The State Bank of Vietnam (SBV) recently issued Circular No. 37 providing guidelines on bancassurance distribution transactions, particularly insurance agency operations by credit institutions and foreign bank branches ("banks") for insurance enterprises ("insurers").
Previously, bancassurance distribution arrangements between banks and life insurers were regulated by Joint Circular No. 86. Following the issuance of the new regulations on the insurance business for insurers under Circular No. 50 and Decree No. 73, Circular No. 37 was issued to replace Joint Circular No. 86 and clarify the rights and obligations of banks in regards to bancassurance arrangements.
In regards to bancassurance deals, Vietnamese law regards banks as agents of the insurer and bancassurance distribution agreements as insurance agency agreements.
Joint Circular No. 86 applied to bancassurance arrangements between banks and life insurers only. Circular No. 37 expands this governing scope to include general (non-life) insurance companies and re-insurance companies.
Required content for bancassurance agreements
Under Circular No. 37, bancassurance agreements between banks and insurers must contain the same details required in typical insurance agency contracts, as per the Law on Insurance Business (which includes: name, address and obligations of banks and insurers, contents and scope of the bancassurance agreement, commission, term and dispute resolution mechanisms).
In addition, Circular No. 37 requires that bancassurance agreements outline (i) the provision and review of customer information and related information; and (ii) arrangements for the collection and payment of insurance premiums between the bank and the insurer.