“Complex and Overwhelming Insurance Policies Pose Risks to Policyholders”

On the morning of October 13th, the 50th session of the National Assembly Standing Committee continued, providing 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 agrees with the necessity of amending and supplementing several articles of the Insurance Business Law. These changes aim to reduce business conditions, simplify administrative procedures, resolve bottlenecks, and enhance decentralization and delegation of authority. However, regarding the scope of amendments, the Standing Committee of the 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 questioned whether the Ministry of Finance would continue to propose a comprehensive revision of the Law. Currently, important content such as Chapter VI on state management, detailed regulations on administrative procedures, and dossiers have not been proposed for amendment this time, failing to fully implement the National Assembly’s directive to regulate only matters within its jurisdiction without excessive detail.

The Standing Committee of the Committee on Laws and Justice also highlighted the proposal to replace the term “specialized inspection” with “specialized examination” in the draft Law. While this change aligns with the new Inspection Law, Deputy Chair Nguyen Phuong Thuy emphasized the need to clarify principles and implementation methods. She expressed 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 implementation methods, legal consequences, and executing entities. Therefore, a mechanical conversion may not be appropriate, and the Committee on Laws and Justice requested 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 raised 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 more accessible for citizens to understand, study, and implement. This is particularly important as comparing the amended versions with the old Law is currently very challenging. Additionally, the lead drafting agency should clarify the urgency of adopting the Law under expedited procedures at the upcoming session, given that the National Assembly has several other laws requiring amendment.

Head of the Committee on Deputies’ Affairs Nguyen Thanh Hai requested the government to thoroughly review the content, ensuring clear and understandable language (e.g., the term “non-life insurance”). She also pointed out that sample insurance contracts are often overly lengthy and difficult to comprehend, posing risks for policyholders. She stressed the need to ensure that citizens receive thorough and complete explanations of the terms, conditions, and risks in the contract before signing, to avoid situations where “premiums are paid in full, but claims are extremely difficult to process” due to complex procedures and unclear conditions.

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