The Minister of Finance, Ho Duc Phoc, has recently reported to National Assembly members on some issues related to parliamentary queries at the 31st session of the Standing Committee of the National Assembly on March 18.
Recommendations on the handling of financial matters worth 21 trillion Vietnamese dong
Minister Ho Duc Phoc stated that by the end of 2023, insurance companies have reinvested a total estimated amount of 762,580 trillion Vietnamese dong into the economy and paid insurance benefits totaling 86,376 trillion Vietnamese dong. The total assets of insurance companies reached an estimated 913,308 trillion Vietnamese dong, an increase of 11.12% compared to 2022.
Insurance companies have been operating safely, effectively, professionally, and their competitiveness has been continuously improving. The products and quality of services have been enhanced to meet the diverse needs of policyholders.
However, due to rapid development, in the recent past, the insurance market, especially life insurance, has encountered some issues regarding the quality of advisory activities, as well as customer care and claim settlement services. Notably, the distribution channel through banks (Bancassurance) has raised concerns.
 Minister of Finance Ho Duc Phoc. Photo: Hoang Ha |
This channel has made insurance operations more diverse, but it has also created more complexity and needs to be reassessed and adjusted to ensure proper and healthy operations.
In recent times, the Ministry of Finance has implemented numerous measures to rectify the shortcomings and deviations in the implementation of insurance product sales activities in the life insurance market in general, and the bancassurance channel in particular.
Specifically, inspections and examinations have been conducted on 10 out of 17 life insurance companies that have implemented insurance sales through credit institutions and foreign bank branches in 2022 and 2023.
Inspected companies accounted for 96.83% of the total insurance premium revenue generated through the bancassurance channel in the life insurance market.
Through inspections, violations related to the bancassurance channel were discovered, such as irregularities in the issuance of procedures and regulations, non-compliance with product pricing, and insurance agents’ failure to comply with company and legal regulations.
The Ministry of Finance’s inspection agency has recommended the handling of financial matters worth 21 trillion Vietnamese dong, including excluding the amount from deductible expenses when determining taxable corporate income in 2021 and 2022, totaling nearly 1,956 trillion Vietnamese dong; and imposing administrative penalties on two insurance companies, with fines amounting to 310 million Vietnamese dong.
In addition, the inspection agency has suspended the signing of new insurance contracts through credit institutions and foreign bank branches for a limited period and demanded the restoration of the initial conditions for the violations.
Stringent handling if violations are detected
Minister Ho Duc Phoc revealed that in 2024, the Ministry has plans to conduct inspections of six insurance companies. Specifically, inspections will be conducted regarding the implementation of insurance sales through credit institutions and foreign bank branches for two life insurance companies (Mirae Asset Prévoir Life Insurance Company Limited and Cathay Life Insurance Company Limited Vietnam).
The financial sector’s commander-in-chief believes that the issues that have been mentioned in the press and public opinion over time present both challenges and significant opportunities to improve the quality of the Vietnamese insurance market, aiming for safe and sustainable development in the future.
In the coming years, in addition to fundamental factors such as economic growth, a large population, and technological development trends, a legal foundation is expected to contribute to further development, both in terms of “quantity” and “quality,” for the insurance market.
Affirming the priority given to the quality of development in the Vietnamese insurance market in the future, Minister Ho Duc Phoc believes that a synchronized set of solutions is needed from both the regulatory authorities and the joint efforts of insurance companies and policyholders to “balancing benefits and sharing risks”.
Regarding the responsibility of the Ministry of Finance, he emphasized that efforts will continue to perfect the policy mechanisms relating to insurance products, promote transparency and disclosure of information about insurance products and companies to enable easy access to information for citizens when researching and selecting suitable insurance products.
The regulatory authorities have already and will continue to request reviews, strengthen inspections, and supervise the operations of insurance companies, and take strict action if any cases of non-compliance by insurance agents with legal regulations are discovered.
Thu Hang
