Minister of Finance Ho Duc Phoc
On the morning of March 18, 2024, at the National Assembly, under the chairmanship of National Assembly Chairman Vuong Dinh Hue, the Standing Committee of the National Assembly organized a Question and Answer session addressing various financial issues.
One of the issues raised was the management and supervision of life insurance business activities and related services in the life insurance sector. The Minister of Finance is responsible for providing the answers.
According to the report from the Ministry of Finance, due to rapid development, the insurance market, especially life insurance, has encountered some issues regarding the quality of advisory activities, as well as the services and settlement of insurance benefits for customers. Additionally, while the market used to have only traditional agency channels, recently, more distribution channels have been established, such as distribution through banks. Distribution through banks has increased the diversity of insurance operations, but also created more complexity, requiring us to reassess and adjust towards correct, healthy operations.
Based on media reports, public opinion, as well as management and supervision efforts, the Ministry of Finance has implemented many measures to rectify the shortcomings and discrepancies in the implementation of insurance product operations in the life insurance market in general, and through bank distribution channels in particular.
The Ministry of Finance has conducted studies to propose and issue additional regulations to timely address emerging market issues, enhance transparency of information, and better protect insurance participants, such as standardizing certain insurance contract provisions to ensure the rights of insurance participants; supplementing regulations to strengthen the responsibility of insurance companies during the process of advisory and contract conclusion, ensuring transparency and providing citizens with accurate, sufficient, and clear information about insurance products to make voluntary and suitable choices…
Furthermore, the Ministry has introduced provisions to prevent the practice of “forcing” purchase of insurance through banks or providing incorrect advice regarding investment-linked insurance products.
During the parliamentary session, Deputy Nguyen Hai Dung from Nam Dinh province requested that the Minister of Finance provide information on the implementation of inspections on life insurance companies in 2023 regarding insurance sales through credit organizations and branches of foreign banks. He also inquired about the inspection plan for 2024 and whether the inspection is associated with monitoring the results after the inspection.
Meanwhile, Deputy Pham Van Thinh from Bac Giang province stated that the results of the first inspection phase on four insurance companies selling insurance through banks, announced by the Ministry of Finance in July 2023, showed that out of the total insurance revenue sold through commercial banks, only about 15,000 billion VND was counted until December 31, 2021. However, there are some companies with up to 70% of customers cancelling their policies after the first premium payment, which is usually paid for one or two years. The deputy requested that the Minister of Finance assess this issue and take appropriate actions regarding the responsibility of related organizations in response to the inspection results. Are there any signs of legal violations that have caused significant harm to a large number of customers who cancelled their contracts? Furthermore, what measures does the Ministry of Finance have to ensure that insurance companies do not commit similar violations in the future, especially in the context of prohibited actions related to the sale of non-compulsory insurance products associated with the provision of banking products and services in all forms?
In response to the questions from the deputies, Minister of Finance Ho Duc Phoc stated that there used to be a situation where commercial banks and their employees provided loans to people for purchasing insurance and received significant benefits. Therefore, when companies acquired the loans, they would cancel the policies and not make further premium payments for subsequent years. In response to this, the Ministry of Finance has collaborated with the inspection and examination agencies of the banks to ensure that the advisory process is recorded fully for inspection and examination purposes.
Deputy Nguyen Thi Viet Nga from Hai Duong province emphasized the need for comprehensive and extensive inspections of life insurance companies to better manage the industry in the future. Minister of Finance Ho Duc Phoc also stated that the Ministry has carried out inspections on 10 insurance companies, and in the coming year, it will continue to inspect 7 insurance companies. This means that all insurance companies will be inspected. However, beyond planned inspections to rectify weaknesses and violations, the Ministry will also conduct surprise inspections based on complaint letters and reports from insurance participants to rectify and protect the rights of insurance participants, and promptly deal with any wrongdoings to ensure equal and law-abiding operations in the insurance market, Minister of Finance Ho Duc Phoc emphasized.
