Manulife Vietnam’s Bancassurance will continue to dominate the market in the future

Wednesday, Dec 14, 2016 08:05

Jude Gomes

In late September Manulife Vietnam and Saigon Commercial Bank (SCB) celebrated the first anniversary of their exclusive partnership. During the first year itself their sales surpassed expectations by several times. Their relationship is considered one of the most successful exclusive bancassurance partnerships in Vietnam, and it is driven by the strong commitment on both sides.

Viet Nam News speaks with Jude Gomes, Chief Partnership Distribution Officer, to know more about Manulife Vietnam’s strategies to capitalize on the potential of this distribution channel.

One year into your partnership with SCB, are you satisfied with its results? How will you describe the success of the partnership?

The SCB – Manulife Vietnam relationship is considered to be one of the most successful exclusive bancassurance partnerships in Vietnam. The business production and revenue generation for the bank has exceeded our business plan.

In record time, all of SCB's branches and transaction offices have been activated to distribute life insurance products, which itself is an incredible achievement. This has resulted in more Vietnamese families being offered protection by Manulife Vietnam through the extensive network of SCB.

More than a third of the bank staff have been professionally trained and certified to offer need-based solutions to the bank’s clients. Manulife Vietnam has, for its part, customised solutions catering to the varied needs of SCB customers. With this proposition, SCB is now a one-stop shop offering a plethora of services and solutions for its customers.

What does the SCB – Manulife Vietnam partnership, and the bancassurance business in general, contribute to Manulife Vietnam’s business?

In the three quarters of 2016, the insurance annual premium equivalent (“APE”) of our bancassurance grew four fold over 2015.

Bancassurance is still a marginal contributor in Vietnam, however, for Manulife; it is a very significant contributor to revenue and production. Last year our bancassurance channel con-tributed about 10 per cent of the total APE of Manulife Vietnam. This has doubled to 20 per cent in 2016 with an even higher contribution expected in the next few years.

How do you see the role of bancassurance in Vietnam in the next few years?

Bancassurance is one of the most critical channels for distribution of life insurance products in mature as well as developing markets.

This provides banks with an opportunity to earn fee income. Distributing life insurance products complements banking products without incurring any additional capital expenditure and helps banks augment their fee-based income. By offering a larger suite of products and services, banks are able to position themselves as a one-stop shop for financial products, thereby helping retain their clients, creating cross-sales opportunities and multiplying profits.

Insurance companies on the other hand need to diversify their distribution to minimise risks of concentration in a single channel. Bank partnerships provide insurance companies with access to a wider and more defined customer segment, as well as offer more price-competitive solutions to the end consumers.

On a macro level, Vietnam’s populous market is supported by a high-growth economy. The country is seeing a surge in the middle class, leading to an increase in demand for banking and financial services. With the banks offering more holistic product portfolios, the relevance of insurance is increasing. These growing needs of customers will be addressed by bancassurance.

Like other developed and frontier markets, as banking penetration increases and with market maturity, bancassurance will become a significant channel for the life insurance industry.

How should the potential of bancassurance be leveraged?

Bancassurance is all about alignment of values, management focus and drive, co-ordinated approach and long-term commitment impacting both banks and insurance companies.

At a macro level the success of the partnership depends on a favourable regulatory framework and the appetite of the banking industry, while at a micro level it involves a disciplined distribution work force, synchronised and easier processes, and simplified, customised and better-priced solutions.

Since last year the market has seen several exclusive bancassurance deals. Are exclusive partnerships becoming a trend?

The Vietnamese insurance industry witnessed several joint ventures initially. Regrettably, for various reasons, their success has been limited.

However, fortunately, in the last two years banks have started to view insurance as more than a product in their shelves. Incidentally, the industry has witnessed some exclusive deals, which come with more defined compensation and financial rewards.

An exclusive long-term partnership is a win-win for both the banks and the insurance companies. The insurer are using this gateway to get access to a more loyal customer base, using the bank network for distribution and gaining market share in a fiercely competitive market. On the other hand, this in turn may enable them to develop, launch and implement retail initiatives that have huge financial implications and continue their growth trajectory.

How do you see the future of Manulife Vietnam's bancassurance channel?

As the market matures, this channel will gain significance. However, not many insurers have local bench strength and regional expertise, and thus this space is limited to a few insurers.

Manulife Vietnam has firmly established itself as the bancassurance leader, and will continue to dominate the market in the future.

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