Finding market opportunities for bancassurance in vietnam

Investigating the insurance product that have potential to cross selling, examine customer’s profile to identify potential customer demand, finding the reason why customers would like to

FINDING MARKET OPPORTUNITIES FOR BANCASSURANCE IN VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

FINDING MARKET OPPORTUNITIES FOR BANCASSURANCE IN VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International business

by Mr: Nguyen Ngoc Noi ID: MBA03024 International University - Vietnam National University HCMC

Acknowledge

First of all, I would like to send my sincere thanks to all teachers in International University –

Ho Chi Minh National University where taught and supported me during this MBA course Especially, the teachers are at school of Business administration

Many sincere thanks to Dr Nguyen Kiem Than who read and advised me useful information

to completed this dissertation

Thanks to all respondents that helped me to fill the questionnaires, your answers were a key source of information useful to me complete this thesis

Thanks to all of you in MBA03 class who shared, supported and provided information useful

in during learning

Many lovely thanks to my family, especially many kisses to my wife and daughter have encouraged and gave me power in this course and my working

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Ho Chi Minh City

Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author’s prior consent

© Nguyen Ngoc Noi/ MBA03024/2010-2012

Table of Contents

Acknowledge i

Plagiarism Statements ii

Copyright Statement iii

Chapter1: Introduction 1

1.1 Overview of Vietnam insurance sector 1

1.1.1 Vietnam Insurance sector 1

1.1.2 Vietnam entered WTO and impacts to Insurance sector 2

1.1.3 Market potential 2

1.2 Statement of the problem 3

1.3 Research objectives and questions 5

1.4 Research methodology 6

1.5 Benefits of this study 6

1.6 Structure of the research 6

1.7 Chapter summary 7

Chapter 2: Literature review 8

2.1 Concepts 8

2.1.1 Bancassurance definitions 8

2.1.2 Potential customer demand identification 8

2.1.3 Market opportunities identification 8

2.2 Theories of Bancassurance 9

2.2.1 A Karunagaran (2006) to Bancassurance “Feasibility strategy for the Banks concluded that the success of bancassurance” 9

2.2.2 Chiang Ku Fan, Yu Hsuang Lee (2010) “Factors to success bancassurance” 9

2.2.3 G.S Popli, Rao, D.N “ Prospects and challenges for selling insurance product through the banks” 10

2.2.4 Konstantinos Lymberopoulos et al(2004) “ Opportunities for banks to cross sell insurance products in Greece” 10

2.2.5 Other theories 10

2.3 Chapter summary 13

Chapter 3: Research methodology 14

3.1 Research process 14

3.2 Research model and hypothesis 15

3.2.1 Research model 15

3.2.2 Research hypothesis 17

3.3 Measurement and questionnaire design 17

3.3.1 Questionnaire design 17

3.3.2 Pilot study 20

3.3.3 Finalize questionnaire 21

3.4 Sample size and data collection method 21

3.3.1 Sample size 21

3.3.2 Data collection method 21

3.5 Data analysis method 21

3.5.1 Data coding 21

3.5.2 Analysis method 23

3.6 Chapter summary 24

Chapter 4: Data analysis and finding result 25

4.1 Sample description 25

4.2 Exploring the current use of insurance products and bancassurance services 26

4.3 Profile of customers who have already used their bank in order to buy an insurance product 27

4.4 Reasons why customers would like to buy insurance products from the banks 28

4.5 Source of information where customer in order to buy insurance products 29

4.6 Profile of customers aware that their bank offers insurance products 30

4.7 Willingness to buy additional insurance product from banks 31

4.8 Exploring customer’s attitude towards Trustworthiness, competence and service expertise of banks and insurance agent 32

4.8.1 Mean scores 32

4.8.3 Factor analysis 34

4.9 Compare means 38

4.9.1 One way Anova 38

4.9.2 Independent sample T test 39

4.10 Chapter summary 40

Chapter 5: Conclusion and recommendation 41

5.1 Research finding and discussion 41

5.2 Recommendation 42

5.3 Limitation of the study 43

5.4 Further research 44

5.5 Chapter summary 45

References 46

Appendix 48

Appendix 1: Survey questionnaires 48

Appendix 2: Crosstabulation 51

Appendix 3: Descriptive statistic 53

Appendix 4: Result of reliability test 54

Appendix 5: Result of Factor Analysis (EFA) 56

Appendix 6: One way Anova 87

Appendix 7: Result of Independent T test 94

List of Tables

Table 1: The factors in study customer’s attitude 16

Table 2: The questionnaires included main points: 17

Table 3: Coding Questions 22

Table 4: Respondent’s profile 25

Table 5: Current use of insurance products 26

Table 6: Customers who used their banks to in order insurance products from the bank products 27

Table 7: Reasons which customer would like to buy insurance from banks 28

Table 8: Sources of information that banks provide insurance to customers 29

Table 9: Profile of customers aware that their bank offers insurance products 30

Table 10: Willingness to buy additional insurance product from banks 31

Table 11: Ranking customer’s attitude to trust, competence, service expertise of Banks and Insurance companies based on mean scores 33

Table 12: Descriptive statistics 34

Table 13: Kaiser-Meyer-Olkin(KMO) 35

Table 14: Total variance explained 35

Table 15: Rotated Component Matrix(a) 36

Table 16: Renamed in study 37

List of Figures

Figure 1: Process of this study 14

Figure 2: Bancassurance opportunities model of O.C.W Jongeneel 15

Figure 3: Conceptual model 16

Figure 4: Current use of insurance products 27

Figure 5: Reasons which customer would like to buy insurance from banks 29

Figure 6: Sources of information that banks provide insurance to customers 30

Figure 7: Willingness to buy additional insurance product from banks 32

Figure 8: The model after modified from finding in EFA for customer’s attitude 37

Abstract

The main objectives of this study to finding market opportunities for bancassurance in Vietnam Identify whether or not there are opportunities to sell insurance product through the banks Investigating the insurance product that have potential to cross selling, examine customer’s profile to identify potential customer demand, finding the reason why customers would like to buy insurance from the banks and awareness to offers insurance product from banks Customer’s attitude also analysis basing on the result to market segment Questionnaires designed and completed by 206 customers who have been transaction with the banks

Market potential is a key factor for developing both life and nonlife insurance Vietnamese’s income achieved average as world’s rank Traditional distributions are employee, agent, broker that have huge revenue in insurance area However, Bancassurace has into Vietnam in nearly years as a new distribution in Vietnam although this distribution was developed in Europe for a long time ago Developing stable in insurance and application bancassurance is

a key factor in this sector This is a distribution very potential to increase insurance revenue, with the purpose to develop bancassurance that author studied distribution channel through survey, conclusion, recommendations to implications to managers and ideas to further research in future

Key words: Banks, Insurers, Opportunities, Bancassurance, Cross selling, Vietnam

Chapter1: Introduction

1.1 Overview of Vietnam insurance sector

1.1.1 Vietnam Insurance sector

Vietnam insurance market is develop very rapidly in year nearly, non-life insurance has increase 25% in 2011, estimated 21,500 billion dong and life insurance has increase 16,2% in 2011, estimated 16,025 billion dong However Bancassurance is five percent in total insurance premium (Association of Vietnamese Insurers) Bancasurance has developed in Europe for many decades In france for example total premium is over 70% through distribution banking, 10% in Malaysia

Insurance penetration (premium as a % of GDP) in 2011, Vietnam has only 1.5%, including nonlife insurance 0.9% and life insurance 0.7% comparison with Singapore 5.9%, Thailand 4.4%, Malaysia 5.1% and Indonesia 1.7% (source Sigma No.3/2012 of Swiss Re) Vietnam has population over 88,8 million people but Insurance penetration is lower than other Asia south country but with increasingly in nearly year, Vietnam Insurance sector has a lot of opportunity to develop and finding new distribution is a necessary for insurance in currently and future

Vietnam Insurance Companies have arrangement with the Banks to sales insurance product to the bank’s customers It is the first step of the bancassurance Because the Insurers and the banks do not more things to developing this arrangement Some banks are open or joint shareholder in insurance companies to do Bancassurance (website of insures):

Bank for investment and development of Vietnam(BIDV) has Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (BIC) BIC officially began operating under the new brand name from January 1 2006 and Chartered capital: 660 billion dong BIC is new brand which BIDV bought the shares of the QBE Insurance Group (Australia) QBE- BIDV joint venture established in Vietnam in 1999

Agribank has Agricuture Bank Insurance Joint Stock Corporation It operation on August

08, 2007 and chapter capital: 380 billion dong and Bao Viet Insurance Joint stock with Bao Viet bank to do Bancassurance

1.1.2 Vietnam entered WTO and impacts to Insurance sector

The insurance market opening commitments of Vietnam in WTO, oversea insurers allowed providing insurance services to insurance companies with capital and foreigners

in Vietnam In addition they also offer reinsurance services, international transportation, insurance brokerage, consulting, computing, risk assessment and claim settlement for the Vietnam insurance market, insurance companies 100% foreigners is not required for compulsory insurance services to 01/01/2008, the remove of restrictions

However, Vietnam insurance market has a lot opportunity to develop insurance sector For example, insurance companies have increase rapidly, only 37 insurance sector companies in 2006, until 2010 has 50 companies (Source: Association of Vietnamese Insurers), claim settlement is more important to insurance companies because competition

is a factor to improve quality service and increase benefits to customer

Diversification of distribution, outside distribution channel, cross selling through banks, financial companies have more interested to opening insurance sector for nonlife insurance and life insurance Local insurance companies have updated IT in management and investment to give benefit to customers and competition with insurance 100% of foreigners Vietnam insurance sector is expected to witness great competition and growth opportunities with innovative product, improve quality service and training employees, expanding distribution channels and growth economic opportunities

1.1.3 Market potential

The insurance companies have completed the route to enough legal capital 300 billion USD for a non-life insurance, 600 billion USD for a life insurance company and change state insurance company into a joint stock company successfully

Non-life insurance has 880,928 for new policies, Premium per capita in USD has 1200 in

2011 it is higher than 2010 (1,160 USD) (source Sigma No.3/2012 of Swiss Re) Vietnam's population has 88,8 million people It is a huge potential for growth insurance, insurance demand is increasing both personal and business Vietnam has young population and economic development those factors to market opportunities Population was insured under 10%, the cost of insurance in developing countries account for 10-15%

of GDP, in Vietnam, this cost is only 2% of the GDP

Market opportunities have come from the factors that a part of population is not insured, income levels across age group, industry sector take workforce in this sector increasing, economic development create customer demand in healthcare and relate services

Vietnam’s population estimated 88,8 million in 2011 (source Sigma No.3/2012 of Swiss Re) but insured population estimated under 10% was covered by nonlife insurance and life insurance

According to Law on Insurance business issued by National Assembly of the Socialist Republic of Vietnam, Law No 24/2000/QH 10, Compulsory insurance is a line of insurance with respect to which the laws provide for the terms and conditions, premium rates and the minimum sum insured that have a binding effect on both the insurance buyer and the insurer For example, Motor owner’s civil liability insurance; aviation carrier’s civil liability insurance; Professional indemnity insurance against risks arising from provision of legal consulting services; Professional indemnity insurance for insurance brokers; Fire and explosion insurance It is an market opportunities growth in the current and future because business is related the bank to get the loan and the bank can become a provider insurance products and services

1.2 Statement of the problem

The insurance market is developing strongly in Vietnam and entering in the world economy The financial companies is competition very strictly, they are finding new distribution channel due to increasing competitive Bancassurance is a distribution channel to lead to price competition, reducing costs, high quality service It is role important in insurance products distribution with competitive advantage

Vietnam has become the 150th world trade organization member on 11 January 2007 it is

a new opportunities for insurance and banking area and more prospect to additional income for both insurance and banking

Bancassurance has grown in many countries in the world and developed in European for many decades The Economic development is a factor that Bancassurance has been in the market Bancasurance is an affective distribution channel in insurance It is simplest the distribution of insurance products and services through a bank’s distribution channel There are many distribution channels for the services of insurance as follows: Firstly, Insurance company sale of insurance product indirectly, without intermediaries, using direct marketing and company’s own sale forces employees Secondly, Insurance

company sale of product through intermediaries who represent several providers to sell of products and services, it based on contract agent, brokers who represent the interest of Insurers

In globalization, technological innovation and completion have create Bancassunce to adapt new development and increase benefits to customers and insurance company

Bancasurance is arrangement between Insurance companies and the banks that it is base

on the same sources of customers to provide banking and insurance products

Non-life Bancassurance only become more popular in the early 1990s the maily property products distributed through the banks in some Western European markets and especially

in France, non-life Bancassurance penetration has risen incrementaly from 4% in 1994 to 9% in 2006 (Swiss Ree- Sigma No.5/2007, P.35)

Bancassurance in Vietnam is not strong development Although insurance company has apply it in their sales channel In this research will deal with development of bancassurane for nonlife insurance in Vietnam, the implementation models, experiences, advantages and disadvantages, the benefit from this distribution channel for banks, insurance companies and customers themselves, a stable development in the competition market

Bancasurance’s strategy focus on the minimize cost, market segment and customer, create the insurance products specially for this segment, benefit to Insurer, Bank and customer Minimize costs but maximize coverage: the bank sale insurance product to customer directly The Insurer must train for the bank’s employee who consult and sale insurance product before they supply insurance to customer The Insurer will not lost much time and cost for example sales forces, finding new customer, competition Low cost but Insurer will supply more coverage to customer to attract them

Market segment and customer target: Insurer will be arrangement and selection the bank with an appropriate customer

Create the insurance product specially for this segment: non-life insurance have more than thousand product however Insurer can focus develop products specifically and adapt the customer need and want The insurance product must coverage the risk that the bank wants to risk management

Benefits to Insurers, Banks and customers: Insurers base on the bank distribution network largely to increasing their revenue through banks and use the same customer base, economy in sales cost; the banks will earn net income from Insurers and increasing value

to customer, strengthening customer relationship, and manpower utilization; customers will insured with reasonable premium and security for their property or health that bank employee high skilled and trained to cross selling insurance products, one stop shopping, customers are not much time to select Insurer because the banks have agreed already with the good insurers

1.3 Research objectives and questions

Examine whether or not Vietnam retail bank customers are aware of insurance selling through bank branch networks and customers are willing to purchase from their banks Identify the reasons that customers would buy insurance from the banks and popular insurance products

Investigate the factors that affect customer’s attitudes to banks and insurance companies

in relation to the provision of insurance products

Using test potential relationships between the factors and customers’ demographic characteristics, awareness and level in use of insurance products

To adaptation the objectives, the study must answered as follow research questions:

- What insurance policies do customers currently hold?

- What are the reasons that customers would like to buy insurance products from the banks?

- What is the level of customers’ awareness that their banks sell insurance products and does this affect their willingness to buy?

- Which popular insurance products that customers would like to buy through the banks?

- Do customers feel the same about both kinds of financial service providers in terms of trust, staff competence and service expertise? Are there specific factors that express customers’ attitudes to purchasing insurance products from banks and insurance companies? Which are these?

- What are the things which customers would prefer banks as their insurance providers?

1.4 Research methodology

The survey focused on potential customer response to new service provided by banks and insurance companies and finding the customer demand that conducted with target population comprising men and women have transactions with the bank or an insurance company, the Pilot test will be used for this survey The genders are different age groups and over 21 years old with 206 samples that it is used for survey This survey was done in October and November 2012, the respondents were from Ho Chi Minh City

1.5 Benefits of this study

The Insurers will be increasing their revenue through banks and it is a further good distribution insurance product with reduce sales cost, employee, especially in risk management because the insurers can be used the same customer base

The banks will earn net income from Insurers and increasing value to customer Diversify product and services of the bank to satisfy increasing customer demand

Customer will insured with low premium and security for their property or health Customers are not much time to select Insurer because the banks have arrangement with the good insurers Customer conveniences in transaction by one stop shopping

1.6 Structure of the research

CHAPTER 1: INTRODUCTION

CHAPTER 2: LITERATURE REVIEW

CHAPTER 3: RESEARCH METHODOLOGY

CHAPTER 4: DATA ANALYSIS AND FINDING RESULT

CHAPTER 5: CONCLUSION AND RECOMMEMDATION

REFERENCE

APPENDIX

1.7 Chapter summary

General insurance sector and bancassurance in Vietnam to identify opportunities for development the distribution channel in finding potential customer demand Identify main objectives and questions to conduct this study and based on them to way suitable study The result of the study benefits to banks, insurers and customers Chapters in research were logic and adapted purposed of research The structure of research adapts the objectives and questions to finding the result and recommendation in development bancassurance in Vietnam

Identify customer demand was an key factor to opportunities for bancassurance that used primary data and secondary data to analyzing and result and recommendation for this research

Chapter 2: Literature review

2.1 Concepts

2.1.1 Bancassurance definitions

According to Cambridge dictionaries online define that “Bancasurance is a business activity in which banks sell services and products usually sold by insurance companies” The latest issue of Insights: Asia Pacific Insurance (May 2012) “The Bancassurance channel, deferred pensions business and immediate annuities market could collectively emerge as the key drivers of future growth for the insurance industry in the near term.” Before a lot of researchers define Bancasurance It is very useful to look at http://www.investorwords.com “Bancasurance is the sale of insurance and other similar products through a bank This can help the consumer in some situations; for example, when a bank requires insurance for those receiving a mortgage loan that mean your property must insured before you get the loan from the bank, the consumer could purchase the insurance directly from the bank Some critics feel that bancassurance gives the bank too much control The bank often offer to their customers a range of financial services It is insurance products from insurance company”

2.1.2 Potential customer demand identification

Identify the customer demand to sell the product to customer market that is an important

to develop effective strategies, to increasing revenue from the potential customer

Market potential is the total volume products and services that could be bought by consumer in future Market demand based on product, service and the situation of economic, survey would be a tool to data collection and analyzing potential demand of market

2.1.3 Market opportunities identification

Christy Ryken (2012) “Marketing opportunities for business growth” mentioned the Ansoff’s model to analysis market opportunities

Market penetration: existing products or services is a key factor to increasing sales through current customer

Market development: Developing products or services to new market through new uses and distribution for an existing product or service

Product development: Improving existing products or services to adapt market demand Diversification: creating many products or service to adapt line commercial and personal

to situation to apply successfully as Referal model; corporate agency; Insurance as fully intergrated financial services/joint ventures Each model will be relationship level different

The banks knew potential bancassurance in India Bancassurance strategy was be win situation” for all the parties involved there are banks, insurance companies and customers

“win-2.2.2 Chiang Ku Fan, Yu Hsuang Lee (2010) “Factors to success bancassurance”

Chiang Ku Fan, Yu Hsuang Lee (2010) the study found key factors influencing bancassurance success, identified through Delphy study, used sampling technique, questionaires to conduct survey based on analysis of key factors influencing bancassurance success to improve the performance of bancassurance, focused on some efforts invested in factors of lower administration cost per insurance policy, service quality, shortime of product innovation, small subsidiary set up cost, provide lower premium insurance to bank distribution and marketing partnership moved to factors such

as creation of integrated groups and joint ventures

2.2.3 G.S Popli, Rao, D.N “ Prospects and challenges for selling insurance

product through the banks”

G.S Poli, Rao, D.N studied Prospects and challenges for selling insurance product through the banks in India, using questionnaires to survey the customers who have transactions with the banks or an insurance company, the survey was administered personally to 115 participants for both genders and different age group The research has result that customers said that they would prefer to buy insurance products from banks due to existing personal relationship with banks, advertisements are one of the main source of information for customers, bank employee trained to push business as well as The research is an indicator that growth potential for the insurance sector through cross selling the bank It is an potential for market insurance by widening the distribution channels

Through this study found potential customer demand in New Delhi in India and factors that influence to increasing sales for bancasurance

2.2.4 Konstantinos Lymberopoulos et al(2004) “ Opportunities for banks to cross sell insurance products in Greece”

In the study was identify whether or not there are opportunities for banks to cross selling insurance product through branch network and result analysis has greatest opportunity come from the fact that consumer awareness of offering insurance products from banks is low in contrast to their willingness to use banks as insurance products providers The customers would like to buy insurance products where distributor was expertise in insurance products A survey conducted between November 2002 and January 2003 at Athens with 720 respondents SPSS software was used to analysis of frequencies, factor, cross tabulation, one way anova and independent T test

2.2.5 Other theories

The latest issue of Insights: Asia Pacific Insurance (May 2012) “The Bancassurance channel, deferred pensions business and immediate annuities market could collectively emerge as the key drivers of future growth for the insurance industry in the near term.” Munich re group research Bancasurance in Practice (2001) mention definition in this research “ bancasurance is the provision of insurance and banking products and services through a common distribution channel and/or to the same client base” Bancassurance make use of various distribution channels: Career agents; Special advisers; Salaried agents; Bank employees; Corporate agencies and brokerage firms; Direct response

This presentation was made in the CEO Summit of banks and insurance companies of Asia Pacific countries in October 2001 in Singapore By Manoj Kumar, ACII (UK), CPCU (USA), ARe (USA), ARM (USA), FIII (India) Said that the most significant changes in the financial services sector over the past few years has been the growth and development of bancassurance Banking institutions and insurance companies have found bancassurance to be an attractive and profitable complement to their existing activities The successes demonstrated by various bancassurance operations particularly in Europe have triggered an avalanche of mergers and acquisitions across continents and efforts are

on to replicate the early success of bancassurance

Distribution is the key issue in bancassurance and is closely linked to the regulatory climate of the country Over the years, regulatory barriers between banking and insurance have diminished and has created a climate increasingly friendly to bancassurance The passage of Gramm-Leach Bliley Act of 1999 in US and IRDA Bill in India (2000) have stimulated the growth of bancassurance by allowing use of multiple distribution channels O.C.W Jongeneel research Bancassurance, Financial services, Financial intermediation, panel study, Europe (2011) mention Bancasurance as a way of financial conglomerations has appealed widespread attention in the world of academic and business The researcher said that it is a one-stop-shop option for a larger range of financial products Market concentration predominantly had a positive impact on bancassurance proportions Both internet usages and banks branch density came out as determinants leading to contraction

of bancassurance proportion

Marketing and distribution channels in Bancassurance (Manoj Kumar) Distribution channels include Insurance Company’s channels, Bank’s Channels and Bacassussurer’s Channels –new

Sharp execution of these partnerships is critical In particular, partners will need to focus

on initiatives that form the 10 building blocks of a successful bancassurance model by Swiss re and Boston Consulting Group (BCG): develop products jointly;

streamline the product offering ; adopt a generalist sales model; create meaningful sales targets and incentives; bundle products for life events; train rigorously

upgrade IT systems; define organizational roles; bolster customer service and post-sale support; ensure capital and risk management

Sam Evans, Walkman Lee, Richard Siu (2012), China’s Insurance sector and the Evolution of bancassurance, the research studied future growth potential in china’s insurance market that bancassurance was becoming increasingly important The result of authors survey highlighted strongest demand in the bank channel for mor complex products including annuity and investment linked products In survey about customer demand found that there was strong demand for additional cover for existing products, supporting the future growth potential

2.3 Chapter summary

The bank and insurance company have arranged as form a partnership that insurance company can sell their products to the bank’s client base and arrangement the benefits or profitable to both bank and insurance company The banks earn additional revenue, insurance company can expand their market and customer base that it is not expand sales force Reference to reseach of K Lymberropoulos (2004) and G.S Poli, Rao, D.N(2008)

to find opportunities market growth through cross selling insurance products by banks and this researches are adapt author’s research in Vietnam to finding market opportunities for bancassurance However Author modified and updated other tools to suitable in Vietnam currently

Chapter 3: Research methodology

3.1 Research process

There are many people who wrote research process, Mark sauders et al (fifth edition 2009) in Research methods for business and students, Uma Sekaran and Roger Bougie (2010) in Research method for business – A skill building approach, Anderson B.(1961)

in An introduction the scientific method and Mc Daniel C and R Gates (1991) in Contemporary marketing research Through the method above, in this study Author used the method that adapted research objectives and results

Figure 1: Process of this study

Identify the research problems

Survey and collection data Data analysis

Discuss and recommendation

3.2 Research model and hypothesis

3.2.1 Research model

O.C.W Jongeneel(2011) that identified bancassurance as a distribution channel of

insurance, based on the factors to examine; market concentration, internet usage, size of

the insurance market, level of deregulation and bank density and through research to

provide understanding of country specific bancassurance development

Figure 2: Bancassurance opportunities model of O.C.W Jongeneel

According to the research of G.S Popli, Rao, D.N (2008) used variable trust in insurance

agent and trust in banks to explore the customers’ attitude, K Lymperopoulos (2004)

used trust in insurers and trust in banks to explore the customer attitude in factors

analysis There are some insurance products or services which author can modify to

survey in Vietnam, may be sale in other countries and not suitable in Vietnam

Figure 3: Conceptual model

Analyzing customer’s attitude to bancassurance channel, it only is an factors to finding

market opportunities Through customer’s attitude to know their behavior in new

distribution and combined with many factors as insurance product, willing to buy,

information source to finding solution to develop bancassurance

Table 1: The factors in study customer’s attitude

Factors The first factors Names in study

F1

Identify the factors which customers believe to buy the insurance product from the banks channel

Trust in banks

F2

Identify the factors which customers trust to buy insurance product from insurance Agent channel

Trust in Insurance Agent

Customer’s awareness

Source of information

Specific insurance product

Table 2: The questionnaires included main points:

House property insurance

Fire and exploration insurance

Marine cargo insurance (including import/export/inland

Modified of Lymperolous et al (2004)

transit)

Life insurance

Exploring the reasons what customers buy insurance products

from Banks instead of insurance Agent

Trust

Existing personal relationship

Convenience in term of location

Source of information about the provision of insurance products

Exploring customer’s attitudes to banks and Insurers channel:

Do you think that your Insurance Agent can advise you on

insurance products?

Lymperolous et al

Do you think that your Insurance Agent gives you all the

information needed?

Do you think that your Insurance Agent will not push you to

buy an insurance product?

Do you think that your Insurance Agent is expert in insurance

product?

Do you think that Bank employees will not push you to buy an

insurance product?

Do you trust Insurance Company for all your financial needs?

Do you trust your insurance agent?

Do you trust Insurance Agent more than bank?

Do you trust the bank employees?

Do you think that the Bank employees give you all the

information need?

Would you trust the bank for all your financial requirements?

Do you think that Bank employees can advise on insurance

products?

Do you think that Bank offers competitive insurance products?

Do you think that Bank employees have sufficient expertise in

insurance products?

(2004) G.S Popli et al (2008)

Products features attracted to the product:

Protect for you and your family

-Pricing

- Saving element

- Long term guarantee returns

- Duration of policy > 5 years

- Short term guarantee returns

Sam Evans et al (2012)

- Duration of policy < 5 years

Willingness to buy Additional insurance products from banks

Accident insurance

Healthcare insurance

Motor – commercial vehicle insurance

Travel insurance

House property insurance

Fire and exploration insurance

Marine cargo insurance (including import/export/inland

transit)

Life insurance

No above

Modified of Sam Evans et al (2012)

3.3.3 Finalize questionnaire

In the First part, the customers were asked their relationship to banks and insurance companies through usage insurance products, reasons, willingness to buy insurance from the banks

In the second part, the customers were asked their attitude to distribution channels were measured in three dimension trust, staff competence and service expertise

In the third part, the questions related to demographics (gender, age, income, education) will be exploring to identify customer’s profile

3.4 Sample size and data collection method

3.3.1 Sample size

The questionnaire sent over 250 customers to completive survey and author received feedback of 206 respondents In survey result received 82.4% from respondent face to face

3.3.2 Data collection method

The questionnaires require respondents fill out the form themselves, the questionnaire was translated to Vietnamese to conduct survey and designed to be as simple and clear as possible

Based on questionnaires to identify existing customer’s demand and potential customers

to Flexibility of marketing planning decision making and state of adaptation to market opportunities

3.5 Data analysis method

3.5.1 Data coding

The data was collected, coding, categorizing and entered into the Statistical Package for the Social Sciences (SPSS) for analysis All the data information entered SPSS where frequencies were run for the descriptive statistics The result of survey was descriptive as percentages, mean, modes and ranges in chart or table form

14 questions that the questions were measured by Likert scale as follow:

- 1 = Strong degree

- 2 = Degree

- 3 = Neither degree or not

- 4 = Disagree

- 5 = Strong disagree

Code A to L for each question and used in factor analysis

Table 3: Coding Questions

Code Questions

A Do you think your Insurance Agent is expert in insurance products?

B Do you think your Insurance Agent can advise you on insurance products?

C Do you think your Insurance Agent gives you all the information needed?

D Do you think Bank employees give you all the information need?

E Do you think Bank offers competitive insurance products?

F Do you trust Insurance Agent more than bank?

G Do you think Bank employees can advise on insurance products?

H Do you think Bank employees have sufficient expertise in insurance products?

I Do you trust the bank employees?

J Do you trust Insurance Agent?

K would you trust the bank for all your financial requirements?

L Do you trust Insurance Company for all your financial needs?

M Do you think Bank employees will not push you to buy an insurance product?

N Do you think your Insurance Agent will not push you to buy an insurance product? Code for Multiple responses for questionnaires 1, 2, 3 and 6:

- Some question data were entered into SPSS and some of them would be recoded

to next analysis There were multiple response

- Analyze: using frequency, descriptive and crosstabbulations

- Analyzing customer’s attitude: Factor analysis used with KMO and bartlett’s test

of sphericity, principle components, varimax rotation,uppress absolute values less than 0.2 and final 0.45 to eliminate less than 0.5 loading

- One Way Anova and Independent T Test would be use in finding relationship customer’s attitude to distribution channels based on demographics

3.6 Chapter summary

In the main points in this chapter that identify research process to conduct the study Uma Sekaran and Roger Bougie (2010), questionnaires and how to conduct survey adapt Lymperopoulos K.et al(2004) and G.S Popli et al(2008), also the studied of Sam Evan et al(2012) for pattern customer demands in Bancassurance Pilot test would be conduct to customers and interview them to modified questions friendly to them and SPSS used data statistic and supported results in research process

Chapter 4: Data analysis and finding result

4.1 Sample description

This research was covered 206 people who was working and living in Ho Chi Minh City, Vietnam Respondents were typically in the survey, with 56 percent (116 people) from female, with 43.7 percent (90 people) from male , 30.1 percent at 21-30 ages, 31.6 percent at 31-40 ages, 57.8 percent graduated from colleges and university, 48.1 percent from monthly income less than 10 million Vietnam dongs, 32.5 percent monthly income from 10-20 million dong (table4)

Table 4: Respondent’s profile

Gender Frequency Percent Valid Percent Cumulative Percent

Education Frequency Percent Valid Percent Cumulative Percent

4.2 Exploring the current use of insurance products and bancassurance services

Reference (Table5) with 80.5 percent of respondents were currently hold vehicle insurance, 44.9 percent of respondents were hold healthcare insurance, 41 percent of respondents were hold personal accident

Table 5: Current use of insurance products

Figure 4: Current use of insurance products

4.3 Profile of customers who have already used their bank in order to buy an

insurance product

All respondent have hold at least on insurance product in currently, the income less than

10 million dong with 48.3 percent, higher income with 32.2 percent at over 10 million

dong (Gross monthly income)

Table 6: Customers who used their banks to in order insurance products from the

10-20 million dong

Fire and special perils

Marine cargo insurance

Life insurance

Heavy (Over 2)

The respondents had demand for products coverage, 53 percent was healthcare insurance,

42 percent has life insurance, 35 percent has personal accident, there are have new demand in purchase of consumers

4.4 Reasons why customers would like to buy insurance products from the banks

Reference (Table 7) With 79.9% out of sample were aware that conveniences in location, with 48.5% from communication and 47.4% from existing personal relationship

Table 7: reasons which customer would like to buy insurance from banks