Home Bank “Unleashing the Power of Insurance: Empowering Banks to Take the Leap.”

Bank

“Unleashing the Power of Insurance: Empowering Banks to Take the Leap.”

11 June, 2025

The trend of banks becoming shareholders, and even major shareholders, in insurance companies is not new in the financial market. Several large banks currently hold significant ownership stakes in insurance businesses, reflecting their goal of expanding into non-credit areas.

Specifically, Agribank currently holds over 52% of the shares in JCSC Insurance Corporation (ABIC); while BIDV owns more than 51% of TJC BIDV Insurance (BIC), and also has a joint venture with MetLife to establish LLC BIDV MetLife Insurance. VietinBank owns 100% of the capital in the TJC Insurance Corporation of VietinBank (VBI).

MJSC Bank (MBB) owns 68.37% of the shares in the TJC Military Insurance Corporation (MIC), and SHB owns 4.29% of the shares in the TJC Saigon-Hanoi Insurance Corporation (BSH).

At the recent 2025 Annual General Meeting of Shareholders, many banks continued to express their ambition to venture further into the insurance industry, particularly life insurance.

In March 2025, Techcombank (TCB) approved a plan to contribute capital and purchase shares to establish JSC Techcombank Life Insurance (TCLife), with an expected charter capital of VND 1,300 billion. Techcombank will contribute VND 1,040 billion, equivalent to 80% of the charter capital. The term of operation for TCLife is expected to be 50 years from the date of licensing by the Ministry of Finance.

TCLife will maximize the strengths of its major shareholder, Techcombank, thereby creating a life insurance model that combines a strong financial foundation with modern technology.

At the same time, the BOD of Techcombank also approved a plan to buy back shares in JSC Techcombank Non-life Insurance (TCGIns) to make it a subsidiary. TCGIns currently has a charter capital of VND 500 billion, and Techcombank holds 11% of the capital (equivalent to 5.5 million shares).

Similarly, the 2025 Annual General Meeting of Shareholders of VPBank approved a plan to establish a life insurance company with a charter capital of VND 2,000 billion, expected to operate in the fields of life insurance, health insurance, and linked insurance. According to Mr. Bui Hai Quan, Vice Chairman of the BOD of VPBank, the bank is transforming from a single-model bank to a multi-functional financial group.

Currently, VPBank‘s financial ecosystem includes member companies such as FE Credit consumer finance company, VPBank Securities securities company, and OPES non-life insurance company. The two missing pieces are the life insurance company and the fund management company.

Mr. Quan emphasized that the establishment of a life insurance company is a strategic and inevitable step to proactively design products, business models, and customer exploitation and care. Being just a distributor of insurance products from partners will put the bank in a passive position, especially in the context of the increasing demand for personalized products. Moreover, life insurance and banking are closely linked in their business models, facilitating co-development within the same ecosystem of customers.

With the experience gained from operating OPES – a digital insurance company, along with proven technology capabilities, especially in AI and digital transformation, VPBank believes that the new life insurance company will have a solid foundation to operate efficiently from the start. This company will also operate independently in terms of finance and equity, ensuring transparency and long-term efficiency.

Mr. Nguyen Quang Huy – CEO of Finance – Banking, Nguyen Trai University assessed that the models of banks owning insurance companies are typical examples of the trend of “backward integration” in the banking industry.

This strategic advantage allows banks to have full control over insurance products, from design and pricing to distribution. At the same time, it increases the gross profit margin without having to pay high commissions to external insurance partners. In addition, it enables the creation of personalized insurance products tailored to the different customer segments that the bank has data on.

However, there are risks involved as it requires specialized operational capabilities. Insurance and banking have different risk management ecosystems. There is a potential conflict of interest, especially if there is a bias towards internal products at the expense of better market options. If the quality of insurance is not tightly controlled, there is a risk to the reputation of both the bank and the insurance company.

The model of banks owning separate insurance companies will grow selectively, mainly among groups of banks with good governance, strong capital reserves, and advanced technology. In the next 3-5 years, the hybrid model (banks selling products from their own insurance companies while also partnering with external providers) will be the main trend to diversify products and reduce concentration risks.

Will it contribute to the sustainable development of the insurance market?

Assoc. Prof. Dr. Nguyen Huu Huan – Senior Lecturer at the University of Economics Ho Chi Minh City said that banks are currently very active in promoting the sale of internal insurance products. Meanwhile, the insurance market in Vietnam is expected to grow strongly in the future due to the increasing demand for insurance products.

Recognizing this potential, many banks are not just partnering with independent insurance companies but also establishing subsidiaries specializing in insurance. This aims to maximize the advantages of their existing customer networks while enhancing control and developing insurance operations towards sustainability and efficiency.

Economist Tran Nguyen Dan noted that the newly established insurance companies with “mother” banks mainly serve the internal ecosystem of that bank. So, do customers still have the opportunity to choose other insurance companies, or are they limited to this ecosystem? In this case, the market may lose its competitiveness, and customer interests may be compromised.

Whether the bank’s desire to own a new insurance company contributes to a more positive insurance market depends on the goals and implementation of each unit. However, what is expected is that when a new “player” enters the market, society hopes that they will bring added value and expand the “pie” of the market rather than just coming to divide the existing pie.

Currently, Vietnam lacks micro-life insurance products, which are small, easily accessible packages with low premiums, serving low-income groups, and sold through digital platforms (insurtech). This segment is very potential but often overlooked, while new insurance companies are mainly established to exploit the existing customer base from the parent bank.

The problem is that these customers already have insurance coverage elsewhere. When bank-owned insurance companies enter the market without bringing breakthrough strategies or innovative products, and only aim to capture the existing market share, they do not add value to the market but instead increase competition without substantive growth.

The insurance market will only develop sustainably when there are more players proactively targeting underserved segments, new customer groups, and unmet needs.

A positive sign is that, from July 1, following the direction of the Ministry of Finance, all ancillary benefits will have to be separated from the main insurance contract. Agents must provide separate advice on each part to help customers understand and make informed choices, improving the quality of advice, product transparency, and creating a healthy competitive environment among agents and companies.

Notably, insurance companies are shifting their marketing focus away from flashy promotional events and artistic performances towards direct communication with consumers, raising awareness and understanding of insurance.

These changes indicate that the insurance market is undergoing a healthy screening process. A decrease in total insurance sales is not necessarily negative if the reduction comes from low-quality contracts, while the increase comes from sustainable and demand-driven contracts. This is a sign of a market that is moving towards health, albeit at a slow pace.

Cat Lam

– 07:56 10/06/2025