They note that the claims ratio on compulsory motorbike insurance policies was just 6 percent last year, several times lower than other kinds of non-life insurance.

Revenue from compulsory motorbike insurance schemes was VND829 billion ($35 million) last year, while compensation paid was just VND50 billion ($2 million), a ratio of 6 percent, according to the Department of Insurance Administration and Supervision.

Tran Nguyen Dan, head of insurance academy IFRM, said that this is an unusually low claims ratio compared to 40-70 percent in other types of non-life insurance.

The low ratio allows insurance companies to pay commissions of up to 50-60 percent of insurance value to dealerships, exceeding the 20 percent threshold set by the Finance Ministry.

"Insurance companies, instead of providing more benefits to buyers, are increasing commissions to boost sales so they could gain more market share," Dan said.

Industry insiders say that insurance companies in Vietnam often hire non-professional agents to sell motorbike insurance certificates. These insurance vendors often sit by the road and sell these certificates without explaining to buyers what their benefits are.

Many drivers in Vietnam only buy motorbike insurance to show the police and do not expect any compensation in case of an accident because they either do not know their rights and/or they are wary of the complicated process and paperwork involved.

Phung Ngoc Khanh, head of the insurance administration department, said that the complicated paperwork creates difficulties in claiming compensation, resulting in the low claims ratio.

Moreover, the compensation value does not match the rising costs of medical and repair services, he said.

Even though Vietnam has been requiring motorbike drivers to purchase compulsory insurance for 10 years, only 30 percent of the country’s 60 million motorbikes have bought the policies, Khanh said. This ratio among cars is 90 percent.

Khanh said that the Finance Ministry will propose changes in regulations to simplify paperwork for motorbike owners and increase the responsibility of companies.

Dan said that insurance companies have not been proactive in responding to accidents, resulting in buyers not benefiting from their insurance policies.

Companies should provide more support for buyers, for example, by sending staff to an accident scene to evaluate vehicle damage, among other things, he added.