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Bancassurance in Vietnam: Life, Non-Life and Creditor Insurance is a study and related PartnerBASE dataset examining the provision of life, non-life and creditor insurance by banks and other lending institutions in Vietnam.

Drawing on the results of a survey of 52 banking entities in Vietnam, the study verifies the percentage of organisations investigated that distribute each of the following 13 types of insurance: accident insurance, creditor insurance related to consumer finance, creditor insurance related to credit cards, creditor insurance related to mortgages, critical illness insurance, health / hospital cash plans, household insurance, income protection insurance, investment-related life insurance, medical expenses insurance, personal motor insurance, retirement savings, and risk life insurance.

For those banking entities that are active in one or more of these fields, the reports ascertain the operating models that they use to source the type of insurance in question (e.g. external, joint venture or captive underwriters) and the identity of the specific providers used. This information is then displayed in terms of the weighted share of partnerships of these providers, which takes into account the number of retail customers of the partner banking entities, thus highlighting those insurance companies that hold the distribution relationships that offer the most potential.

You may be able to use this report, plus the PartnerBASE dataset and market data annexes that accompany it, in one or more of the following ways:

- gain access to a source of information that provides a comprehensive overview of the provision of personal insurance products by all significant banking entities in Vietnam;

- identify partnership opportunities for the same personal insurance products that may arise either because a banking institution is not currently active or because there is scope for replacing an existing initiative;

- understand which underwriters and other product providers have been successful in establishing distribution relationships with the most important banking entities in Vietnam;

- assess how the evolving regulatory environment may open up or block opportunities for your organisation to sell through the bank distribution channel;

- appreciate the magnitude of the opportunity to sell personal insurance products through banks and other lending institutions in Vietnam.

Overall, in a market in which bancassurance is likely to grow rapidly as a distribution channel, albeit from a low base, across the 52 banks and other lending institutions researched in Vietnam, Finaccord’s research identified 170 bancassurance distribution initiatives for the various types of insurance investigated.

Table Of Contents

Bancassurance in Vietnam: Life, Non-Life and Creditor Insurance
TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY 1

1.0 INTRODUCTION 3

What is this report about? 3
Distribution partnerships with banks and other lending institutions constitute the focus of this report 3
Rationale 3
Bancassurance is expected to experience strong growth during the next years 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 4
Investment-related life insurance 4
Retirement savings 5
Risk life insurance 5
Critical illness insurance 5
Income protection insurance 5
Accident insurance 5
Health / hospital cash plans 6
Medical expenses insurance 6
Personal motor insurance 6
Household insurance 6
Creditor insurance 6
Mortgages, consumer finance and credit cards 7
Weighted provider share of partnerships 7
Operating models 8
Abbreviations and exchange rates 8
PartnerBASEâ„¢ and market data annexe 9
Finaccord 9

2.0 MARKET BACKGROUND 12

Banks and other lending institutions covered 12
Economic background 12
Political and economic reforms have transformed Vietnam in recent years 12
… although state-owned enterprises still produce about 40% of national GDP 13
High inflation is one the country's main economic concerns 13
…although it also faces other structural problems 13
In the Index of Economic Freedom, Vietnam is ranked only 136th in the world 13
Introduction to the banking sector 14
Four of Vietnam's five largest banks by number of customers are state-owned 14
with Agribank leading the market by this measure 14
Indigenous banks control around 90% of the retail lending sector 14
although this market remains very small by international standards 15
Several Japanese banks have displayed an interest in Vietnam's banking sector 15
Introduction to bancassurance 16
Bancassurance in Vietnam is developing at a slower pace than in other Asian countries 16
given a channel share of between only 3% and 5% of total life insurance premiums 16
although the available evidence points to a rapid growth rate from this low base 16
Only a limited number of banks have set up captive or joint venture underwriters 16
with Aviva and BNP Paribas Cardif apparent as joint venture partners 16
Typically, captive and joint venture insurers use bank distribution as part of a multi-channel strategy 17
Baoviet is known to be focusing increasingly on bancassurance as a strategic distribution channel 17
Several key factors have delayed the development of bancassurance in Vietnam 17
although the experience of neighbouring countries points to strong future growth potential 18

3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS 19

Insurance market size and growth 19
The market for investment-related life insurance has been growing rapidly in nominal terms 19
with foreign-owned banks the most likely to market a wide range of policies 19
Distribution share of banks 21
Bancassurance accounts for only a small proportion of total life insurance premiums 21
Bancassurance provision rates, operating models and partnerships 21
Investment-related life insurance 21
15 Vietnamese banks offer investment-related life insurance products in one form or another… 21
…with two joint venture underwriters leading the market by weighted share of partnerships 21
Prudential is the most visible external underwriter in this segment 21
Over 30 banking institutions have no apparent arrangement for selling investment-related life insurance 22
Retirement savings 24
Only four insurance providers are active as partners of banks in this field 24
Performance of key bancassurance underwriters 24

4.0 PROTECTION-RELATED LIFE INSURANCE 26

Insurance market size and growth 26
Premiums for protection-related life insurance moved up consistently from 2010 onwards 26
Distribution share of banks 27
Bancassurance provision rates, operating models and partnerships 28
Risk life insurance 28
Prudential, Dai-ichi Life and Prevoir Life are ranked among the top five providers 28
with the former company having established four partnerships for risk life policies 28
Critical illness insurance 28
Critical illness cover is promoted in a stand-alone format by a small minority of Vietnamese banks 28
Income protection insurance 28
Performance of key bancassurance underwriters 31
Although they have huge potential to grow, the market share of VCLI and VietinAviva remains low 31

5.0 ACCIDENT AND HEALTH INSURANCE 32

Insurance market size and growth 32
Vietnam's market for accident and health insurance has expanded rapidly in recent years 32
Distribution share of banks 33
Bancassurance provision rates, operating models and partnerships 33
Accident insurance 33
By weighted share of partnerships, two captive underwriters lead the field 33
Bancassurance sales reportedly accounted for 14.5% of BIC's total revenues in 2011 33
Foreign-owned providers in this market include Chartis, Liberty, Manulife and Prudential 34
Medical expenses insurance 36
Most distribution relationships are similar to those observed for accident insurance 36
Health / hospital cash plans 36
Both ACE and Manulife possess bank distribution partnerships in this niche field 36
Performance of key bancassurance underwriters 36

6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE 39

Insurance market size and growth 39
Premiums for household insurance have slightly outgrown those for personal motor cover 39
Distribution share of banks 39
Bancassurance provision rates, operating models and partnerships 41
Personal motor insurance 41
ABIC's captive relationship with Agribank makes it the sector leader by weighted share of partnerships 41
BIC is used in this sphere by both parent BIDV and three other banks 41
Baoviet claims a total of six distribution partnerships in this field, one of which is a captive tie 41
Quite a few banking institutions have yet to try marketing personal motor insurance 41
Household insurance 43
Where both policy types are offered, underwriting relationships are similar for household insurance 43
with only TienPhong Bank reporting any variance in this respect 43
Performance of key bancassurance underwriters 45
Key bancassurance underwriters held a combined market share of total non-life premiums of 5.75% in 2011 45

7.0 CREDITOR INSURANCE 46

Consumer lending market size and growth 46
Mortgage lending 46
Residential mortgage balances grew at a nominal annual rate of 28.9% between 2008 and 2012 46
Non-mortgage lending 47
The compound annual growth rate for non-mortgage balances is somewhat lower than that for mortgages 47
Credit and other pay later cards 48
Though still under-developed Vietnam's credit card market is growing at a rapid pace 48
Creditor insurance provision rates, operating models and partnerships 50
Creditor insurance linked to mortgages 50
A majority of banks offering home loans also have an arrangement for related creditor insurance 50
Two captive insurers and two joint ventures are ranked in the top five by weighted share of partnerships 50
Prevoir Life is used for mortgage-related creditor insurance by six different banking entities 50
Creditor insurance linked to consumer finance 53
Partnerships for policies linked to consumer finance are mainly similar to those for mortgage-related cover 53
Creditor insurance linked to credit cards 53
Schemes for credit card payment protection insurance are rather less commonplace in Vietnam 53
Creditor insurance risk coverage 56
Most creditor insurance policies are limited to cover in the event of death and permanent disability 56
Creditor insurance market size, growth and forecast 57
The very small creditor insurance market is expected to advance rapidly between 2012 and 2016 57
with the value of policies cross-sold with credit cards expected to increase most strongly 58



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1

Overview of bancassurance provision rates for different types of insurance in Vietnam, 2012 2

1.0 INTRODUCTION 3

Banks and other lending institutions in Vietnam contacted by Finaccord, segmented by type 4
2.0 MARKET BACKGROUND 12
Key economic indicators for Vietnam, 2012 14

3.0 INVESTMENT-RELATED LIFE INSURANCE AND RETIREMENT SAVINGS 19

Gross written premiums for investment-related life insurance and retirement savings in Vietnam, 2008 to 2012 20
Gross written premiums for investment-related life insurance and retirement savings in Vietnam, 2008 to 2012 (data) 20
Bancassurance provision of investment-related life insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 23
Bancassurance provision of retirement savings in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 25

4.0 PROTECTION-RELATED LIFE INSURANCE 26

Gross written premiums for protection-related life insurance in Vietnam, 2008 to 2012 26
Gross written premiums for protection-related life insurance in Vietnam, 2008 to 2012 (data) 27
Bancassurance provision of risk life insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 29
Bancassurance provision of critical illness insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 30
Market share in total life insurance of key bancassurance underwriters in Vietnam, 2010 to 2011 31

5.0 ACCIDENT AND HEALTH INSURANCE 32

Gross written premiums for accident and health insurance in Vietnam, 2008 to 2012 32
Gross written premiums for accident and health insurance in Vietnam, 2008 to 2012 (data) 33
Bancassurance provision of accident insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 35
Bancassurance provision of medical expenses insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 37
Bancassurance provision health / hospital cash plans in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 38

6.0 PERSONAL MOTOR AND HOUSEHOLD INSURANCE 39

Gross written premiums for personal motor and household insurance in Vietnam, 2008 to 2012 40
Gross written premiums for personal motor and household insurance in Vietnam, 2008 to 2012 (data) 40
Bancassurance provision of personal motor insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 42
Bancassurance provision of household insurance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 44
Market share in total non-life insurance of key bancassurance underwriters in Vietnam, 2007 to 2011 45

7.0 CREDITOR INSURANCE 46

Residential mortgage lending balances outstanding in Vietnam (absolute and per capita), 2008 to 2012 46
Consumer non-mortgage lending balances outstanding in Vietnam (absolute and per capita), 2008 to 2012 47
Credit and other pay later cards issued and per capita in Vietnam, 2008 to 2012 48
Key data points for the consumer lending market in Vietnam, 2008 to 2012 49
Provision of creditor insurance linked to mortgages in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 52
Provision of creditor insurance linked to consumer finance in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 54
Provision of creditor insurance linked to credit cards in Vietnam, 2012: provision rate, operating models and weighted provider share of partnerships 55
Risk coverage of creditor insurance policies in Vietnam, segmented by type of underlying product, 2012 56
Creditor insurance gross written premiums in Vietnam, segmented by policy type, 2008, 2012 and 201657
Creditor insurance gross written premiums in Vietnam, segmented by cover type, 2008, 2012 and 2016 58
Creditor insurance gross written premiums in Vietnam, segmented by policy and cover type, 2008, 2012 and 2016 (data) 59

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