The Department of Insurance Management and Supervision (Ministry of Finance) has just announced the inspection conclusion on the sale of insurance products through credit institutions and foreign banking branches of Mirae Asset Prevoir Insurance Company Limited (MAP Life, hereinafter referred to as Mirae Asset Prevoir).
The inspection results showed many shortcomings in the process of implementing insurance sales through credit institutions.
According to the inspection conclusion, Mirae Asset Prevoir has implemented the sale of insurance products through two main units, Viet A Commercial Joint Stock Bank (VAB) and Mirae Asset Vietnam Finance Company Limited (MAFC).
In 2023, Mirae Asset Prevoir issued 20,543 insurance contracts via banking insurance distribution channel (bancassurance), of which 87.7% of contracts were implemented through MAFC and 12.3% of contracts were sold through VAB.
According to the audited financial statements for 2023 and the company's reporting data, the insurance fee revenue collected from the bancassurance channel reached VND 258.8 billion, accounting for 46.7% of the company's total insurance fee revenue for the year. Of which, newly exploited insurance fee revenue via bancassurance channel reached VND 144.18 billion, equivalent to 33.1% of total newly exploited insurance fee revenue.
Existencies in selling insurance through banks
The inspection conclusion shows that Mirae Asset Prevoir has violated many regulations related to the implementation of insurance sales through credit institutions.
In which, the company determined the insurance amount was not in accordance with regulations when Mirae Asset Prevoir and MAFC agreed to calculate based on customer loans instead of actual income as the product rule approved by the Ministry of Finance. For sales contracts via VAB, the payment of insurance fees is not fully explained to customers, leading to the risk of misunderstanding the rights.
The insurance fee collection method also does not comply with regulations when instead of collecting periodically monthly, quarterly or annually, Mirae Asset Prevoir requires customers to pay the entire fee at one time from the beginning.
In addition, the process of signing an insurance contract confirmation is not yet complete. Customers participating in MAFC insurance only confirm via electronic system or text message without directly signing the insurance request as prescribed. For VAB, there are 461 joint insurance contracts without sales illustration documents or not fully confirmed by customers. This leads to customers not having a basis to compare and evaluate products before deciding to buy.
Another problem is the rate of contract cancellation at a significant level. At VAB alone, 164 insurance contracts were required to be canceled by customers during the 12-day review period, accounting for 0.8% of the total number of newly exploited contracts; 41 insurance contracts were required to be canceled by customers in the first year of the contract, equivalent to 0.2% of the total number of newly exploited insurance contracts.
Confirming customer information is not transparent
The inspection conclusion also pointed out the shortcomings in the management of Mirae Asset Prevoir insurance agents. There are 213 employees of MAFC who do not have an insurance agent certificate but still consult and sell insurance products. Similarly, some bank employees under VAB also participated in insurance consulting without meeting the necessary conditions.
Confirmation of customer information is not really transparent. Some customers participating in joint insurance at VAB do not sign the confirmation on the sales illustration documents, but only sign on a common confirmation form. This causes a lack of clarity in the insurance agency's accountability and consultation.
Incorrect cost accounting
One of the most notable issues is the cost accounting, with a total amount of VND 122.48 billion required by the inspection agency to be excluded from insurance business expenses.
Of which, 135.8 million VND was paid in commissions to insurance agents at MAFC, corresponding to 278 insurance contracts, but many of these are not qualified to act as insurance agents according to regulations.
The inspection agency also discovered that the "acess fee" payment to VAB worth 2.3 billion VND had no specific basis. In addition, a bonus was paid to 25 VAB bank employees who did not directly consult on insurance with a total amount of VND 850.7 million, a cash bonus to VAB employees worth VND 404.7 million without a specific service contract as a basis for payment.
Mirae Asset Prevoir spends "agents' management" and "annual bonuses" to VAB with an amount of up to VND 2.37 billion but does not have clear evaluation criteria. The "knowledge enhancement training support" and "management support" for MAFC with a total amount of VND 116.4 billion were also determined to be invalid.
Proposal for financial and administrative handling
In response to the above-mentioned shortcomings and limitations, the inspection agency proposed to handle the financial aspects of Mirae Asset Prevoir. The total amount of VND 122.48 billion will be deducted from insurance business expenses to avoid affecting tax obligations. In addition, the management agency requested Mirae Asset Prevoir to review the insurance agency contract with MAFC and VAB to ensure compliance with regulations.
The tax authority is also recommended to check the tax declaration for invalid expenses. At the same time, it is recommended that competent authorities review the administrative violations of Mirae Asset Prevoir in the inspection conclusion (if any).
