiveness (Bao Viet has chosen HSBC Insurance and Vinashin as strategic partners, Bao Minh

chose AXA, or Vinare chose Swiss Re…).

- Establish investment organizations independent of exploitation activities to be able to make professional and effective investments from insurance premiums.

- Joint ventures and partnerships with financial institutions to be able to be stronger against competitive pressure when foreign insurance companies enter the market according to Vietnam's commitment roadmap to the WTO.

- Investment activities also need to be promoted effectively, by making the most of financial investment tools, actively participating in the stock market. Many businesses have established fund management companies to manage idle capital from life insurance activities to invest in the stock market, considering this a good opportunity to use capital effectively. When investing in large-capital projects, companies need to focus on appraisal work to ensure safety, liquidity and profitability for capital.

Current status of applying Bancassurance model in Vietnam insurance market - 13

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