Restoring confidence in the life insurance market

"Single loss, double loss"

With the nature of a humane product, life insurance is currently provided by insurance companies to protect customers' finances against risks related to health, body and life, so life insurance is of interest to and used by many people. Currently, there are two main types of life insurance: traditional life insurance, purely for the purpose of insurance, and the second is linked life insurance, combined with investment channels with different levels of risk such as government bonds, savings or stocks.

In 2021, Ms. TH ( Hue City) needed to borrow a real estate investment credit package. She was invited by a bank employee to buy a Sun Life life insurance product, which would be convenient for loan approval. Believing the consultant's words without carefully researching, Ms. H. signed a contract to buy an insurance package with a fee of 25 million VND/year. After more than 1 year of paying fees, recently, seeing many "scandals" about life insurance, Ms. H. took out the contract to review and "didn't expect to participate in an investment insurance product".

“After consulting with the consultant, I realized that I made a mistake in choosing an investment package instead of a traditional insurance package for better protection. Considering my finances, I decided to stop the contract because I could no longer afford to pay, even though I knew that the premium of more than 30 million VND that I had paid could be lost,” Ms. H. said sadly.

A real estate business owner said he had to buy 5 different life insurance products worth hundreds of millions of dong from banks to get a loan approval during the real estate “freeze” period, even though he had no need for it because he had previously purchased a life insurance package for his family from the insurance company. “Currently, I have abandoned these 5 contracts, considering them as fees to get loans from banks to cope with difficulties,” he said.

According to the Department of Insurance Management and Supervision of the Ministry of Finance , in Vietnam, after nearly 30 years of formation and development, the life insurance market has now had 19 participating enterprises, providing more than 500 life insurance and health insurance products. Currently, the insurance market has a growth rate of about 15%/year, in which, in the period of 2018-2022, the growth rate is quite high, averaging about 21%. To date, more than 10% of the population participates in purchasing life insurance.

Thua Thien Hue currently has more than 10 life insurance companies operating. According to the assessment of the leader of a reputable life insurance company in Hue, compared to other provinces and cities in the country, the life insurance market in Hue is still too small, and people's awareness of actively participating in insurance is still very low. If we compare the numbers, the number of customers participating in life insurance in Da Nang City is about 5 times higher and in Can Tho City is 3-4 times higher than in Thua Thien Hue Province.

Market transparency

With more than 20 years of experience working in the insurance industry, Ms. Hoang Thi My Hang, Head of Sales Department of Dai-ichi Life Hue Office frankly said: For a long time, in addition to customers who have a real need to participate in life insurance, they will have a certain understanding of the product, many other customers are quite subjective. The bad thing about many customers is that they buy based on trust, buy because of trust, trust the consultant (TVV) instead of learning and buying according to their needs.

Currently, before practicing, all TVVs are granted insurance business certificates and codes by the Ministry of Finance, insurance companies grant product training certificates, and TVVs regularly participate in training.

“In reality, most consultants “avoid” talking about the disadvantages and only emphasize the advantages of the contract. This may be due to new consultants or part-time consultants (working part-time), who do not fully understand the terms and conditions, and are afraid that customers will find fault and lose the contract. There are also some consultants who deliberately “show off the good and hide the bad”, with the aim of signing as many contracts as possible. Therefore, when deciding to participate in purchasing life insurance products, customers should choose a professional and reputable consultant as well as need to understand the basic terms and carefully study the rights and obligations when participating in the insurance contract. If you do not understand and are not sure, you do not necessarily have to participate in investment-linked insurance products,” Ms. Hang advised.

Mr. Tran Cao Vinh Ngoc, Deputy Director of SHB Hue Bank Branch said: Currently, only Development Bank and Social Policy Bank do not sign cooperation agreements with insurance companies, while most banks cooperate with insurance companies in distributing life insurance products through banking channels.

“For SHB, selling life insurance is just an additional business channel that brings revenue to the bank but is not the focus, does not impose the bank's interests above the interests of customers, so there are no cases of wrongdoing for profit. SHB Hue also does not impose targets on TVV. If TVV, due to sales pressure, does not bring benefits to customers, customers will leave the bank. At that time, the bank's loss will be greater than the profit from insurance.

During the consultation process, the Head Office also requires the insurance company to call back to confirm that 100% of the customer will participate before successfully signing the contract. Therefore, for a long time, the Hue market has had almost no complaints or lawsuits about life insurance", the Deputy Director of SHB Hue informed.

A leader of a commercial bank said that the life insurance contract is up to hundreds of pages, the bank's consultant will summarize the main points in 5-7 pages about the benefits the customer is entitled to, how much money to pay, what the income is, how much fees are... These terms are explained in detail to the customer and currently the State Bank requires that when consulting, there is a recording of the exchange between the customer and the consultant, in order to limit the consultant from "saying whatever he wants" but must advise according to the regulations of the product, the insurance company as well as the bank.

At the same time, to enhance market transparency and ensure the rights of insurance participants, in the coming time, the Ministry of Finance plans to continue to improve the business policy mechanism; including researching and supplementing regulations to improve the quality of insurance agents, having separate regulations on implementing insurance sales through banks; enhancing the responsibility of insurance enterprises in supervising the consulting activities of agents; and making information on insurance contracts transparent.

Source