“Complex and Overwhelming Insurance Policies Pose Risks to Policyholders”

On the morning of October 13th, continuing the 50th session, the Standing Committee of the National Assembly provided feedback on the draft Law amending and supplementing several articles of the Insurance Business Law.

Commenting on the draft Law, Deputy Chair of the Committee on Laws and Justice Nguyen Phuong Thuy stated that the Committee agreed with the necessity of amending and supplementing several articles of the Insurance Business Law to reduce business conditions, simplify administrative procedures, resolve obstacles, and enhance decentralization and authorization. However, regarding the scope of amendments, the Standing Committee on Laws and Justice expressed concerns about the government’s proposal to amend 24 out of 157 articles in the Insurance Business Law. Ms. Nguyen Phuong Thuy noted that while the amendments are necessary, it is unclear whether the Ministry of Finance will continue to propose a comprehensive revision of the Law. Currently, some critical content, such as Chapter VI on state management and detailed regulations on administrative procedures and dossiers, has not been proposed for amendment this time, failing to fully implement the National Assembly’s directive to regulate only matters within its authority without excessive detail.

The Standing Committee on Laws and Justice also drew particular attention to the proposal to replace the term “specialized inspection” with “specialized examination” in the draft law. While this change aligns with the new Inspection Law, according to Deputy Chair of the Committee on Laws and Justice Nguyen Phuong Thuy, it is necessary to clarify the principles and methods of implementation. There is concern that completely removing the content on specialized inspection from the Insurance Business Law would eliminate specialized inspection activities in this field. Additionally, inspection and examination are distinct activities with different methods, legal consequences, and implementing entities. Therefore, a mechanical conversion may not be appropriate. The Committee on Laws and Justice requests the government to provide detailed explanations on these issues.

Echoing Deputy Chair Nguyen Phuong Thuy’s viewpoint, Head of the Committee on Deputies’ Affairs Nguyen Thanh Hai expressed concerns about the length of the current Law (157 articles) and suggested that the drafting agency consider streamlining the number of articles to make it easier for citizens to access, study, and implement. This is particularly important as comparing the amended versions with the old law is currently very challenging. Simultaneously, the lead drafting agency should clarify the urgency and necessity of adopting the Law under expedited procedures at the upcoming session, given that the National Assembly has several other laws requiring amendments.

Head of the Committee on Deputies’ Affairs urged the government to thoroughly review the content, ensuring clear and understandable language (e.g., the term “non-life insurance”). Ms. Nguyen Thanh Hai highlighted the issue of overly lengthy and complex sample insurance contracts, which pose risks for policyholders. She emphasized the need to ensure that citizens receive thorough and detailed explanations of the terms, conditions, and risks in the contract before signing, to avoid situations where “premiums are paid in full, but claims are difficult to process” due to complicated procedures and unclear conditions.

Regarding the lengthy and complex insurance contracts and the lack of transparent consultation mentioned by Head of the Committee on Deputies’ Affairs Nguyen Thanh Hai, the Ministry of Finance acknowledged that, in practice, there are still cases where citizens express frustration due to being coerced into purchasing insurance through the banking system or receiving unclear advice, despite regulations requiring transparent and recorded consultation processes with detailed guidance minutes. “In response to this issue, the regulatory agency is strengthening oversight and control to minimize businesses exploiting mechanisms and policies to the detriment of citizens. We will further intensify inspection and supervision efforts,” emphasized the Deputy Minister of Finance. The Ministry of Finance will categorize and evaluate enterprises with frequent complaints to implement more stringent monitoring measures and will listen to feedback to improve policies.