Vietnam grants banks green light to sell investment-linked insurance

Vietnam: Banks permitted to sell investment-linked insurance products In a major regulatory shift, commercial banks in Vietnam have been given the green light to continue selling investment-linked insurance products through the bancassurance channel. This decision comes after the State Bank of Vietnam (SBV) initially proposed a ban on banks selling such products in a draft circular issued in late March this year. The SBV's about-turn on the matter followed extensive feedback from experts and industry insiders, as reported by the Vietnam News Agency. The central bank ultimately decided to remove the prohibition, signaling a significant development in the country's banking and insurance sectors. The latest regulations, introduced on 30 June, now permit commercial banks and foreign bank branches in Vietnam to function as insurance agents for various types of insurance products as outlined by the Law on Insurance Business. However, for commercial banks to operate as institutional agents, they must meet specific conditions set forth by the SBV. One of the key requirements for commercial banks seeking to act as insurance agents is the establishment of a dedicated department solely responsible for carrying out insurance agency activities. Additionally, the head of this department must have a minimum of three years of experience in finance, banking, or insurance, along with holding a university degree or higher in insurance. Moreover, the Ministry of Finance has recently imposed stringent regulations on investment-linked insurance products. Effective from 1 July, insurers are mandated to provide illustrative charts on their websites to enable customers to independently review and comprehend these products. Furthermore, there are strict guidelines in place for recording and filming each sale process to ensure transparency and consumer protection. This move to allow banks to sell investment-linked insurance products is expected to not only enhance the range of financial services available to customers but also foster greater competition and innovation in the insurance market. With the revised regulations now in place, commercial banks in Vietnam are poised to play a more active role in offering insurance products that cater to the evolving needs of their clientele.