People are forced to buy insurance through banks, what does the Minister of Finance say?

Delegates reported that many people were given misleading insurance advice and forced to buy insurance through banks and agents. The Minister of Finance said he would continue to inspect and strictly handle violations.

On the morning of November 18, continuing the program of the 10th session of the 15th National Assembly , delegates discussed in the hall the draft law amending and supplementing a number of articles of the Law on Insurance Business .

Delegate Le Xuan Than, Khanh Hoa delegation

PHOTO: GIA HAN

The insurance contract is very long and “extremely confusing”

Delegate Nguyen Huu Thong ( Lam Dong delegation) mentioned the draft allowing individuals who are insurance agents of life insurance companies to be agents distributing health insurance and non-life insurance products of other insurance companies and vice versa. At the same time, expanding the mechanism of cross-selling products.

Mr. Thong said that, in the current condition that the monitoring system for insurance agency activities still has many shortcomings, the above regulation has a great potential risk of conflict of interest.

According to him, an agent is an authorized representative of an insurance company; when representing many companies at the same time, they can be influenced by commission levels and preferential policies, thereby no longer fully ensuring the obligation to prioritize the interests of the insurance buyer.

Practice also shows that many people have reported being given misleading advice and being forced to buy insurance through banks and agents.

“If we expand cross-selling without strengthening legal requirements and control mechanisms, it will be difficult to overcome this situation,” he said.

The delegate suggested that there should be a tighter binding mechanism, clearly stipulating the number of businesses that an individual agent is allowed to represent (for example, no more than two businesses, including one life, one non-life or health).

Along with that is the requirement that agents must publicly inform customers which businesses they are agents of, what the commission difference is; the obligation to provide honest advice, prioritize customer interests, along with strong sanctions for violations...

Delegate Le Xuan Than (Khanh Hoa delegation) also reflected that when buying insurance, people often approach it from many angles and many different insurance regulations. Meanwhile, the insurance sales unit always gives an extremely long and difficult to understand contract. Many buyers just sign it, which eventually leads to disputes or damages.

To overcome this, Mr. Than proposed that the draft law regulate the content of each type of insurance contract, assign the Government to issue specific instructions for each type and have a contract model.

“Applying this will benefit insurance buyers,” Mr. Than commented, citing that when the National Assembly enacted the Law on Real Estate Business, it assigned the Government to develop a decree and a series of model contracts.

“The model contract is both concise and easy to understand, for both the insurance seller and the insurance buyer, and protects the buyer's rights,” the delegate said.

Minister of Finance Nguyen Van Thang

PHOTO: GIA HAN

The Ministry will inspect and strictly handle insurance violations.

Answering questions from many delegates about the cross-selling of insurance products through banks, Finance Minister Nguyen Van Thang admitted that recently, there has been a situation where bank employees have sold confusing products between insurance and banking products.

However, according to him, the Law on Credit Institutions clearly prohibits credit institutions, foreign branches, managers, employees, credit officers, and foreign bank branches from linking the sale of non-compulsory insurance products with the provision of banking products and services in any form.

At the same time, the Law on Insurance Business also strictly prohibits threats and coercion to enter into insurance business contracts. In addition, the Law on Insurance Business and its guiding documents also strictly regulate consulting and recording work to improve the quality of agents. "The Ministry of Finance has and will continue to conduct inspections, handle violations and submit to competent authorities to issue regulations to limit this situation," said Mr. Thang.

The Ministry of Finance also said that the draft law also expands the scope of operations of non-life insurance enterprises. Accordingly, non-life insurance enterprises are allowed to deploy non-life insurance and health insurance with a term of 1 year or less (this is short-term insurance, similar to the nature of non-life insurance), and at the same time deploy term insurance products with a term of 1 year or less.

In which, term insurance only covers death, not related to death risks mentioned in other insurance products.

"This is a simple and popular insurance product in many countries over the past 20 years and is an advanced regulation, creating more business opportunities for non-life insurance companies," Mr. Thang said.