Amending the Insurance Law: A Necessary Step to Breathe New Life into the Market

VTV.vn - Amending the Law on Insurance Business aims to reduce costs, make operations transparent and protect people's rights, creating a foundation for sustainable development for the market.

Insurance market "transforms": Reducing bottlenecks, focusing on handling urgent requests

Since the beginning of 2025, the Vietnamese insurance market has recorded many positive signs, with non-life insurance premium revenue increasing by more than 10% in 9 months. The digitalization process continues to be promoted through services such as online claim declaration and loss assessment via mobile applications. Many insurance companies are accelerating digital transformation to improve customer experience and business processes.

However, the market's transformation is still hindered by long-standing bottlenecks such as high compliance costs, complicated procedures, while the mechanism for monitoring insurance distribution activities through banks is not really effective. The Ministry of Finance and many experts believe that these are issues that need to be addressed immediately, especially when the bancassurance channel continues to expand rapidly in both scale and influence.

Many insurance companies are accelerating digital transformation.

In that context, the draft law amendment submitted by the Ministry of Finance this time does not expand the scope of regulation but focuses on resolving urgent problems, aiming to reduce business conditions, simplify administrative procedures and remove difficulties for businesses. Notably, the draft has reduced 31% of business conditions, including abolishing 22 conditions and simplifying 3 administrative procedures.

Along with shortening the time for handling procedures, the draft also adjusts regulations related to distribution, administration and capital contribution activities to increase transparency, while enhancing supervisory responsibilities, thereby better protecting the interests of insurance participants. Focusing on handling "urgent bottlenecks" is expected to create momentum for the market to develop more stably and sustainably, while encouraging businesses to innovate products and improve competitiveness in the period when the market enters a new growth cycle.

Blind spots that need to be overcome: Transparency, trust and market governance

Despite recording positive growth, the Vietnamese insurance market still has many persistent "blind spots", directly affecting consumer confidence and development quality.

According to Dr. Can Van Luc, Chief Economist of BIDV , Member of the National Financial and Monetary Policy Advisory Council, the limitations mainly focus on four core groups of issues. The biggest barrier to expanding insurance coverage is the limitation of transparency in product consultation and design. Many products still contain too many confusing exclusion clauses, causing customers to lack full information about their rights and obligations, leading to disputes when an insurance event occurs.

Some insurance companies still focus their investment portfolios on safe channels such as government bonds, failing to fully play their role as long-term investors in the economy .

In addition to the issue of transparency, operating and exploitation costs remain high, especially agent commissions and management costs of insurance companies. This cost level not only puts pressure on the profits of insurance companies but also indirectly affects the premiums that people have to pay. In addition, many insurance companies still lack professionalism in risk management and their investment capacity is not commensurate. Some companies still focus their investment portfolio on safe channels such as government bonds, not fully promoting their role as long-term investors of the economy. This situation becomes more serious when the compensation process in many places is still slow and complicated. Despite promoting digitalization, many customers reflect that the required documents are still cumbersome and the processing time is long, thereby giving rise to doubts about the payment commitment of insurance companies.

In particular, in that context, the bancassurance channel, although growing strongly with a group of banks' insurance income increasing by 22.2% in the first 9 months of 2025, still has many potential risks. This growth momentum, reflecting the recovery after the standardization period, is accompanied by reports that customers are "suggested" or pressured to buy insurance when borrowing capital. Therefore, the draft revised law proposes to control conflicts of interest, absolutely prohibit forced insurance purchases, separate consulting and credit activities and increase transparency of fees, benefits and exclusion clauses. Experts warn that if cross-selling expansion is not closely monitored, the risk of "high commissions - biased advice" will return, causing consequences not only for insurance companies but also for the banking system.

In a broader view, amending the law is not only of technical significance but also has far-reaching socio-economic impacts. Reduced business costs will encourage businesses to develop new products, making the market more competitive. A transparent legal framework strengthens people's trust and expands coverage of life and non-life insurance. When operating effectively, insurance becomes an "economic shield" that helps reduce the budget burden when disasters, natural disasters or economic fluctuations occur.

However, the implementation process still faces many challenges such as risk monitoring while reducing business conditions; controlling forced insurance purchases at banks; and the lack of understanding of people's rights, requiring financial communication and education to be strengthened.

All these factors show that the Vietnamese insurance market is entering an important transition period, shifting from growth rate to service quality and customer trust. If completed in the right direction, the draft amended Law will create a solid foundation for the sustainable development of the industry in the coming years./.

Source: https://vtv.vn/sua-luat-bao-hiem-buoc-tien-can-thiet-thoi-luong-sinh-khi-moi-cho-thi-truong-1002511191700089.htm