Will inspect insurance sales through credit institutions and foreign bank branches

Minister of Finance Ho Duc Phoc reported on a number of contents related to the group of questions at the 31st Session of the National Assembly Standing Committee.

The Ministry of Finance has advised on issuing additional regulations to prevent the situation of "forcing" people to buy insurance through banks .

In 2024, the Ministry of Finance plans to inspect 6 insurance companies, including inspecting the implementation of insurance sales through credit institutions and foreign bank branches for 2 life insurance companies.

The above information was stated by Minister of Finance Ho Duc Phoc in a report on a number of contents related to the group of questions at the 31st Session of the National Assembly Standing Committee.

As reported by Investment Electronic Newspaper - Baodautu.vn, the questioning activity will take place on March 18.

Must record the consultation process

Management and supervision of insurance business activities and service activities in the field of life insurance business is one of the groups of issues that the Minister of Finance will answer.

Reporting on this content, the Minister said that by the end of 2023, insurance companies had reinvested an estimated total of VND 762,580 billion into the economy and paid out an estimated VND 86,376 billion in insurance benefits. The total assets of insurance companies are estimated at VND 913,308 billion, an increase of 11.12% compared to 2022.

Although still very young compared to the hundreds of years of history of the world insurance market, the Vietnamese insurance market has experienced more than a quarter of a century with high and relatively stable growth. The growth rate of this market averages 20%/year, basically completing the goals set out in the Insurance Market Development Strategy for the period 2011 - 2020, the Minister assessed.

However, according to the head of the financial sector, due to rapid development, in recent times, the insurance market, especially life insurance, has encountered a number of problems regarding the quality of consulting activities, as well as customer care services and insurance benefits settlement for customers.

Along with that, if in the past, the market only had traditional agency channels, in recent times, many other distribution channels have been formed, namely organizational agents, typically the distribution channel through banks (Bancassurance).

“Bancassurance helps diversify insurance operations, but also creates more complexity and we need to review and rectify them to operate in the right direction and healthily,” the Minister acknowledged.

Mr. Phoc said that through the reflection of the press, public opinion, as well as management and supervision work, under the strong direction of the Government, in recent times, the Ministry of Finance has strengthened many solutions to rectify negative aspects and deviations in the implementation of insurance product exploitation activities in the life insurance market in general and the bancassurance channel in particular.

Specifically, the Ministry of Finance has researched to submit to competent authorities to issue and promulgate additional legal regulations to promptly adjust emerging market issues, increase information transparency and better protect insurance participants.

For example, standardizing some regulations on insurance contracts to ensure the rights of insurance participants;

Supplementing regulations to enhance the responsibility of insurance companies in the process of consulting and concluding insurance contracts, ensuring transparency, people are properly consulted, have sufficient and clear information about insurance products, so that they can choose insurance products on a voluntary basis and in accordance with their needs;

Supplementing regulations to prevent the situation of "forcing" to buy insurance through banks or incorrect advice on investment-linked insurance products such as:

Credit institutions operating as agents must clearly explain to customers that insurance products are not products of the credit institution. Participation in insurance is not a mandatory condition for using other products and services of credit institutions operating as agents.

Credit institutions that conduct insurance agency activities are not allowed to advise, introduce, offer, or arrange the conclusion of investment-linked insurance contracts for customers within 60 days before and 60 days after the date of disbursement of the entire loan, in order to avoid the situation where bank employees use their right to review and approve loans to pressure borrowers to purchase insurance.

For investment-linked insurance products, insurance agents or employees of insurance agency organizations must record the consultation process, including confirmation from the customer that the insurance participation is voluntary and in accordance with financial needs. Insurance companies are not allowed to issue contracts in cases where the recording does not include confirmation from the insurance buyer that the insurance participation is voluntary.

Transfer information to the State Bank for coordinated processing.

Regarding management and supervision, according to the report, the Ministry of Finance has issued many official dispatches requesting insurance companies to rectify insurance sales activities through banks, strengthen inspection and supervision of the implementation of insurance agency contracts with banks, and strictly comply with the provisions of the Law on Insurance Business regarding not forcing organizations and individuals to buy insurance in any form.

The Ministry of Finance has held a meeting with all life insurance companies and requested insurance companies to comprehensively review and strengthen supervision of the implementation of business processes and quality management of agents and employees of credit institutions' agents, increase sanctions on agents and strictly handle violations.

Require insurance companies to establish and publicize hotlines and permanent departments with competent staff to receive, respond to, and promptly and thoroughly handle customer complaints/questions about insurance contracts. For companies with many complaints and recommendations from customers, the Ministry of Finance will work directly with insurance companies to request reviews, reports, and solutions to thoroughly handle customer complaints.

At the same time, to enhance the effectiveness and efficiency of management and supervision of insurance sales activities through banks, in the past, regarding information reflected through the hotline about being forced to buy insurance when disbursing loans, the Ministry of Finance has transferred information to the State Bank Inspection and Supervision Agency for coordination in management and supervision.

In 2022 and 2023, the Ministry of Finance conducted inspections and examinations of 10/17 life insurance companies that sold insurance through credit institutions and foreign bank branches (with premium revenue exploited through the bancassurance channel accounting for 96.83% of total premium revenue exploited through the bancassurance channel of the entire life insurance market).

Through inspection, violations were discovered through the bancassurance channel: Violations in the issuance of procedures and regulations, violations in compliance with product fee schedules, insurance agents not complying with Company regulations and legal regulations.

Proposed financial handling of the total amount of VND 21,000 billion, of which VND 1,955.997 billion is excluded from deductible expenses when determining taxable income for corporate income tax in 2021 and 2022.

Administrative sanctions against 2 insurance companies, fined 310 million VND.

In addition, additional penalties are applied to suspend the signing of new insurance contracts through credit institutions and foreign bank branches for a limited period of time; Remedial measures: Restore the original status of the violation.

In 2024, according to the approved plan, the Ministry of Finance plans to inspect 6 insurance companies. In particular, it will inspect the implementation of insurance sales through credit institutions and foreign bank branches for 02 life insurance companies (Mirae Asset Prévoir Life Insurance Company Limited, Cathay Life Vietnam Insurance Company Limited), the Minister added.

Source