Vietnamese law treats the bank as an agent of the insurer and the bancassurance agreement as an insurance agency agreement. The legal 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 to which it is currently the agent. However, no legal restrictions are imposed on insurers from entering into bancassurance agreement with more than one bank.

In practice, parties can further elaborate the scope of exclusivity such as restrictions in relation to certain products, a certain period of time or certain geography.

Vietnamese law imposes an obligation on the insurer to develop training programs and coordinate with the bank in organizing and providing training courses and take responsibility for granting insurance agent certificates to the bank’s staff members, who directly act as individual insurance agents.

Any other obligations on providing manpower support is a matter of negotiation between the insurance and the bank on a case-by-case basis.

The bank’s customer database is subject to banking secrecy, data protection and privacy regulations. As banks are under a strict duty to maintain confidentiality and secrecy, banks will only allow the insurer the right to access their customer database after it has received the relevant consent from the customer or as may be otherwise permitted by the law.

The disclosure by the bank to the insurer is also typically subject to strict confidentiality provision. In practice, the insurer generally has to agree to use such customer data for purposes specified in the consent, to maintain such data strictly confidential, and not disclose the information to any third party whatsoever (including each of the insurers’ subsidiaries, related companies, associated companies, agents, servants or to employees of the insurers, except employees who are required to have the information in order to carry out the insurers’ obligations under the bancassurance agreement).

There are two separate components of compensation payable to the bank, including commissions and other expenditures.

In respect of commissions, commission rate must be subject to maximum limits set out by law for each type of insurance products. Banks typically request for the maximum amount of commission payable under law. As a matter of negotiations, the parties may wish to consider giving themselves the flexibility in determining the commission structures reflecting the parties’ view on bancassurance product competitiveness, market segmentation and any impact on bancassurance product sales volume.

In respect of other expenditures for banks (as insurance agents), apart from commissions, other expenses and fees to be paid to the bank should be classified as “expenses for management of insurance agents.”

Accordingly, “expenses for management of insurance agents” includes expenses for initial training and examination for issuance of insurance agent certificates, expenses for improving knowledge to agents, expenses for recruiting agents, expenses for rewarding agents and expenses to support agents. For this part, applicable to 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.

It is common in practice, especially in an exclusive bancassurance transaction, that the insurer will pay the bank an upfront fee as an exchange for the exclusivity offered by the bank. It is uncertain under the law whether such upfront fee can be considered “expenses for management of insurance agents”. If not, there is a risk that such upfront fee would not be considered as legitimate business expenses of the insurer for income tax calculation purposes.

This is a matter of negotiation between the insurer and the bank, noting that the development of products is subject to the approval or reporting requirements by the law. Parties normally set up a steering committee to work out business plans and supervise the implementation of the same. This committee will discuss any issue and find the solutions, or escalate to higher management to resolve before the bank can sell such product for another insurer or terminate the agreement.

A bancassurance agreement may have a provision on the ownership of the JDIP as well as the use and transfer of such JDIP. Normally, such JDIP will be under joint ownership and the transfer must be approved by both parties, unless otherwise agreed by the parties.

The bancassurance agreement may also have a provision on the license of the JDIP, which is created and developed by a party to the other party in connection with the performance of the licensee obligations for the term of the bancassurance agreement, and vice versa, in which the licensor shall provide a warranty that the JDIP does not infringe any third-party rights or law.

The license of the JDIP, which is created and developed by a party, should be terminated upon the termination of the bancassurance agreement. The parties should also reach an agreement on how to dispose of the rights in the JDIP, which is jointly owned by the parties upon termination of the bancassurance agreement.

This is a matter of negotiation between the insurer and the bank. Facilitation fee is not commonly seen in Vietnam as a matter of practice, given the restriction on the expenses that the insurer may incur as mentioned in Question 4 above.

This is a matter of negotiation between the insurer and the bank. Facilitation fee is not commonly seen in Vietnam as a matter of practice, given the restriction on the expenses that the insurer may incur as mentioned in Question 4 above.

As the bank is only an agent of the insurer, it is the insurer that will be liable toward the customers. However, the insurer can seek compensation from the bank for any breach by the bank staff of regulatory requirements or fraud or any activity infringing the laws directly or indirectly related to the sale of the bancassurance products.

The bank may also seek damages for breach of the bancassurance contract by the insurer.

A bancassurance steering committee is not required under Vietnamese law and there is no specific rule on it. It is, therefore, optional. However, this model is commonly seen in practice as the bancassurance steering committee (BSC) can facilitate collaboration and ensure the effective implementation of the bancassurance business and the annual business plan.

The issues that the parties may wish to consider may include composition of the BSC; frequency of BSC meetings; quorum for BSC meetings; matters falling within the scope of the BSC (e.g., drawing up the annual business plans, implementation of business plans, monitoring performance of targets and business plans, determining standard operating protocols, facilitating and resolving issues); decision-making process (e.g., whether it should be by majority or unanimous vote) and proposed resolutions if there is a deadlock in the BSC (e.g., escalation to senior management).