Rapid growth of bancassurance activities could cause insurers to have to pay compensation to customers due to mistakes made by bank employees, who serve as insurance consultants.
Data of insurance companies show that by July 2018, the new premium revenue through bancassurance reached over VND2.86trn ($122m), an increase of 12% compared to the corresponding period in 2017 and accounting for about 20% of the market’s total new premium revenue, according to a Vietnam News report.
However, industry insiders say that the distribution channel is growing too fast. Consequently, many employees at banks, who also act as insurance consultants, have not been properly trained. As a result, many insurance companies had to pay unfair compensation due to the employees’ errors in providing consulting services.
The latest case involved an insurance company which was required by law to compensate a corporate customer VND3bn as a result of errors in the consultancy process committed by bank staff. Specifically, the bank staff did not fully explain to the customer the terms of exclusion in the insurance contract.
Industry insiders said that there were many other cases where the insurance disputes stemmed from the mistakes of banks, acting in the role of the insurer’s agent.
According to lawyer Tran Quoc Tuan from the HCM City Lawyers Association, insurance agents operate under the authorisation of insurance companies so that when the acts of the agents damage the legitimate rights and interests of customers, the insurance companies have to take responsibility. After that, insurance companies shall take measures to deal with the errant agents.