Requesting the Ministry of Public Security to clarify the "ambiguities" of life insurance

On the morning of May 31, the National Assembly discussed in the hall the additional assessment of the results of the implementation of the socio-economic development plan and the state budget in 2022; the implementation of the socio -economic development plan and the state budget in the first months of 2023.

Giving her opinion, delegate Nguyen Thi Thuy ( Bac Kan delegation) - Vice Chairwoman of the National Assembly's Judicial Committee spoke about issues related to the recent noise in the insurance market.

Experts only understand 70% of the contract content.

According to delegate Thuy, life insurance is highly humane, helping people minimize losses and damages from risks related to life, health, illness and disease. However, after many lawsuits and customer complaints posted recently, public opinion cannot help but be skeptical.

“Many people rushed to check their contracts and were confused. Many people brought their contracts to the insurance company to ask but received completely different information than the consultant provided. Many people who had plans to buy life insurance temporarily put it on hold with high vigilance,” Ms. Thuy said.

Dialogue - Requesting the Ministry of Public Security to clarify the — Delegate Nguyen Thi Thuy speaks at the hall on the morning of May 31 (Photo: Quochoi.vn).

According to the female delegate, it is time to seriously review this issue so that the human values of life insurance are not affected by those who deliberately violate it for personal gain.

Second, regarding life insurance contracts, a contract usually has about 70-100 pages and is a complex financial product with many specialized terms. However, according to the Bac Kan delegation, the main disadvantage here lies with the buyer if they encounter unscrupulous consultants. Many experts said that they only understand about 70% of the contract content.

Furthermore, recent life insurance contracts are often in the form of investment links - meaning a portion of the customer's money is put into securities and bond funds by the companies, making it even more complicated.

“Many people share that no matter how carefully they read, they still do not understand the flexibility of insurance packages. They cannot understand how much of the money they have paid back if they terminate the contract after 3, 5, or 10 years,” said Ms. Thuy.

Vague, even misleading advice

Third, regarding the team of consultants, delegate Thuy said that this is the key step leading to many lawsuits in recent times. Many consultants clearly understand the nature of insurance contracts but intentionally give ambiguous or even incorrect advice to quickly sign the contract.

According to regulations, the maximum commission rate that consultants receive is up to 40% of the first year of the contract. Currently, insurance companies fluctuate between 30 - 40%.

"For example, if the contract has a payment of 100 million/year, right after the customer pays, the consultant will receive 30 - 40 million in the first year," Ms. Thuy informed.

Many consultants deliberately give misleading advice, making customers think they are participating in a highly profitable product that both protects their health and compensates them if something unfortunate happens. And when the contract ends, they receive the entire amount paid plus profits.

In reality, however, with some investment contracts, profits are just an expectation that depends entirely on the market. Even the insurance company that invests customers' money cannot be sure that this investment will generate profits.

“Many consultants only tell customers about the benefits they are entitled to without clearly stating the binding terms and the disadvantages of early liquidation, which can result in almost a total loss of the amount paid… This is the source of many frustrations in the past with the lack of transparency in consulting,” said Ms. Thuy.

Fourthly, regarding insurance companies and insurance agents, according to the Vietnam Insurance Association, in 2022, inspections discovered more than 3,100 cases of violations by insurance agents, including intentional misrepresentation of products.

Public opinion has raised the question, from recent incidents, whether or not insurance companies know but deliberately ignore the mistakes of consultants and agents, causing disadvantages to customers?

“When one side is a professional insurance company and the other side is an unprofessional buyer with an unqualified consultant, pushing all the responsibility onto the buyer is unreasonable and unreasonable,” Ms. Thuy emphasized.

According to the female delegate, Vietnam's life insurance participation rate is among the lowest in the world (11% of the population). While the Philippines is 38%, Malaysia 50%, Singapore 80%, the US 90%. To achieve such a high rate, there certainly is no situation of dishonest and transparent advice like in our country...

To improve the market, Ms. Thuy recommended that the Ministry of Finance conduct a comprehensive inspection of life insurance activities, focusing on investment-linked insurance.

Ms. Thuy also recommended that the Ministry of Public Security, from the complaints and public opinion, verify and clarify whether there is a crime of fraud or deception of customers, and if so, initiate an investigation. In addition, she recommended that insurance companies review all stages from contract design, consultation, signing and complaint settlement .

Source