On November 18th, the National Assembly continued its 10th session, engaging in a plenary discussion on the draft amendments to the Insurance Business Law.
Delegate Ha Sy Huan participating in the plenary discussion. Photo: Pham Thang
During the discussion, Delegate Ha Sy Huan (Thai Nguyen delegation) raised concerns about the regulation of insurance sales through banks. Circular 34, issued by the State Bank on June 30, 2024, mandates that commercial banks and foreign bank branches conduct insurance agency activities in compliance with the Insurance Business Law and its guiding documents.
However, Delegate Huan highlighted persistent issues of customers being pressured to purchase insurance when taking out loans. He proposed that the amended law should place insurance sales through banks within a stringent legal framework, ensuring robust supervision and penalties to protect the rights and legitimate interests of policyholders.
The delegate from Thai Nguyen also advocated for clear regulations distinguishing between insurance advisory services and banking activities such as lending and capital mobilization, with an absolute ban on coercive insurance sales during loan applications. Additionally, he called for stronger penalties against banks and insurance companies that violate advisory principles.
Speaking at the session, Delegate Nguyen Huu Thong (Lam Dong delegation) addressed the draft law’s provision allowing individuals acting as life insurance agents for one company to simultaneously distribute health and non-life insurance products from another. He expressed concerns that this cross-selling mechanism, given the current inadequacies in agent supervision, could lead to conflicts of interest.
Delegate Thong noted ongoing public complaints about mis-selling and coercive insurance practices through banks and agents. He warned that expanding cross-selling without enhancing legal requirements and control mechanisms would likely exacerbate these issues. He urged the drafting agency to implement stricter binding mechanisms if cross-selling is to be permitted.
Minister Nguyen Van Thang addressing the National Assembly’s concerns. Photo: Pham Thang
In response, Minister of Finance Nguyen Van Thang acknowledged instances of bank employees misleading customers by conflating insurance products with banking services. He emphasized that the Credit Institutions Law explicitly prohibits linking non-mandatory insurance sales to the provision of banking products or services.
Minister Thang also reiterated that the Insurance Business Law strictly forbids threats or coercion in insurance contracts. Furthermore, regulatory guidelines mandate rigorous advisory practices, including audio recording, to enhance agent quality.
He assured that the Ministry of Finance would continue inspections and sanctions against violations in insurance business activities, and would propose additional regulations to curb such practices.
