Unprecedented changes are taking place in the insurance market.

The most extensive overhaul ever

The Ministry of Finance has just announced the conclusions of its 2022 thematic inspection of four life insurance companies. How will these inspection conclusions impact the overall market, in your assessment?

- Annually, the Insurance Supervision and Management Department will organize specialized inspection and audit teams to examine insurance companies in accordance with its state management functions.

This inspection is a thematic inspection of bancassurance business operations, part of the Ministry of Finance's inspection plan. The inspection focuses on the company's activities during the 2021 fiscal year, with consideration of related periods.

The impact of inspection and examination activities on the market is always very clear, a "filter" to help the market become healthier. The discovered problems are aimed at helping businesses improve and perfect their management and business activities, while helping to improve the quality of customer service, in accordance with changes in the law from 2022 when the new Law on Insurance Business and guiding documents come into effect.

The recently announced inspection conclusion has pointed out some shortcomings in the operations of the four companies and proposed specific solutions. This is not the result of just the four companies but the entire insurance industry can examine. The discovered loopholes are the key points that insurance companies have been proactively focusing on improving. Even insurance companies that have done well are trying to do better.

The insurance market is undergoing unprecedented changes (Figure 1). — Mr. Ngo Trung Dung - Vice President of Vietnam Insurance Association

+ So first of all, will the insurance company adjust and review its operations according to the "indications" of the inspection conclusion?

- Insurance companies have taken immediate action based on market developments, instead of just “sitting there” and waiting for conclusions from management. According to the quick reports of 4 companies, all insurance agents violating the inspection conclusions were handled immediately upon discovery, without waiting for the conclusion to be announced. Some companies have proactively worked with their banking partners to correct errors from the banks, including establishing an agency to manage customer behavior standards with members of both sides.

The recent period also witnessed the first time 100% of life insurance companies taking action together, reviewing, adjusting, improving business processes, and correcting existing problems...

The review and adjustment process will take place continuously as a strategy at insurance companies to promote a healthy market, improve the quality of all aspects, and ensure the highest benefits for customers.

We can see that the most extensive reform ever implemented by insurance companies has taken place. There is no room or time for sluggish businesses…

The key is in operation and execution.

+ Is there a solution that could bring about a breakthrough transformation for the insurance industry, especially given the reality that buyers are "panicked" by contracts that are both long and difficult to understand?

- This is a problem for global life insurers. In the world , life insurance contracts are always thick and have difficult-to-understand terms. In the US, contracts can be up to 100-200 pages; Singapore is more than 80 pages; Japan and Taiwan are nearly 100 pages. Vietnam and Thailand are about 80 pages and 75 pages respectively.

Fortunately, this problem is being addressed by insurance companies in Vietnam. Some companies have researched and launched a shortened contract of only a dozen pages with important information for customers to easily grasp. Electronic contracts with "digital insurance certificates" that do not need to be printed on paper are also being deployed.

When these adjustments are finalized and implemented, they will create a breakthrough for the insurance industry. Major, controversial barriers preventing customers from owning life insurance products that meet their needs will be removed. This will also align with the trend of digitalization in insurance companies.

+ And right now, when the market needs immediate solutions, what significant actions have been taken in practice, sir?

- A series of immediate actions have been implemented, creating positive signals for the life insurance market since its peak period, around March-April.

Within 24 hours of the disputes erupting, insurance companies reviewed the contracts of all customers with complaints, promptly offered appropriate solutions, and provided thorough "re-consultation and further explanation" on the information that customers questioned.

Complaint hotlines are widely publicized.

Enterprises also strive to eliminate "blind spots" in the quality of consulting of insurance agents by reviewing insurance agency contracts signed with organizations and individuals; controlling the activities of insurance agency organizations, ensuring compliance with the provisions of Clause 2, Article 125 of the Law on Insurance Business.

A series of training and knowledge-up activities for employees directly working at insurance agencies have been taking place. Businesses have also intensified their anonymous purchasing (mystery shopping) activities to assess the quality of advice.

On behalf of the Vietnam Life Insurance Association (IAV), we, along with insurance companies, have identified five solutions to quickly improve the quality of the life insurance market.

The insurance market is undergoing unprecedented changes (Figure 2). — A series of immediate and long-term actions were implemented.

+ Many actions have been taken, so in your opinion, what is the key point for the life insurance market to restore customer trust?

- The Law on Consumer Rights Protection, recently passed by the National Assembly on June 20, 2023, requires financial service providers, banks, and insurance companies to clearly explain the terms and conditions to customers. These requirements have already been stipulated in the Law on Insurance Business.

Looking deeper, before the Consumer Protection Law was passed by the National Assembly on June 20, in essence, consumers in Vietnam, like in any other country, when buying life insurance, were guaranteed their rights with transparency in the contract, in the terms, in all data provided as well as regulations on rights, financial obligations, profits received or cases of risk that must terminate the contract.

To put it simply, the key lies in the operational and monitoring aspects. The good news is that recently, many customers, after receiving thorough explanations, have understood the situation, stopped complaining, and abandoned their intention to terminate the contract.

+ Thank you!

Regarding the insurance hotspot at SCB bank, after a press conference announcing the situation and results of police work in the first 6 months of 2023, Major General Nguyen Van Thanh, Deputy Director of the Department of Police Investigation of Crimes of Corruption, Economy, and Smuggling - C03, Ministry of Public Security, said: Upon receiving the denunciation and through research, Department C03 found that the contracts for transferring from savings books to Manulife insurance packages were very transparent. All contracts had the signatures of investors. Therefore, Department C03 raised many issues that needed to be verified, such as: Did SCB leaders direct bank employees to propagate to customers to transfer from savings deposits to insurance packages? Did bank employees use "professional skills" to make people transfer contracts?...

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