Support development of insurance market both quantity and quality: Minister of Finance

VCN – Minister of Finance Ho Duc Phoc said that although the insurance market has achieved rapid growth in the “quantity”, the service quality has not yet developed commensurately.
Effectively control the insurance business Effectively control the insurance business
Strengthening management and risk identification in insurance business Strengthening management and risk identification in insurance business
Support development of insurance market both quantity and quality: Minister of Finance
Minister of Finance Ho Duc Phoc speaks with the press about the situation of the insurance market.

Through the press and public opinion, it is shown that the service quality of insurance companies still has many problems that voice concern for customers when buying insurance. Could you assess this situation?

Vietnam's insurance market has experienced over a quarter of a century with high and relatively stable growth. Products and service quality are improved to meet the diverse needs of policyholders.

Minister of Finance Ho Duc Phoc: Harmonizing benefits and sharing risks

“In order to achieve the goal of quality and sustainable development, it is not possible to change in the short term but it needs to improve step by step. In the near future, Vietnam's insurance market will give priority to the development of this market. However, to "harmonize benefits and share risks", it needs comprehensive solutions from both regulatory agencies, and coordination of both insurers, commercial banks, Vietnam Insurance Association and policyholders”.

However, we admit that during the rapid growth in “quantity”, the service quality has not yet developed commensurately. Notably, the insurance market, especially life insurance, has occurred some problems related to the quality of consulting activities and the care and settlement of insurance benefits for customers. Moreover, the market has added many other distribution channels, typically bancassurance, which helps diversify insurance operations, but also creates more complexity in recent times.

In fact, many insurance companies only focus on training insurance brokers towards selling products and training sales skills rather than economic knowledge, specialized knowledge, and professional ethics. On the other hand, some companies pay more attention to the revenue and profit earned from the customs brokers rather than the control and supervision of the service quality. On the other hand, many customers need to study carefully and have a gullible mentality when signing insurance contracts, affecting the overall development quality of the insurance market.

What are measures taken by the Ministry of Finance and competent authorities to rectify this issue?

Currently, the legal framework, mechanisms and management policies for the insurance market are increasingly being improved, supporting the development of the market, and contributing to promoting international economic integration and cooperation. However, the concerns raised by the public affecting the actual role and nature and humanity of insurance, the market must be improved strongly. Insurance companies need to raise awareness, review and provide solutions to improve the quality of brokers. On the side of the state management agency, we will strictly handle the insurance companies that make mistakes.

Through reflections from the press, public opinion as well as management and supervision, the Ministry of Finance has strengthened many solutions to remove obstacles in the exploitation of insurance products and bancassurance.

The Ministry of Finance and the State Bank of Vietnam have worked and issued documents to rectify commercial banks, requested insurance enterprises to strictly comply with the law, and prohibited acts of forcing customers to buy insurance in any form.

The Ministry of Finance directed the Department for Insurance Management and Supervision to strengthen the management and supervision of this activity; closely coordinated with the State Bank's authorities to ensure the parallel management between commercial banks and insurance enterprises.

Could you tell us about the fundamental and long-term solutions for the life insurance market and the Vietnamese insurance market to develop more effectively and sustainably?

Vietnam's insurance market is still in the early stages of development, so we need to perform and improve to achieve the goal of the Insurance Market Development Strategy until 2023.

To achieve the goal, the insurance market still faces challenges that need to be improved and commensurate with Vietnam's potential and advantages such as human quality, market database, and IT application, strengthening of risk management and transparency of insurers. In the coming years, in addition to fundamental factors such as economic growth, population size, technology development trends, etc. the legal framework is expected to support the further development of the insurance market in terms of both "quantity" and "quality".

The regulatory agency will continue to improve mechanisms and policies related to insurance products, and publicize and provide transparent information about products and insurance companies so that people can easily access information and select appropriate products. On the other hand, the management agency will request to review and strengthen the inspection and supervision of the operation of insurance enterprises and strictly handle violations of insurance brokers (if any).

In addition to promoting information and raising awareness about insurance, customers need to understand their rights and obligations when participating in an insurance contract to protect themselves and reduce arising disputes.

By the end of April, insurance companies have invested VND708.4 trillion into the economy, a year-on-year increase of 14.41%. The total premium revenue in the first four months of 2023 is estimated at VND75.3 trillion, of which insurance companies pay insurance benefits estimated at VND23.5 trillion, up 20.71% compared with the same period in the previous year.

Thank Minister!

By Hong Diu/Ngoc Loan

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