Four life insurance companies have been identified by the Ministry of Finance for violations following an inspection.
In early January 2024, the Ministry of Finance completed inspections on 10 insurance companies. In an interview with PV Tien Phong, a leader of the Insurance Supervision and Administration Department (Ministry of Finance) stated that the conclusions of the inspections on 2 life insurance companies have been completed. The violations of the insurance companies are similar to the 4 companies that were previously announced.
“After the inspection, the inspection unit will finalize the conclusions, submit them to the Legal Affairs and Inspection Department of the Ministry of Finance for discussion and explanation before they are announced in accordance with regulations,” said the leader of the Insurance Supervision and Administration Department.
The list of insurance companies to be inspected in 2023 that are awaiting the announcement of conclusions includes: Manulife Vietnam Life Insurance Company (Manulife), AIA, Dai-ichi… In the first half of 2023, the Ministry of Finance completed inspections on 4 insurance companies, identifying a series of violations by insurance advisory agents and requesting strict action from the CEO of the insurance companies, with written reports being submitted. According to PV Tien Phong’s research, there are currently no detailed regulations regarding the timing of the announcement of inspection conclusions.
“At the end of November 2023, the Minister of Finance issued a plan to inspect 6 companies, including 4 non-life insurance companies and 2 life insurance companies,” the Ministry of Finance announced.
While insurance companies are being inspected by regulatory agencies, many customers are eagerly awaiting their rights. Ms. Nguyen Thanh Nga (Thanh Hoa) stated that when she went to deposit her savings at a bank, the staff invited her to switch to a flexible savings product with high interest rates and included an insurance policy. Believing the bank employee’s words, Ms. Nga transferred 200 million VND to the life insurance product.
“The employee falsely filled in my information and the information of my relatives in the insurance contract. At the time the contract was issued, my daughter was only 16 years old, still in school, but the insurance agent falsely stated that she was married and owned a store, with a monthly income of 50 million VND. When I discovered these errors, I went to the bank to file a complaint, and the bank representative informed me that the insurance agent had left the company, and there were many customers who were filing complaints, like my case. I hope to recover the money I lost due to the misinformation provided by the advisor,” Ms. Nga shared.
Sharing a similar experience, Ms. Ho Ngoc Diep (Ho Chi Minh City) said that her family lost nearly 120 million VND in insurance premiums due to incorrect advice from an advisor. According to Ms. Diep, the advisor explained that after 10 years, she would withdraw an amount equal to or even greater than what she deposited. The insurance advisor falsely declared that she had no medical history. When Ms. Diep’s mother became ill and submitted a medical expenses claim, the insurance company refused, citing “inaccurate declaration” concerning health records.
“The deceptive behavior of insurance advisors occurs in many places, and many customers like us fall into their traps. I want the regulatory agencies to inspect and heavily penalize the unethical advisors and companies, as well as provide fair compensation to customers,” recommended Ms. Diep.
Soaring Compensation Costs
Along with the intensified comprehensive inspections by regulatory agencies, in 2023, many insurance companies faced a high number of contract cancellations. In its financial report for the first 6 months of 2023, Manulife Vietnam Life Insurance Company stated that the total compensation and insurance payments amounted to over 8.8 trillion VND, an increase of 45% compared to the same period the previous year.
Similarly, the semi-annual financial report for 2023 of General Insurance Company also showed that the total compensation and insurance payments accumulated until the end of the second quarter of 2023 amounted to over 555 billion VND, a sharp increase compared to the end of the second quarter of 2022. Among them, compensation for hospitalization and medication costs accounted for 220 billion VND, while contract cancellations accounted for nearly 154 billion VND. The compensation costs ranged from a few billion VND to a maximum of 73 billion VND.
Data from the Ministry of Finance shows that in 2023, the total insurance premium revenue is estimated at 227.596 trillion VND, with the non-life insurance market increasing by 2% and the life insurance market decreasing by about 12.5% compared to the same period in 2022. The amount paid for insurance claims is approximately 86.467 trillion VND, an increase of 31.1% compared to the same period the previous year.
Insurance expert Tran Nguyen Dan believes that the Ministry of Finance now has a hotline to receive complaints from the public related to insurance. In the coming time, the competent authorities need to update the progress of inspections and the process of handling complaints regarding insurance contracts.
“In recent times, the regulatory agencies have supplemented regulations on fines for individual agents, but the regulations regarding organizational agents (including banks) are still lax. Therefore, there should be a deterrent penalty mechanism, with fines based on a percentage of sales. When the amount of the fine is much larger than the illicit gains, both individual and organizational agents will refrain from misconduct,” recommended Mr. Dan.
