Major Vietnam private lender Techcombank intends to set up life insurance unit

Techcombank, one of Vietnam’s major private lenders, is seeking shareholders’ approval to contribute capital for establishing a life insurance subsidiary regardless of a slowdown in the bancassurance sector.

The move came after Techcombank (HoSE: TCB) terminated a 15-year bancassurance partnership with Canada’s Manulife Vietnam in October 2024.

Life insurance sales in Vietnam have declined since the industry crisis in 2023. Bancassurance, once a key revenue stream for Techcombank, fell to VND606 billion ($24.15 million) in 2024, down from VND1.75 trillion ($69.75 million) in 2022.

Following its separation from Manulife, Techcombank stated that it sees an opportunity to revitalize its insurance business with a differentiated strategy.

Additionally, Techcombank announced plans to seek shareholder approval to increase its stake in Techcom Nonlife Insurance JSC (TCGIns) beyond 11%, making it a subsidiary.

The Vietnamese life insurance sector's premium revenue declined 5.5% year-on-year to VND132.2 trillion ($5.2 billion) in the first 11 months of 2024, according to the Ministry of Finance.

The local life insurance sector has experienced significant shifts over the past two years. The revised Insurance Business Law, effective from January 2023, and the finance ministry’s Circular 67, dated November 2, 2023, stipulates stricter regulations aimed at protecting policyholders' rights.

Key changes include a ban on banks selling investment-linked insurance products within 60 days before or after a loan is disbursed and a requirement for insurance advisors to record consultations via audio or video.

The State Bank of Vietnam is also in the process of drafting Decree 88, which would impose administrative fines of VND400-500 million ($19,678) on banks found to link non-mandatory insurance products with their banking services.

Currently, there are 85 insurance companies operating in Vietnam, including 19 life insurers, with two domestic firms (Bao Viet and Bao Minh) and the remainder being foreign or joint-venture entities.