The Ministry of Finance will implement many solutions to develop the insurance market comprehensively, transparently and properly with its existing potential.

The size of the Vietnam insurance market is still small compared to its potential.
Photo: ST 

Remove difficulties for insurance businesses

The Covid-19 pandemic has affected the insurance sector, however, this sector still has strong growth with impressive growth.

According to Ngo Viet Trung, Deputy Director of Insurance Supervisory Authority Department (Ministry of Finance), the Ministry of Finance has followed the market and grasped the situation to promptly amend, supplement and complete policies to comprehensively develop a safe, sustainable and effective insurance market. As of November 11, 2020, the Ministry of Finance issued Circular No. 89/2020/TT-BTC amending and supplementing four circulars in the field of insurance business, in which amendment on setting provisions helping businesses to reduce pressure on capital in the short term and have a suitable time to implement overall financial plans, stabilise business in the context of a sharp drop in interest rates in investment and government bonds as well as the Covid-19 pandemic is still unpredictable.

"The Ministry of Finance always accompanies enterprises through cutting and simplifying administrative procedures, promptly removing difficulties and problems, as well as having policies to support enterprises to overcome difficult periods. Besides general policies on tax deferral and tax reduction for businesses, the Ministry of Finance has also implemented solutions to support the insurance market like reducing the rate of deduction for the Insured Protection Fund in 2020 from 0.15% down to 0.05% of total revenue of insurance; delay the inspection plan of businesses until 2021; allow businesses to organise online exam for insurance agency certificate,", Trung shared.

Along with the management authority, insurance companies have adjusted their production and business activities to adapt to the new situation, such as reviewing and cutting costs to improve operational efficiency, supplement capital charter to strengthen financial capacity and expand distribution channels, especially insurance sales channel through banks and promoting online insurance distribution forms. At the same time, increasing investment in information technology and digital transformation to improve service quality and customer experience.

According to a customer who participated in insurance in 2020, the more outbreaks of the pandemic occur, the higher the risk of affecting their health and income, the clearer the meaning of life insurance.

"As soon as we learned many insurance companies committed to paying when a customer was infected with Covid-19, my family signed two insurance policies related to health and accumulation. The beneficiary policy, as well as the quality of the insurance company's consulting and customer services, was much clearer and more transparent than a few years ago,” this customer said.

Completing the legal framework

Although Vietnam's insurance market in 2020 recorded a high and stable growth rate, the scale was still small compared to the potential. According to the Insurance Supervisory Authority Department, currently, the ratio of premium income to GDP is 3.07%, lower than the average of ASEAN (3.35%), Asia (5.37%) and the world average (6.3%). In particular, the market potential of several sectors such as natural disaster insurance, public property insurance, import-export insurance, life insurance and health insurance has not been fully exploited.

Ngo Viet Trung said that to promote the insurance market to continue to develop stably, in 2021, the Ministry of Finance will focus on researching and completing the National Assembly's decision to develop a revised Law on Insurance Business as well as the development of guiding documents for execution. At the same time, promoting simplification of administrative procedures and strengthening the connection with international management, integration and cooperation.

Another important goal is to improve information transparency of insurance companies and develop and professionalise insurance distribution channels to keep pace with the developments of Industrial Revolution 4.0.

Notably, the Ministry of Finance will improve the effectiveness of State management and the effectiveness of inspection, examination, supervision and sanctioning of administrative violations; establishing information technology systems, technical infrastructure; building a database for the insurance market; strengthening the linkage between social insurance and commercial health insurance.