Mirae Asset Prévoir, Cathay Life Vietnam violate bancassurance rules: Vietnam inspectors

South Korea's Mirae Asset Prévoir and Taiwan's Cathay Life Vietnam failed to make insurance policy terms clear to buyers and wrongly accounted for agent commissions when selling insurance via banks, according to Vietnam's Insurance Supervisory Authority.

The findings were posted on the Ministry of Finance's website on Wednesday, following the ministry's inspections of 10 insurers last year, including these two companies which partnered with banks to provide insurance products tailored to the needs of bank customers (bancassurance).

In its conclusion, the Insurance Supervisory Authority said Mirae Asset Prévoir did not comply with the regulations on premium rates.

Specifically, Mirae Asset Prévoir issued more than 18,000 new policies through Mirae Asset Financial Company (MAFC) in 2023. MAFC's customers, after being advised, would be offered loans to pay for insurance premiums. The sum insured is calculated as a percentage of the loan. However, this practice was found to be "in violation of regulations."

Inspection results showed that 213 individuals at MAFC, who provided consultations and sold products to customers, had not been certified and were not qualified to act as agents.

Additionally, the documentation for 461 bancassurance contracts from the company did not have information that inform buyers of regulations to secure their rights, such as premium payment obligations and information disclosures.

They also failed to clearly inform buyers of long-term commitments in the contracts, therefore, when canceling the policy, buyers would not receive a refund equivalent to the premium paid.

Besides MAFC, the company also issued 2,525 joint-life insurance policies via VietABank (VAB). By the end of 2023, it had accounted for "access fees" paid to VAB totaling nearly VND5.8 billion ($227,406) as insurance business expenses.

However, this amount lacked specific quantitative criteria linked to the results of policy acquisition and maintenance. They also incorrectly accounted for some bonus payments to agents and individuals associated with agents, totaling VND2.4 billion ($94,100) and VND400 million ($15,684), respectively.

Mirae Asset Prévoir, established in 2005 with a charter capital of approximately VND2.16 trillion ($84.69 million), reported a bancassurance premium revenue of nearly VND259 billion ($10.15 million) in 2023, accounting for nearly 47% of its total premium revenue. Of this, revenue from new insurance policies amounted to over VND144 billion.

Similarly, Cathay Life Vietnam sold bancassurance products through Indovina Bank (IVB). According to the inspectors, the company did not specify a clear process for the bancassurance product sales.

For two policies, they failed to inform buyers that the agreement was long-term and that canceling the contract would result in not receiving the full premium paid.

Other activities of Cathay Life Vietnam were also found to be non-compliant, such as selling insurance to foreigners who did not live and work in Vietnam.

They also did not provide sufficient legal training and update to their agents and failed to evaluate the quality of their consultants periodically. Additionally, a VND200 million ($7,842) subsidy to insurance agents was found to be inappropriate, according to the conclusion.

Cathay Life Vietnam, established in 2007, had a charter capital of VND15.31 trillion ($600.3 million) at the end of 2023. The company's bancassurance premium income reached VND22.3 billion ($874,338) in 2023, which accounted for 0.8% of its total premium revenue. Of this, revenue from new policies was VND19.6 billion.

Based on the inspection results, the finance ministry's inspection team recommended that Mirae Asset Prévoir and Cathay Life Vietnam reduce expenses for non-compliant items, amounting to more than VND122 billion ($4.78 million) and VND203 million, respectively.

They also suggested that relevant authorities review administrative violations and impose fines on the two companies in the insurance business.

In 2024, 10 life insurers offering bancassurance products were inspected. Following the inspections, the finance ministry proposed measures on financial amounts totaling VND21 trillion ($823.4 million) and imposed administrative fines of VND310 million ($12,155) on the two companies.

According to official data, the total premium revenue of the entire insurance market last year was about VND227.5 trillion ($8.92 billion), down 0.25% compared to the previous year. Of this, life insurance premiums decreased by 5% year-on-year to VND149.2 trillion and non-life insurance premiums reached VND78.3 trillion, up 10.2%.