Banks are prohibited from forcing customers to purchase insurance in any form.

Speaking to the press about the insurance market, Minister of Finance Ho Duc Phoc said that by the end of 2022, insurance companies had reinvested a total of 656 trillion VND into the economy and paid out over 64 trillion VND in insurance benefits.

However, Minister Ho Duc Phoc frankly admitted that while there has been rapid growth in "quantity," the "quality" has not developed proportionally. A prime example is the insurance market, particularly life insurance, which has recently faced several issues regarding the quality of consulting services, as well as customer care and claims settlement.

Minister of Finance Ho Duc Phoc

While previously the market relied solely on traditional agency channels, in recent times, many other distribution channels have emerged, including institutional agencies, most notably bancassurance. Bancassurance diversifies insurance sales activities but also creates greater complexity.

"Therefore, we must reassess and rectify the situation to ensure healthy and proper operation," the leader of the Ministry of Finance emphasized.

"Based on media coverage, public opinion, and management and supervision efforts, under the decisive direction of the Government, the Ministry of Finance has recently strengthened many solutions to rectify existing shortcomings in the implementation of insurance product sales in the life insurance market in general and the bancassurance channel in particular," Minister Ho Duc Phoc shared.

In fact, specialized regulatory agencies have recognized the emerging problems and are urgently taking action to bring about change. The Ministry of Finance and the State Bank of Vietnam have repeatedly worked together and issued documents to rectify the situation, requiring commercial banks and insurance companies to strictly comply with the law and prohibit any form of soliciting, enticing, or providing incomplete advice (or, colloquially, "coercing") customers to buy insurance.

Mr. Ho Duc Phoc stated: "Specifically with regard to the Ministry of Finance, we have directed the Insurance Management and Supervision Department to strengthen its management and supervision of this activity; and at the same time, closely coordinate with the relevant agencies of the State Bank of Vietnam to ensure parallel management from commercial banks and insurance companies."

Regarding legal improvements, many new regulations on insurance agents (including bancassurance) have been specified in a stricter and more comprehensive manner in the draft guiding documents for the amended Insurance Business Law. The Ministry of Finance has submitted these documents to the Government and expects them to be issued soon to rectify operations and enhance quality in order to protect the rights of customers in this distribution channel.

Furthermore, the Ministry of Finance leadership believes that some insurance agents operate with low quality. In reality, many insurance companies focus only on training agents to sell products, meaning the training is biased towards sales skills rather than emphasizing fundamental economic knowledge, specialized insurance knowledge, and professional ethics.

On the other hand, some businesses focus more on revenue and profit earned by dealers, neglecting to control and monitor the operations, quality of advice, and customer service provided by dealers.

Insurance agents often fail to meet standards and provide inadequate and unbiased advice, especially regarding investment-linked insurance products. Furthermore, many customers lack thorough research and are overly trusting or hesitant when signing insurance contracts, negatively impacting overall development. This is also a contributing factor to public dissatisfaction, diminishing the role, true nature, and humanitarian aspects of insurance.

"Therefore, the issue is that the market must undergo a drastic change. Insurance companies need to raise awareness, review their practices, and find solutions to improve the quality of their agents. On the part of the state management agency, we will rectify and strictly handle insurance companies that commit violations," Mr. Ho Duc Phoc pledged.

Six immediate actions must be taken by insurance companies following a meeting at the Ministry of Finance. The insurance regulatory body requested improvements in the assessment and issuance of insurance contracts; the assessment and issuance of insurance contracts must ensure they are consistent with the financial capacity and risk tolerance of the customer.

Source