The draft Law on Insurance Business (revised) will be submitted at the second session of the 15th National Assembly to create a driving force for Vietnam's insurance market to develop commensurate with its existing potential.

The insurance market sees impressive growth

According to the Ministry of Finance, Vietnam has about 10% of the population, or 11.9 million people, participating in life insurance; four million people participating in health insurance, short-term health; 12 million students covered by accident and healthcare insurance; 18 million passengers insured by aviation; over 12 million passengers insured for railway accidents; and 1,620 million people covered by road accident insurance. Along with that, about 2,894 insurance products are offered across all insurance lines.

Viet Nam now has 73 insurance enterprises and one foreign non-life insurance branch which has thousands of branches and representative offices nationwide in order to enhance the quality of customer service from selling products to taking care of customers and compensation.

The Ministry of Finance said the insurance market has been protecting almost all types of assets of all economic sectors from the State, private to foreign investors; and all economic fields from industry, agriculture to service.

The above figures show that the insurance market is developing impressively, especially in recent years. From 2000 to 2020, Vietnam's insurance market grew significantly compared to other countries in the region and the world. The growth rate has been maintained for a long time, regardless of the financial crisis or other adverse impacts.

The current Law on Insurance Business is no longer sufficient and reveals certain shortcomings such as it is not consistent with the newly revised Civil Code, some contents have no grounds for practical application such as power, process of handling insurance enterprises facing financial difficulties.

Furthermore, the adoption or integration of technology in the insurance business; requirements on internal inspection, internal audit, independent audit; the connection between the management agencies in the implementation of the Government's insurance programs are problems.

According to Mr. Dinh Trong Thinh, economic expert and senior lecturer at the Academy of Finance, although drafting agencies and insurance enterprises gave comments to amend and supplement the Law on Insurance Business, a number of provisions of the existing law have not kept pace with international standards, such as provisions on prevention of insurance fraud, money laundering, and terrorist financing; limited conditions for foreign investors; outdated financial management model; and a lack of requirement for risk management.

"Our country's insurance market has developed rapidly with a lot of insurance products. However, the insurance scale and products are not commensurate with the potential. Vietnam has space for the insurance market to grow more strongly with various products. Therefore, it is time to amend the Law on Insurance Business to expand the scope of management and cover all insurance business activities and comply with the current reality,” Mr. Dinh Trong Thinh said.

Institution is a solution

The Ministry of Finance said the draft Law on Insurance Business (revised) will institutionalize the Party's viewpoints and guidelines, the State's laws, the Resolutions of the National Assembly, the Government and the Prime Minister's decisions on the development of the socialist-oriented market economy associated with renovating the growth model, improving the business environment, enhancing national competitiveness in order to build and develop the insurance market in accordance with the country’s socio-economic development conditions.

The draft Law also contributes to renewing the growth model through reform in service provision, business methods and state management methods; raise publicity, transparence, initiative and the responsibility of insurance enterprises, especially attaching importance to the quality and safety of the market; selectively absorb international practices to build a unified insurance market system in the country’s overall financial market.

Mr. Dinh Trong Thinh said that, after many economic fluctuations, a decrease and disruption of the global supply chain due to the impact of the Covid-19 pandemic, the Law on Insurance Business (revised) with progressive terms will be a solution to help the insurance market and business community develop in the new integration period.

In addition, the draft Law on Insurance Business (revised) will strengthen the protection and balance the interests of participants and insurers. It will make insurance enterprises have a wide path for development because the business market will have fairer competition and insurance products will be more diversified. When the interests of the participants are ensured, their trust in insurance will increase.

The draft Law on Insurance Business (revised) includes eight chapters and 156 articles. The draft has adhered to the purposes, guidelines and concretized seven groups of policies to propose the development of the Bill approved by the Government in Resolution 121/NQ- CP on December 31, 2019.