Customers also need to study carefully before signing the insurance contract. Photo: Internet

Implicit trap

The insurance industry has developed for more than 400 years by establishing many multinational insurance enterprises. According to the Insurance Supervision and Administration Department (Ministry of Finance), in Vietnam, after nearly 30 years of establishment and development, the life insurance market has now had 19 enterprises, providing over 500 insurance products and health insurance.

Motivated by 14 million valid insurance policies, insurance businesses created jobs for more than 900,000 agents and employees. Therefore, insurance businesses invested more than VND 616,000 billion in the economy, and the amount of insurance paid to customers will beup to VND 42,561 billion in 2022.

Life insurance products have been extended to all subjects who need protection against unforeseen risks. According to experts, insurance operates on the principle that the majority compensates for the few. Itcollects the insurance premiums that most insurance buyers pay into a common fund to cover and compensate for the damage and loss of a few unlucky participants. This is the human meaning of insurance.

The latest case is the Bell 505 helicopter crash in Ha Long Bay (Quang Ninh);insurance companies quickly processed and paid insurance benefits to the victims. For example, MB Ageas Life Insurance has paid insurance benefits for the wife and family of the pilot VND240 million. Bao Viet Insurance also paid VND200 million in death compensation under the health insurance program for two passenger victims. In addition, PVI Insurance has advanced US$ 50,000 to the pilot's family.

The basis forpromoting life insurance is from people's actual needs arising in human life. However, insurance transactions are also civil transactions based on the principle of voluntariness and equality between the parties, so when an insurance purchase is forced and shows signs of deception, it contrasts the original purpose of life insurance, affecting the development of this industry and insurance enterprises.

In fact, for normal citizens, insurance is a relatively complicated financial product;when signing a contract, they can only trust the commitments made by the insurance broker. To achieve the target and commission, the insurance broker can use many tricks to attract customers.

Many disputes show that customers' decision to buy insurance stems from their trust in attractive offersand lack of transparency from some insurance brokers rather than knowledge of insurance products. Meanwhile, insurance contracts are often long, with many difficult terms for buyers to fully understand, so this may contain an implicit trap, voicing concern by citizens.

According to economic expert Dr Can Van Luc, the current insurance contractcontains 100 pages, so very few people read them. In foreign countries, the insurance contract is very simple. Therefore,the expert said that regulatory agencies should review regulations to standardize relevant personnel such as insurance brokers and consultants. In addition, insurance enterprises should review internal policies and procedures as well as the network of insurance agents and consultants. The government should also have a national financial education program to improve people's knowledge about insurance.

Ensuring the rules and disciplines of the insurance market

Mr Ngo Trung Dung, Deputy General Secretary of the Vietnam Insurance Association, said that when receiving information about customers'complaints and grievances related to life insurance products and services, the Association requested insurance businesses to quickly check and verify information reflected by customers to promptly handle and ensure the interests of customers based on compliance with the law.

In April 2023, the Insurance Management and Supervision Departmentof the Ministry of Finance issued guiding documentsand held meetings with insurance businesses to provide solutions and control promptly. Accordingly, the Department requires insurance companies to urgently review the overall sales and appraisal processes at enterprisesand customer service processes to ensure compliance with provisions of the law. The insurance management agency also asks to adjust the appraisal of insurance contracts; The appraisal and issuance of insurance contracts must be consistent with the customer's financial ability and level of risk acceptance.

The Department of Insurance Management and Supervision also requested the Vietnam Insurance Association to urgently review and complete the code of professional ethics for insurance agents,and standard rules applicable toinsurance businesses. This Association should have strict sanctions for violations.

Ms Pham Thu Phuong, Deputy Director of the Insurance Supervision and Administration Department, said that this is the time for the insurance market to adjust after a long period of rapid growth. Strict handling of violations detected through insurance inspection and supervision is an opinion but the responsibility of insurance management and supervision agencies to ensure rules and disciplines of the market and protect the interests of insurance buyers.

For customers, experts recommend that, before signing an insurance contract, the buyer should carefully understand the rules and terms, costs and cash flow distribution, understand the insurance policy benefits illustration.