Authorities clamp down on insurance fraud

The State Bank of Vietnam (SBV) and the Ministry of Finance have said they will deal with credit credit institutions that conned customers into buying insurance rather than simply taking out loans.

The central bank announced on Tuesday that an investigation showed that some banks had switched standard loans to life insurance packages, and then charged customers inflated interest rates for cancellations of insurance agreements.

The SBV requested credit institutions to update key performance indicators (KPIs) of their employees to relieve the pressure of selling insurance deals. Credit institutions were also instructed to prevent bankers from forcing customers to buy insurance.

It added that banking inspectors and the insurance authority under the Ministry of Finance would check the operations of insurance agencies within credit institutions.

A day earlier, the Ministry of Finance requested its Insurance Supervisory Authority to conduct inspections into bancassurance deals that involved forcing customers to buy insurance in order to secure loans.

The ministry has also established a hotline for customers to report such incidents.

Earlier this month, the finance ministry's insurance supervision administration transferred complaints from dozens of citizens to the Ministry of Public Security regarding deposit savings at Saigon Commercial Bank (SCB) that were converted into insurance contracts.

The ministry started received complaints related to the introduction and advice given on insurance purchases by employees of SCB, an agent of insurer Manulife Vietnam. Some customers said that when they tried to deposit savings at SCB, the bank's staff switched them to Manulife's Tam An investment insurance packages.

The total assets of insurers in Vietnam jumped 14.51% year-on-year to VND811,312 billion ($34.16 billion) in 2022. The sector re-invested VND656,423 billion ($27.64 billion) into the economy last year, up 12.56% year-on-year; gained insurance premiums of VND251,306 billion ($10.58 billion), up 15.09%; and paid indemnification of VND64,018 billion ($2.7 billion), up 23.29%.

The market featured 78 insurers last year, including 31 non-life insurers, 19 life insurers, two reinsurance businesses, and 26 insurance brokers.

Among life insurers, regarding insurance premiums, local player Baoviet Life took the biggest portion of 18.8%, followed by foreign firms Prudential with 17.7%, Manulife with 17%, Dai-Ichi with 12.7%, and AIA with 10.3%.