Speaking at the meeting, Minister of Finance Ho Duc Phoc said the Law on Insurance Business was promulgated 20 years ago, when the insurance market was still young, the management authorities were also newly established, and the market size was very small. Thus products and distribution channels were not diversified.

Up to now, before the development of the market and many changes in legal regulations, the Law on Insurance Business has revealed shortcomings that are no longer consistent and synchronous with the newly revised regulations in the Civil Code, some contents have no basis for practical application like competence, process of handling insurance enterprises facing financial difficulties; the application or integration of technology in the insurance business; requirements for internal control, internal audit, independent audit; the linkage between the management agencies in the implementation of the Government's insurance programmes.

Some provisions of the current Law on Insurance Business have not kept pace with international standards, such as provisions on prevention of insurance profiteering, money laundering, and terrorist financing; conditions for foreign investors are limited; outdated financial management model; no requirement for risk management.

In addition, Minister of Finance Ho Duc Phoc also stated the guidelines and policies of the Party and State on perfecting the law in the insurance business were also issued. Specifically, the fifth Conference of the 12th Party Central Committee issued Resolution No. 11-NQ/TW on perfecting the socialist-oriented market economy institution, in which: "Balanced development, firm synchronised the financial market. Develop the insurance market, the market for accounting, auditing, tax consulting, valuation services"; Resolution No. 39-NQ/TW on improving the efficiency of management, exploitation, use and promotion of the economy's resources, which stated the task of "improving legal regulations on the insurance. Encourage insurance businesses to re-invest in the economy”; Decision No. 242/2019/QD-TTg approving the Project "Restructuring the securities market and insurance market to 2020 and orientation to 2025" defining "revised Law on Insurance Business and other guidance documents in the direction of risk-based management and supervision; develop supervision criteria to promote post-inspection work through examination".

From the above reasons, Minister of Finance Ho Duc Phoc said the promulgation of the revised Law on Insurance Business is necessary.

Seven main policy groups

Presenting the draft law at the meeting, Minister of Finance Ho Duc Phoc said the draft revised Law on Insurance Business had adhered to the purpose, direction and specific point of view and concretise seven policy groups as proposed to develop a law project which was approved by the Government in Resolution No. 121/NQ-CP dated December 31, 2019.

As for the general regulations, the contents are amended, supplemented and the new regulations include the subject of application, which is expanded compared to the old law, is a mutual organisation providing micro-insurance; amend and supplement wording explanations to be suitable with relevant practice and law; principles of providing and using insurance services revised to be consistent with current legal regulations, international practices and international commitments that Vietnam participates in (EVFTA, CPTPP); types of insurance are divided into three basic types according to international practice, namely life insurance, non-life insurance and health insurance and compulsory insurance, limited to reflect the true nature of the type of insurance.

Regarding insurance contracts, according to the minister, this content basically retains the design of the old Law, adds a section on loss prevention, fraud prevention and dispute settlement. Contents of the completed insurance contract are including general provisions; each type of contract (life and health, property and damage, civil liability); regarding loss prevention, fraud prevention and dispute settlement.

Regarding insurance firms and reinsurance enterprises, the draft law has expanded foreign investors, allowing financial groups to conduct insurance business; simplify conditions for insurance firms that have been licensed to operate in Vietnam and want to establish new insurance enterprises; supplement the business registration; allow insurance companies to provide products in other insurance fields.

Regarding the operation, the Minister of Finance said that the draft law has added new regulations to improve corporate governance, such as new regulations on organisation and operation, internal control, risk management of enterprises according to international practices, suitable to the nature of insurance business activities; allowing insurers to take initiative in designing and building insurance products and outsourcing them to meet conditions; additional regulations on conditions in case of outsourcing. In addition, supplementing contents and principles to encourage insurance firms to apply IT in insurance operation; requirements on the application of IT in insurance business activities, subjects and forms of insurance service provision in the network environment.

Regarding micro insurance, this content is newly regulated, including content on characteristics of microinsurance and organisations that are provided with microinsurance products (insurance enterprises, mutual organisations providing insurance).

Regarding the financial management of insurance enterprises and reinsurance enterprises, draft amendments and supplements to regulations on financial management of insurance enterprises and reinsurance enterprises towards transforming to capital management base on a risk. Accordingly, the draft law requires enterprises to determine the capital adequacy ratio and capital management corresponding to the size and risk level of the firm.

Notably, regarding the State management of insurance business, the Minister of Finance said that the draft law has been amended towards combining regulations on the contents of state management and state authorities; supplement the tasks and powers of the Ministry of Finance in the management, supervision, inspection and handling of violations of the law on insurance business activities.

Regarding the coordination mechanism in State management: supplementing the regulation that the Ministry of Finance shall coordinate with foreign insurance management agencies in coordinating management, supervision, inspection and the examination of insurance branches of foreign enterprises operating insurance in Vietnam; establishing a mechanism to share information on management and supervisory work with the State Bank of Vietnam and other ministries and branches involved in insurance.