Beyond the current agency distribution framework
In my last two posts, I looked at Vietnam’s life insurance challenges from two angles:
- A government target (15% penetration) that risks prioritising volume over value.
- A product mix (UL & ILPs) that fits insurer profit models more than customer realities.
But even if we fix KPIs and rebalance product portfolios, there’s still one more challenge - and it may be the toughest of all: agency distribution.
The Agency Crisis in Vietnam
Vietnam’s agency model - once the engine of life insurance growth - is under strain:
- Recruitment is collapsing. Young recruits no longer see agency as a viable career.
- Retention is weak. Many leave within 12–18 months, often carrying negative experience and perceptions back into the market.
- Compensation distortions. Oversized first-year commissions encourage mis-selling, self-funding, and policy churning.
- Customer trust is eroding. Too many households have experienced broken promises or prematurely lapsed policies.
The result? For the first time, industry observers note negative agency growth last 3 years in Vietnam - a red flag for an industry that still relies on agents for 80–90% of distribution.
What Mature Markets Can Teach Us
Vietnam is only 26 years into its modern life insurance journey. By comparison:
- Japan has had life insurance for over a century.
- Korea, Taiwan, Hong Kong, Singapore: agency-led growth started in the 1960s–80s, giving them decades to mature.
Three lessons stand out:
1. Agent Role Evolves with Market Maturity
- In early markets (like Vietnam today), agents are primarily sellers - focused on rapid acquisition and closing deals.
- In mature markets, agents have evolved to be advisors or relationship managers. For example: In Japan, the largest insurers (Nippon Life, Dai-ichi) shifted their tied-agency forces into long-term advisory roles, supported by financial planning certification. In Singapore, MAS reforms mandated higher qualification standards, pushing agents to deliver real financial advice, not just pitch products.
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Vietnam is still stuck in “sell fast” mode. The shift to “advise and retain” hasn’t happened yet.
2. Compensation Models Rebalance Over Time
- In Vietnam today, first-year commissions often account for 40% of annual premium - highly front-loaded. This encourages agents to prioritise new sales over persistency.
- In Korea and Singapore, regulators forced a shift toward levelised commissions (spread over 5-7 years). Agents still earn well, but only if policies stay in force.
- In Hong Kong, insurers began tying agent bonuses to persistency ratios - making “keeping policies alive” as profitable as “closing the sale.”
Without reform, Vietnam risks the same boom-and-bust cycle: aggressive sales → high lapses → customer distrust → regulator crackdown.
3. Distribution Diversifies
- In Taiwan, bancassurance now accounts for over 50% of new business.
- In Korea, digital direct channels are gaining ground as regulators push transparency.
- Even in Japan, with its strong tied-agent heritage, cross-channel ecosystems (banks, corporate partnerships, digital) now carry much of the growth.
Vietnam’s heavy over-reliance on agents is a structural risk. If agency falters, there’s no safety net.
A Post-Agency Playbook for Vietnam
What does “post-agency” look like? Not the end of agents - but a redefined role, with compensation and responsibilities more in line with mature markets:
- From sellers to explainers. Agents shift from pitching to guiding, with persistency and financial education at the centre.
- Fewer, better professionals. A smaller, full-time elite of agents who deliver genuine financial advice, supported by stronger certification and digital tools.
- Compensation reform. Commissions rebalanced to reward persistency, not just acquisition - aligning with global best practice.
- Omni-channel ecosystems. Bancassurance, direct digital, and embedded insurance handle the scale of acquisition, while agents handle depth and retention.
- Data-driven trust. Vietnam’s rollout of VNeID and digital health/social data (VssID) can enable straight-through onboarding and claims, reducing “human friction.”
Final Thought
Fixing products is necessary. Rethinking KPIs is essential.
But neither will matter if the industry ignores the distribution crisis.
Mature markets show us the path: elevate agents into professional advisors, rebalance commissions toward persistency, and diversify distribution channels.
Director (Insurance) @ Synpulse | Helping carriers create the future of insurance | #NeoInsurance #Parametric #Distribution
2moFinding the right-balance between selling and advising is always tricky for agents. Appreciate the read, and think it speaks more broadly than Vietnam to the philosophical issue of agents as sales representatives of the carrier, or agents as advisors to prospective customers. One might produce more volume, even if incentivized differently, but the other fundamentally builds customer relationship. Perhaps less tangible, but ultimately potentially more valuable.
Project Manager
2moExactly. The crisis isn’t about agents disappearing, it’s about what role they choose to play next. In every mature market, when the product pushers got exposed, only those who shifted to relationship builders survived. Vietnam has a chance to skip the painful middle stage if we reframe the agent’s identity now — from chasing bonuses to earning trust. The industry’s future won’t be won by distribution channels, but by who owns the customer relationship long-term.
Professional Services B2B Go-to-Market (APAC) | International Business | South Africa -Western Cape - Business Manager | Awarded - Exclusive “Friend of Taiwan Business Community” 世界台商总会 (WTCC)-台商之友荣
2moAbsolutely valid view
Leading LL Global (LIMRA LOMA) Vietnam in supporting our member companies’ professional growth and industry development | Personal Finance and Financial Planning Contributor
2moA very thoughtful piece. While challenges in the agency model are real, I believe it will remain central if we shift the focus from scale to quality. Building a professional sales force that delivers customer-centric advice and long-term value is key to restoring trust and sustaining growth. Digital, bancassurance, and direct channels will all expand, but the role of a trusted human advisor is irreplaceable. The future is hybrid — and a strong, professional agency force will remain at its core.
Creative Director & Social Media Head - Maven Marketing, Building Engaging Brands| ICICI Prudential -Content Strategist, Direct Marketing Campaigns,Turning ideas into stories that stick.
2moInteresting read.Digitalization to offer DTC or hybrid sales models that still incorporate the agents with a redefined role is a promising way forward.