After more than 20 years of formation and development, the Vietnamese insurance market has become an effective long-term capital mobilization channel for the economy, creating jobs and stable income for workers, and making a positive contribution to the national development efforts in various periods. The legal system on insurance business has been gradually perfected, creating a solid legal framework for insurers to conduct their business operations.
Article table of contents
During the past time, the Communist Party and the State have always been concerned and created favorable conditions to promote the development of the insurance market. The socio-economic development strategy for the period 2011-2020 has set the direction to "Modernize and expand high value-added services such as finance, banking, insurance, securities, logistics, and other business support services." The legal framework regulating insurance business activities has been and continues to be adjusted to meet the development requirements of the market, with many regulations standardized according to international practices. Legal regulations on organizational forms and operations have also created favorable conditions for insurers (DNBH) to establish and operate effectively.
To date, after more than 20 years of formation and development, the Vietnamese insurance market has continuously improved and grown, gradually demonstrating its role as a solid shield against risks, helping organizations and individuals quickly stabilize their operations and lives when facing risks. It has been an effective channel for mobilizing long-term capital for the economy, creating jobs, and providing stable income for workers, contributing positively to the country's construction efforts in each period.
Improving the Legal System in the Insurance Business Sector
The legal system for the insurance business has been gradually improved, creating a solid legal framework for insurers to conduct business. The specialized legal system on insurance has been reviewed, amended, and supplemented to fulfill Vietnam's international commitments in the insurance business sector. The revised Insurance Business Law of 2010 and implementing documents have removed barriers and discrimination against insurers with foreign investment, ensuring equality for insurers from all economic sectors participating in the market. This is reflected in the following aspects:
Firstly, amending, supplementing, replacing, or issuing new legal documents to simplify administrative procedures, align with market development, meet international standards, and fulfill international commitments.
During the 2011-2015 period, the legal system in the insurance business sector continued to be improved, creating a favorable legal environment and foundation for market development. A total of 37 legal documents (06 Decrees, 06 Prime Minister's Decisions, 25 Circulars of the Ministry of Finance) were reviewed, amended, supplemented, and newly issued, focusing on the following objectives: removing obstacles, helping and supporting insurers to grow efficiently; simplifying administrative procedures; enhancing corporate governance; ensuring healthy competition, financial safety, and protecting the interests of insurance product participants.
Secondly, unifying the institutional framework between the various laws and the Insurance Business Law, ensuring consistency and coherence.
During the 2011-2015 period, the Ministry of Finance reviewed and proposed to the Government of Vietnam and the National Assembly to amend inconsistent regulations related to management, supervision mechanisms, and unclear provisions, ensuring consistency, supervision management, supporting the insurance market, and protecting the interests of insurance participants. For example: removing the Insurance Contract Chapter (revised Civil Code); adding fraud crimes in the insurance business (revised Criminal Code of 2015); adding management and supervision fees for insurance activities (Law on Fees and Charges of 2015). To date, the above-mentioned laws and codes have been institutionalized in line with the Insurance Business Law, ensuring consistency and coherence within the legal system for the insurance business.
Thirdly, revising and supplementing current tax policies to support the insurance market, focusing on policies that encourage products aimed at economic and social security goals.
To encourage insurers to develop insurance products with social security goals and create opportunities for people to participate in necessary insurance products, the Ministry of Finance proposed that the Government of Vietnam and the National Assembly add many insurance services to the group of non-taxable goods in the Law amending and supplementing several Tax Laws No. 71/2014/QH13, such as health insurance, human-related insurance services, other agricultural insurance, marine insurance, essential fishing equipment insurance, and fisherman insurance.
Additionally, the Ministry of Finance also proposed that the Government of Vietnam and the National Assembly create preferential tax policies to encourage people to participate in voluntary retirement insurance, thereby having financial resources to ensure their own life in old age and reducing the state's burden on social welfare.
Requirements for Legal Perfection in the Insurance Business Sector for 2016-2020
In the coming years, Vietnam's insurance market has many development opportunities but also faces numerous challenges. While there are opportunities such as a large market potential, deeper international economic integration, and many foreign investors wanting to invest in Vietnam's insurance market, there remain significant challenges like Vietnam's economy not yet being entirely stable; increasing frequencies of disasters and natural calamities; numerous and unpredictable insurance risks, with increasing numbers posing adverse effects on the business activities of companies, including insurers. Therefore, the legal system for the insurance business needs to be revised, supplemented, and perfected to meet the requirements and demands of reality.
Commitments by the World Trade Organization (WTO) and the Trans-Pacific Partnership (TPP) in the insurance business sector are becoming more open, increasing competition between domestic insurers and foreign insurance organizations with superior experience and advantages. Meanwhile, the financial capacity of many domestic insurers is not yet really strong; management and operation technologies have not been modernized; the level of insurance staff is still limited and lacks practical experience; the professionalism of product distribution channels is uneven. Therefore, the legal system for the insurance business needs to be revised, supplemented, and perfected to maintain market stability and create a healthy competitive environment among insurers.
Besides the specialized legal system in the insurance business sector, the insurance market is also affected by the overall legal system. Changes in policies in related fields during different economic development stages significantly impact insurers' activities in a young market that is catching up with the international development trend. Some policies on financial management, tax, and investment do not really encourage businesses to purchase group insurance, life insurance, and retirement insurance for employees; there are no incentives for insurers to expand their business in remote areas or invest in social welfare insurance products.
Moreover, even within the current legal system for the insurance business, some regulations do not fully cover real development needs; for example, regulations on insurance commissions, investments, reinsurance, corporate governance. Therefore, the legal system needs to be perfected to ensure consistency and coherence across the legal documents.
Perspectives and Objectives for Perfecting the Legal System
In the coming period, perfecting the specialized legal system for the insurance business needs to be conducted based on the following perspectives and objectives:
Firstly, the legal framework regulating insurance business activities needs to be continually improved in alignment with the guidelines and perspectives of the Communist Party and the policies of the State in insurance business activities.
Secondly, amending, supplementing, or replacing documents should be oriented towards simplifying and reducing administrative procedures, aligning more closely with international standards, focusing on developing and perfecting regulations related to types of insurance encouraged by the State for social welfare purposes.
Thirdly, the specialized legal system for the insurance business must be coherent, clear, appropriate, consistent, and synchronized with the Constitution, existing codes, and laws; comply with international commitments and treaties that Vietnam has signed or is a member of.
Some Proposals for Perfecting Insurance Business Laws
In the 2016-2020 period, the Ministry of Finance will continue to perfect specialized laws on insurance business according to the Vietnam Insurance Market Development Strategy for the 2011-2020 period. Specifically:
Firstly, reviewing the system of legal documents to amend, supplement, or replace them towards simplifying and reducing administrative procedures, aligning more closely with international standards and practices, ensuring transparency, transparency, and fairness for market participants; enhancing financial and executive management requirements of insurers (focusing particularly on standardizing regulations on information technology application, professional qualifications of key insurer personnel, applying advanced management models and methods).
Secondly, supplementing and developing new regulations to facilitate companies in developing new types of products, meeting the diverse needs of insurance participants as well as the economic and social development requirements (e.g., voluntary health insurance, retirement insurance, disaster insurance). Moreover, establishing regulations on licensing and operating reinsurance companies; criteria and conditions for operation of organizations providing support services for insurers, contributing to improving the quality of insurance activities (accounting auditing, loss assessment).
Thirdly, further developing and perfecting policies related to types of insurance encouraged by the State for social welfare purposes (e.g., agricultural insurance, export credit insurance, health care insurance, insurance for low-income groups) based on summarizing and evaluating pilot program implementations.
Fourthly, continuously improving and supplementing mandatory insurance policies as prescribed by the Insurance Business Law: professional liability insurance for insurance brokers, professional liability insurance for legal counseling activities, civil liability insurance for air carriers towards passengers.
Fifthly, cooperating with related ministries and central authorities to review overlapping regulations between the specialized legal system on insurance business and other legal documents (e.g., Civil Code, Competition Law, Construction Law, Maritime Law) to perfect insurance business regulations for consistency and coherence across legal documents.
Sixthly, amending accounting policy regulations applicable to insurers in line with international and Vietnamese accounting standards.
Seventhly, reviewing current tax policies to ensure suitability and support the development of the insurance market, focusing on policies that encourage insurance products serving economic and social security goals (e.g., agriculture, forestry, fisheries, insurance for the poor).
Eighthly, researching and developing preferential mechanisms for insurers' reinvestment back into the economy, especially focusing on mechanisms that facilitate connection and interoperability between insurers' investment activities and the stock market and other financial markets.
Ninthly, researching amendments to Insurance Business Law No. 24/2000/QH10 and the revised Insurance Business Law No. 61/2010/QH12 comprehensively in 2020 along with the guiding documents, creating a new legal system with a broader scope, synchronizing insurance business activities in connection with financial service market segments.
Source: Pham Thu Phuong - Finance Magazine
.jpg)
.Medium.png)
.Medium.png)
.Medium.png)
.Medium.png)
