New Points in the Amended Law on Insurance Business

Law Amending and Supplementing Certain Provisions of the Law on Insurance Business (Law on Insurance Business), has been passed by the National Assembly with many new contents compared to the draft submitted to the National Assembly.

There is no internal sector insurance dominance

Article 10, the Law Amending and Supplementing the Law on Insurance Business provides regulations on cooperation, competition, and bidding in insurance business. The Law, passed by the National Assembly, clearly outlines the principles in cooperation, competition, and bidding as follows: enterprises are allowed to cooperate in the fields of reinsurance, co-insurance, loss assessment, handling insurance benefits, prevention and limitation of losses, development of human resources, product development, training and management of insurance agents, and information sharing for risk management.

In addition, enterprises can compete in terms of conditions, scope, and level of insurance liability. Bidding must be conducted in accordance with the legal regulations on bidding but must also comply with the provisions of this law regarding insurance products, service quality, insurance capacity, and financial capability.

Before the Law was passed, some National Assembly delegates (NADs) suggested researching and designing a separate article on prohibitions in insurance business activities, especially prohibiting internal sector insurance within groups and corporations.

However, Article 10 of the current Law on Insurance Business already specifies the prohibitions on cooperation and competition in insurance business activities. Besides the general regulations in related laws, these prohibitions cover acts of unfair competition through market closure and division in the insurance sector.

Therefore, insurance enterprises with support from groups through capital contribution can still exist while ensuring principles of competition in the market.

The Government of Vietnam specifically regulates the activities of the Insurance Buyer Protection Fund

The National Assembly agreed to establish the Insurance Buyer Protection Fund as many NADs believed that such a fund is a way to ensure safety and protect the rights of insurance participants in case the insurer faces financial difficulties or insolvency. The Insurance Buyer Protection Fund is deducted from the premiums of insurance business enterprises.

According to the National Assembly Standing Committee, studying the experience of some countries shows that regulations on the source formation, contribution rate, management, and use of the Insurance Buyer Protection Fund vary depending on the development of the insurance market and the requirements of each country. Some countries have regulations, others do not set a contribution ceiling.

Therefore, Clause 3 of Article 97 of the Draft Law has been amended to outline the principles concerning the purpose of establishing the Fund, the source of deduction, and assigning the Government of Vietnam to provide specific guidelines on deduction, management, and use of the Fund.

The amended and supplemented law also adds cooperatives to the types of enterprises allowed to conduct insurance business. These are collective economic organizations with legal status and operate like a type of enterprise.

In practice, many large-scale cooperatives already meet the conditions for conducting insurance business as per regulations, such as capital requirements, financial capacity, solvency, operational management, risk management, and professional skills.

Training institutions granted insurance agent certificates

According to the Draft Law submitted to the National Assembly, the Ministry of Finance regulates the curriculum, content, form of training, and issuance of insurance agent certificates. However, some opinions suggest keeping the current regulation, which specifies that insurance agent certificates are issued by the insurer or the Insurance Association.

According to the National Assembly Standing Committee, in recent times, many insurance agents have not undergone training or the training quality has not been ensured, causing damage to insurance participants, reducing business efficiency, and the reputation of the insurer. The Insurance Association lacks the conditions in terms of facilities and personnel to train insurance agents, and competent state agencies have not performed well in inspection and supervision.

Therefore, to gradually enhance the quality of insurance agent activities, the Draft Law amends the regulation by assigning the issuance of insurance agent certificates to training institutions approved by the Ministry of Finance, with the Ministry of Finance strengthening inspection and supervision; and also amending Clause 3, Article 127 regarding the renewal of insurance agent certificates to suit whether to renew the certificate depending on the request of the agent or the insurer.

Source: Dong Hai - Cafef.vn

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