Need to amend the Law on Insurance Business to ensure stable growth and integration

The Law on Insurance Business 2022 has contributed to promoting market development, but over time, there have been shortcomings that need to be amended to comply with policies, create a synchronous legal corridor, and promote sustainable growth in the insurance industry.

Guaranteed harmony and prudence

Law on Insurance Business No. 08/2022/QH15 (abbreviated as Law on Insurance Business) was passed by the 15th National Assembly of the Socialist Republic of Vietnam, 3rd session, on June 16, 2022, effective from January 1, 2023.

As a specialized law in the field of insurance business, the Law on Insurance Business has contributed to the timely institutionalization of the Party's policies and guidelines in the field of insurance business, serving the goal of socio -economic development and accelerating the cause of industrialization and modernization of the country.

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The Government and the Minister of Finance have issued eight legal documents detailing and guiding the implementation of the Law on Insurance Business.

This system of legal documents has: created a basic, complete and transparent legal framework; promoted a healthy and equal competitive environment among enterprises; ensured harmony between management, prudent supervision and created initiative in business activities of enterprises.

Basically, the Law on Insurance Business and its guiding documents have gradually approached international practices and standards, in line with the requirements of an economy operating under a market mechanism, contributing to the successful implementation of integration commitments in the field of insurance business and financial markets.

The construction and completion of the legal system on insurance business in recent times has gradually promoted the development of Vietnam's financial market.

After the Law on Insurance Business was promulgated, in the face of general economic difficulties, most indicators of the insurance market continued to maintain growth momentum.

It is expected that in 2025, the total assets of insurance enterprises will reach VND 1,067,825 billion (an increase of 29.86% compared to 2022), of which non-life insurance enterprises will reach VND 149,268 billion and life insurance enterprises will reach VND 918,557 billion. The average growth rate in the period 2022-2025 will reach about 9.75%.

The total amount of investment back into the economy is estimated at VND 895,954 billion (an increase of 31.66% compared to 2022), of which non-life insurance enterprises are estimated at VND 82,654 billion and life insurance enterprises are estimated at VND 813,300 billion. The average growth rate in the 2022-2025 period is about 10.28%.

According to the Ministry of Finance's forecast, total insurance premium revenue in 2025 is estimated at VND 239,636 billion (down 3.29% compared to 2022), of which non-life insurance enterprises are estimated at VND 85,938 billion, life insurance enterprises are estimated at VND 153,698 billion. The average growth rate in the 2022-2025 period decreased by about 0.91%.

Insurance benefit payments are estimated at VND 104,459 billion (up 55.44% compared to 2022), of which non-life insurance companies are estimated at VND 25,912 billion and life insurance companies are estimated at VND 78,547 billion. The average growth rate in the 2022-2025 period is about 18.18%.

Insurance companies have a nationwide customer service network with more than 1,000 branches, representative offices, nearly one million agents, providing more than 2,100 insurance products.

Enterprises create jobs for nearly 1 million people each year; major losses are paid promptly, helping customers quickly stabilize production and business; contributing to supporting social security policies and target programs, urgent tasks of the Government through agricultural insurance programs, fishery insurance...

The growth rate is slowing down

In addition to the achieved results, legal regulations on insurance business also have some shortcomings, not consistent with the Party and State's policies on economic growth, especially private economic development, as well as practical requirements for synchronization with other relevant legal documents.

The growth rate of Vietnam's insurance market is showing signs of slowing down, with the growth rate of key indicators in the 2022-2025 period reaching only around 10%.

Therefore, there needs to be a policy to increase the initiative in building and designing products of insurance companies to better meet the diverse needs of organizations and individuals in many economic activities and lives.

The move towards applying the risk-based capital model in the Law on Insurance Business 2022 has gradually approached international practices. Currently, the Ministry of Finance does not have the financial resources and human resources with sufficient experience and capacity to continue perfecting the risk-based capital model for the Vietnamese insurance market.

In addition, the Ministry of Finance is developing an information database to serve the management and supervision of the insurance market and build a risk-based capital model, expected to be implemented in the 2026-2030 period.

In addition, the current accounting regime of insurance companies mainly records according to book value, which is not in sync with the recording according to market value in the risk-based capital model. Therefore, the immediate implementation of the risk-based capital model in 2028 will face difficulties in terms of resources and information technology infrastructure.

According to Hong Kong's experience, in addition to more than 10 years of research and development, the management agency allows insurance companies 3 years of trial application to have time to prepare resources and upgrade information technology systems.

Legal documents related to the insurance sector such as the Law on Inspection, the Law on Handling of Administrative Violations, etc. have been amended and supplemented in recent times. Therefore, some provisions of the Law on Insurance Business are no longer consistent and synchronous with the new provisions in the above legal documents.

Based on the above political, legal and practical bases, the Ministry of Finance has reviewed and studied the contents of cutting and simplifying administrative procedures and business conditions, and at the same time removed difficulties and obstacles to propose to the Ministry to submit to the Government and the National Assembly to draft a Law amending and supplementing a number of articles of the Law on Insurance Business in 2025 according to shortened procedures.

Source: https://baodautu.vn/can-sua-luat-kinh-doanh-bao-hiem-de-bao-dam-tang-truong-on-dinh-va-hoi-nhap-d370407.html