Amendment toLaw on Insurance Business: Ensuring benefits for participants

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The Ministry of Finance is collecting comments for the draft Law on Insurance Business (amended).

Enhance responsibility of the State

According to the Ministry of Finance, the current Law on Insurance Business was enacted 20 years ago. Along with the development of the insurance market and extensive integration and international cooperation, this Law has a number of shortcomings and the policy mechanisms have also not kept up with reality. In addition, the quality of insurance products and services is not high, many regions, classes, organizations and individuals do not have access to commercial insurance products suitable to their needs, especially health insurance products, life insurance, and insurance for personal property.

Therefore, the Ministry of Finance said that the amendment tothe Law on Insurance Business is really necessary, meeting the requirements of uniformity and consistency in the relevant legal system and new requirements arising in practice, overcoming the shortcomings of the policy mechanism and the existence of the market, ensuring international standards on insurance management and supervision.

In the draft Law on Insurance Business (amended), the Ministry of Finance specifies the subject of application replacing the current law. They are Vietnamese organizations and individuals and foreign organizations and individuals participating in capital contribution, establishment, insurance business activities and activities on the insurance market; state management agency in insurance business; other agencies, organizations and individuals related to insurance businesses.

Compared with the current Law, the Ministry of Finance has also amended the State's regulations on insurance business. Accordingly, the draft stipulates that the State has policies to regulate insurance business activities, protect the legitimate rights and interests of parties involved in insurance business activities. Along with that, the State is also responsible for developing the Vietnamese insurance market in both size and quality, improving the business environment, and creating conditions to attract organizations and individuals to participate in insurancebusiness.

The draft also saysthat the State should pay attention to access international practices and standards; encourage and create conditions for insurance business organizations to innovate and apply advanced science and technology to insurance business. At the same time, effectively implementing state management, openness and transparency from state management to insurance business activities to protect the legitimate rights and interests of investors, insurance buyers, and safety of the whole system, reducing social costs, promoting the healthy development of the insurance sector.

According to the Ministry of Finance, this amendment aims to protect the interests of insurance buyers, encourage the establishment of new businesses, create new standards and improve the efficiency of state management.

Build honesty

Regarding basic principles in insurance business, in comparison with the current Law, the new draft Ministry of Finance proposes regulations that organizations and individuals in need of insurance can only participate in insurance at insurance business organizations operating in Vietnam. Foreign-invested enterprises and foreigners working in Vietnam with insurance needs may choose to participate in insurance at an insurance business organization operating in Vietnam or use cross-border insurance services. In addition, insurance business organizations have autonomy and self-responsibility in their insurance business activities; must meet financial requirements to fulfill its commitments to the participants.

The Ministry of Finance also requires the parties involved in insurance business to be absolutely honest, voluntarily negotiate, open, transparent and comply with other principles specified in this Law. Specifically, for those who are not insurance business organizations, insurance brokers and insurance agents, they are not allowed to confuse an insurance buyer.

The Ministry of Finance explained that this amendment was to match market practices and principles applicable to all players in the insurance market and minimize disputes.