Currently, banks’ loan policies are very attractive, especially for consumer loans, home loans, and car purchases. However, banks have tricks to enjoy incentives; borrowers must buy insurance packages associated with the bank.

iIlustraive photo

En excuse for insurance to worry if the customer has any risks

Nguyen V.D. (Dong Da district, Hanoi) is in need for buying an apartment house, but due to insufficient capital, he went to do procedures for a home loan at Bank B. With a loan of VND 1 billion in 10, during the year, D. was advised by the staff to buy an additional insurance package for borrowers with the cheapest value of nearly VND 1.3 million for the first year. In later years, you can choose to buy or not to buy.

D. said the bank required to buy this insurance package to agree to disburse the loan, with the reason that this is a life insurance package for customers, if the customer has risks, it will have insurance to pay the loan to the bank.

In a similar situation, Bui L.H. (Nam Dinh) has a car loan at Bank T., with a loan of more than VND 600 million in five years. But to get a loan as well as enjoy preferential interest rates, Mr. H. had to buy an auto insurance package from an insurance company linked with T bank.

Many customers have encountered similar problems, even it was reflected that the bank was forced to buy a life insurance package at a higher price than it actually is or lost additional fees for application procedures, etc. otherwise, they would be unable to borrow or be late in capital disbursement.

In the role of a person wishing to borrow money to buy a car, reporters went to a transaction branch of T. Bank, the consultant here told reporters that to borrow money; customers must buy car body insurance. Customers can only buy from one of the insurance companies designated by the bank. This employee even said any bank loan would require the customer to buy such insurance, only the insurance firm would be different, in some places it would be requested by the bank, in some places it would not. Customers are free to choose.

At another bank branch, the staff also explained that customers who borrow to buy a car or buy a house often use that car or house as collateral. Therefore, when debt is not fully paid, this is the property of the bank, if the car or house is damaged; it will cause damage to the bank, so insurance should be used to ensure the bank's collateral.

"Irresistible" by great profits

According to the Vietnam Insurance Association, in 2020, the total insurance premium revenue reached VND 186,221 billion, up 16.5% from the previous year. By the end of 2020, the whole country had about 11% of the population participating in life insurance.

That is probably the result of the fact that in recent years, banks have boosted revenue from services, in which cross-selling services of insurance products through banks (bancassurance) is bringing a significant source of revenue. In particular, a series of exclusive deals between insurance and banks have been signed, thanks to which, the bank has also collected trillions of dong in prepaid insurance premiums about 6-7 years ago, and last year accounted for 40% of new insurance sales.

At the end of 2020, the SBV also sent a document to credit institutions about insurance firms and insurance agents. The State Bank of Vietnam told commercial banks to strictly comply with regulations on insurance business, strictly handle cases of forcing customers to buy life insurance or other types of insurance when granting credit to customers, linking compulsory purchase of insurance with the granting of credit to customers. However, this situation has not yet abated.

Talking about this issue, Assoc. Dr, Đinh Trọng Thịnh, a teacher of the finance academy, said that there is no compulsory condition for customers, insurance is encouraged to buy when they need capital, all business activities must follow the market economy and cannot sell goods in the style of addition conditions. With the market economy, all business activities must follow the market economy and cannot sell goods following other conditions.

The Ministry of Finance also spoke up about this. According to the ministry, the law on insurance business stipulates the principles, rights and obligations of parties involved in insurance business and exploitation to ensure that participation in insurance is voluntary on the basis of needs and financial capabilities of customers, there are no regulations or limitations on insurance products sold through banks.

Therefore, the Ministry of Finance requires insurance enterprises to review and strengthen the inspection and supervision of insurance agency activities of banks, and work with banks to promptly detect and handle cases of insurance agents forcing customers to buy insurance to take measures to increase the insurance policy retention rate.

In the future, for this distribution channel to be both effective and safe and not affect the interests of insurance buyers, the Ministry of Finance will work with the SBV to study and perfect the policy mechanism and strengthen the management and supervision of insurance sales activities of agents at credit institutions.

At the same time, the Ministry of Finance will request insurance businesses to strengthen inspection and supervision of the performance of insurance agency contracts with credit institutions and take measures to correct and promptly handle them, avoiding cases of violations.