The Ministry of Finance is currently seeking feedback to submit to the Government of Vietnam a Draft Decree guiding the implementation of microinsurance applicable to microinsurance organizations (including socio-political organizations, social-professional organizations) and relevant organizations and individuals within the territory of the Socialist Republic of Vietnam.
Article table of contents
Microinsurance is a relatively new concept. Unlike common insurance business types, microinsurance operates on a non-profit basis, and to date, there has been no document regulating this content.
Microinsurance is understood as insurance products provided by socio-political organizations to individuals or households with low incomes, aimed at meeting the need for protection against possible life risks, based on widely accepted insurance principles.
According to the Draft Decree, microinsurance organizations may provide one or several microinsurance products such as:
- Insurance products for cases where the insured person dies or suffers total and permanent disability: paying the insurance amount and possibly paying benefits to support funeral costs, and refund insurance premiums as agreed upon;- Insurance products for cases where the insured person dies or suffers total and permanent disability while still owing a bank loan or microfinance institution loan: on behalf of the insured person, paying the remaining amount payable to the bank or microfinance institution as agreed upon;- Health insurance products: supporting hospitalization and surgery costs for the insured person as agreed upon;- Personal accident insurance products: paying insurance amounts corresponding to the insured person’s injury rate due to an accident;- Old-age savings insurance products: providing cash benefits based on the account value of the insurance contract as agreed upon when the insured person reaches retirement age;- Property damage insurance products for households: paying the insurance amount as agreed upon due to household property damage of the insured person.
Low-income individuals will enjoy appropriate insurance benefits that meet their needs. There will be an agreement between the microinsurance organization and the policyholder regarding whether the insured is the policyholder or the entire family of the policyholder.
Microinsurance products must meet basic characteristics such as:
- Except for old-age savings insurance products, the insurance term cannot exceed one (1) year and may be renewed annually.- Simple or no insurance underwriting procedures.- For insurance products for cases where the insured person dies or suffers total and permanent disability, health insurance, personal accident insurance:- The insurance amount per insured person does not exceed five (5) times the annual income of near-poor households in urban areas as regulated by the Government of Vietnam;- The annual insurance premium does not exceed 6% of the average per capita income of near-poor households in urban areas.
Currently, the Ministry of Finance has approved three companies to deploy microinsurance products: Prudential Vietnam Life Insurance Company Ltd., Manulife (Vietnam) Ltd., and Dai-ichi Life Insurance Company of Vietnam Ltd. These companies have also provided microinsurance products with low premiums, small insurance amounts, and simple, easy-to-understand insurance products. Some socio-political organizations have also been providing microinsurance products to their members, notably the Women's Union and the Community Financial Resource Development Support Center.
In the near future, if the Draft Decree on microinsurance guidance is passed, there will be a legal basis and more specific regulations on this type of insurance.
.jpg)
