Conclusion of inspection of 4 businesses selling insurance through banks: Under-accounting for tax costs of thousands of billions of dong

ANTD.VN - The Ministry of Finance has just issued the conclusion of a specialized inspection of the sale of insurance products through credit institutions and foreign bank branches (bancass) and related content for four life insurance companies, including Prudential, MB Ageas, BIDV Metlife and Sunlife.

First year insurance contract cancellation rate is up to 73%

For BIDV Life Insurance Company Limited, in 2021, BIDV Metlife will sell insurance through 01 credit institution, Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV).

Insurance premium revenue sold through BIDV reached more than VND 1,553 billion, equivalent to 99.2% of total premium revenue, new insurance premium revenue sold through BIDV reached more than VND 452 billion, equivalent to 98.3% of total new premium revenue.

In 2021, the Company issued 21,123 new insurance contracts (HI) through the bancassurance channel, with a cancellation rate after the first year of 39.4%.

As for MB Ageas Life Insurance Company Limited, this company sells insurance through MB Bank and MB Shinsei Finance Company (or M.Credit Finance Company).

Total premium revenue from insurance sales through banks reached VND4,466 billion, equivalent to 78% of premium revenue. New premium revenue from insurance sales through banks reached VND2,820.9 billion, equivalent to 74% of total new premium revenue.

In 2021, MB Ageas issued 66,757 new insurance contracts through banks, of which the cancellation and termination rate of insurance contracts after the first year through this channel was 32.4%.

The Ministry of Finance pointed out many violations of businesses selling insurance through banks (Illustration photo)

The highest contract cancellation rate in the first year belongs to Sun Life Vietnam Life Insurance Company Limited. In 2021, this company sold insurance through Asia Commercial Bank (ACB ) and Tien Phong Bank (TPBank) with total insurance premium revenue through the banking channel reaching VND 2,038 billion, equivalent to 61.26% of premium revenue; new exploitation revenue through the banking channel reached VND 1,907.7 billion, equivalent to 82.27% (insurance premium revenue through ACB reached VND 1,248.6 billion and TPBank was VND 789.4 billion).

In 2021, Sun Life issued 80,117 new insurance contracts through these two banks, of which the cancellation and termination rate after the consideration period (first year) of contracts sold through TPB was 73%, and through ACB was 39%.

For Prudential Life Insurance Company Limited (Vietnam), in 2021, the Company will deploy insurance sales through credit institutions (bancass) including: VIB, MSB, Pvcombank, SeABank, Standard Chartered, Vietbank, United Overseas (UOB), and Shinhan Bank Vietnam.

Insurance premium revenue through bancass channel reached more than 6,184 billion VND, equivalent to 21.48% of total premium revenue; new insurance premium revenue through bancass channel reached 3,700 billion VND, equivalent to 54.89% of total new premium revenue.

In 2021, the Company issued 94,431 new insurance contracts through the bancassurance channel. The first-year contract retention rate for insurance contracts exploited through the bancassurance channel (based on insurance premiums) was 59%, corresponding to the first-year cancellation and invalidation rate of 41%.

Under-accounting for tax costs of thousands of billions of dong

In 2021, Prudential accounted for more than VND 740 billion in expenses related to bancassurance activities and deducted them when determining taxable income. Of which, initial support costs and cooperation fees paid to organizational agents were VND 44 billion; marketing support costs paid to banks were VND 342 billion; direct bonuses paid to bank employees for introducing and selling insurance products were more than VND 57 billion; fixed allowances and bonuses paid to individual insurance agents were not in accordance with regulations at VND 296 billion.

Accounting for the above expenses into expenses related to bancassurance activities and deducting them when determining taxable income for corporate income tax is not in accordance with the law on insurance business and tax law.

Similarly, the Ministry of Finance also requested BIDV Metlife to account for an additional VND 174 billion in expenses related to bancassurance activities to calculate corporate income tax in 2021.

At Sun Life, this enterprise also recorded more than 600 billion VND in expenses and revenue related to bancassurance activities as deductible expenses when determining taxable income for corporate income tax in 2021, which is not in accordance with regulations.

In addition, Sun Life also recorded support payments to banks as deductible expenses when calculating taxes incorrectly in 2021, such as recording marketing support expenses for TPBank of VND 121 billion; ACB of a total of VND 124 billion...

With the above violations, the Ministry of Finance requires Sun Life Vietnam Insurance to reduce deductible expenses when determining taxable income for corporate income tax in 2021 by more than VND 600 billion.

For MB Ageas Insurance, in 2021, this enterprise also accounted for expenses related to bancassurance activities as deductible expenses when determining taxable income for corporate income tax in violation of regulations, an amount of VND 5.9 billion.

Regarding tax violations, the Ministry of Finance assigned the General Department of Taxation to direct local Tax Departments (Hanoi Tax Department and Ho Chi Minh City Tax Department) to urge and review enterprises to declare and comply with tax and invoice laws for expenses stated in the inspection conclusion. From there, handle tax and invoice administrative violations (if any) and guide and handle similar cases.

Regarding cases of insurance agents and bank employees not complying with the Company's regulations, through sample inspection, the Ministry of Finance discovered many cases of insurance agents and bank employees not complying with regulations in the process of implementing insurance sales.

Common violations include: not properly implementing regulations on collecting and declaring customer information issued by the Company; not complying with the process of exploiting and consulting insurance products according to the Company's regulations; not properly implementing regulations on declaring and completing documents, lacking responsibility in checking information in documents and insurance request files of customers;

Not properly implementing the Company's regulations on insurance premium management; not ensuring the quality of insurance product consultation; not accurately collecting customer information during the process of consulting on insurance products for customers according to regulations...

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