The Insurance Supervisory Authority of the Ministry of Finance (the MOF) and State Bank of Vietnam (SBV).
Yes.
Bancassurance partnerships are generally divided into the exclusive and non-exclusive arrangements (the default requirement is that a credit institution or a foreign bank branch in Vietnam may not concurrently act as an insurance agent to other insurers without a written consent of the insurer that it is currently the agent to).
The salient terms are:
- exclusivity;
- term and termination of the agreement;
- products to be distributed;
- commissions and other payments;
- confidentiality;
- data privacy and data provision between the parties for the bank’s customer data; and
g) the insurer’s training for the bank’s sale staff.
Yes, insurance companies must be licensed, and for life and health insurance products, the products must be approved by the Ministry of Finance.
Insurance agency operation of banks must be approved by the State Bank of Vietnam.
There is no legal restriction for an insurer to appoint a bank as its exclusive distributor or the term/duration of the appointment.
However, a bank may not concurrently act as agent for other insurers unless it is approved by the insurer of which such bank is an existing agent.
To the extent that an exclusive arrangement is possible, the length of the exclusivity is a matter of negotiation between the parties.
Yes, and the form of the preferential treatment is a matter of negotiation.
Periodical (quarterly) reporting is required to the MOF (for insurers) and to the SBV (for banks). No specific approval is required under the law.
No, there are no specific legal requirements for the insurance company or the bank to submit the distribution agreements (and any ancillary documents) to the regulators.
The law requires distribution agreements (i.e., agency agreements) to contain certain key provisions. However, there are no specific requirements for the details of each provision.
In practice, it is uncommon that regulator will comment on the terms, although the regulators have an extensive regulatory power to do so. If the distribution agreement is requested to be submitted to the regulators, it is likely that the regulators would only provide comments to the provisions that they find contrary to the law.
It would be prudent to undertake a competition law review to make sure that there will be no potential risk of violation.
Insurance regulations prohibit the below anti-competition activities, and therefore should be considered in reviewing a distribution agreement:
- Establish collusion among insurance enterprises;
- Illegally intervene in the selection of insurance enterprises;
- Provide untruthful information;
- Fight for customers by obstructing employees or customers of other insurance enterprises;
- Conduct illegal sales promotions; and
- Conduct other illegal acts in cooperation, competition and bidding.
Yes, provided that the bank has to obtain consent from relevant customers.
Yes. Customers may provide consent to the banks to disclose their information to insurers.
None.
Yes, there are certain limitations.
In respect of commissions, commission rate must be subject to maximum limits set out by the MOF for each type of product. In respect of other expenditures for banks (as insurance agents), for non-life insurers, there is a restriction that expenditure for agent rewards and agent support must not exceed 50% of insurance commissions of insurance policies implemented in a fiscal year.
For payment of commission at a higher rate than the limit required under the law, a monetary fine from VND90 to VND100 million (approximately USD4,500 to USD5,000) may be imposed. A part of the license relating to the violation may also be ceased for two to three months. Illegal profits are required to be disgorged.
Yes, the MOF might request information through periodical reporting requirements or their inspections from time to time.
For life insurers, they are required to report to the MOF on a quarterly basis on total premiums collected, total commissions and other payments to its banks/agents. Banks are also required to report to the SBV on total amounts of these payments on a quarterly basis.
For non-life insurers, no such specific requirements for periodical reports on compensation arrangements with banks. Only general requirements for quarterly reports on the list of agents are applicable.
None, provided that life or health insurance products must be approved by the MOF before sale under current regulations.
None.
For life and health products, policy forms must be reviewed and approved by the MOF before the insurers can offer and sell their products in the market. Also, life insurance policy template and terms and conditions need to be registered with the Vietnam Competition Authority in accordance with the law on consumer protection.
Insurers own the IP rights to such forms.
None, except for a general requirement that the conclusion/execution of insurance policies (between a life insurer and its customers) and the conclusion of other contracts (between a bank as the insurer’s agent and its customers) must be separated and that each of the insurer and the bank must independently take responsibility for their own products and services (including the case where the insurer and the banks agree to link insurance products with banking products and services).
No. However, the bank would generally exercise care regarding the level of access to its customer data.
In addition, the sales people are usually employed by the bank rather than the insurer. Vietnamese law prohibits insurers from paying commissions to their sales people.
- Yes, the insurance company must provide training and issue insurance agency certificates to the sales personnel.
- Insurance company may compensate the bank in the forms of commission, sale bonus and agent supporting amount, and the bank may use such compensation to pay its sales personnel.
No. However, the bank would generally exercise care regarding the level of access to its customer data.
In addition, the sales people are usually employed by the bank rather than the insurer. Vietnamese law prohibits insurers from paying commissions to their sales people.
If the bank is an insurance agent of the insurer and the parties enter into a distribution agreement (agency contract), the bank will normally provide some space without additional fees to the insurance companies to distribute its products.
If the bank leases space to the insurance company by way of entering into a lease agreement, this may be difficult because it will require the bank to register for a leasing business
as one of its lines of business.
None.
Yes, the MOF and the SBV issued a joint circular No. 86/2014/TTLT-BTC-NHNNVN on 2 July 2014 on bancassurance between banks and life insurers in Vietnam. Specifically, this joint circular provides guidelines on the principles and conditions for credit institutions to carry out life insurance agency activities, provides key contents of insurance agency agreements (i.e., distribution agreements), specifies the commissions and expenses for management of agents, states the rights and obligations of credit institutions and life insurance companies, provides arrangements for training for sale staff of credit institutions, and provides for reporting requirements.