Revising Law on Insurance Business: Creating a legal framework to "digitize" insurance business and management

	Revising Law on Insurance Business: Exploiting all available space
	Amazing growth rate of insurance market
	It is necessary to promulgate the revised Law on Insurance Business

The draft Law on Insurance Business (revised) is developed on the basis of application of information technology. Photo: Internet

Insurers focus on information and technology application

Through a survey by the Ministry of Finance, insurance businesses have basically met the requirements of network infrastructure, data center infrastructure, application of data storage solutions, software to handle professional work and high-quality human resources. At many insurance businesses, traditional transaction processes are transformed with digital technology such as: sales, administration, care, issuance of insurance contracts and deployment of electronic insurance certificates for motor vehicles.

All insurance companies now have their own websites. Some insurers use web applications or mobile applications; they develop applications on smartphones to help insurance agents improve efficiency, assist customers in reporting premium payments.

Some insurance businesses are cooperating with third parties to sell insurance products such as digital banks and electronic trading platforms. In addition, some insurance enterprises have initially formed a digital ecosystem to serve customers and reduce complex processes.

For example, Bao Viet Insurance Company already has applications that allow users to "maximize" benefits in online inquiry, registration and benefit payment.

Along with that, Baoviet Insurance has applied AI and chatbots to introduce insurance products, improving the customer experience, affirming the solid steps of the non-life insurance market.

VietinBank Insurance (VBI) has had an insurance app for mobile phones since 2017. This company has also applied technology to help digitize and store all customer insurance information to accurately and easily check necessary cases.

The non-life insurance sector has also introduced applications to customers such as MyAIA (application of artificial intelligence technology to automatically identify information, change paper contracts to electronic ones) of AIA Life Insurance Co., Ltd and the online insurance page of Chubb Life Vietnam Insurance Cop., Ltd to help customers easily check information about insurance policies.

In fact, new technologies help insurance companies save time, costs, limit risks, and create added value for customers.

However, many experts said that Vietnam's insurance industry is facing a big challenge of different levels of information technology among insurers and the limited capacity of human resources. Because each insurer has its own operation scale, characteristics and network organization method, the investment and technical equipment is also very different.

Moreover, the sales from the online insurance channel are still low (less than 5% of the total sales), some domestic insurers do not have enough money to invest in technology, only focusing on short-term goals more than long-term strategies.

According to BIDV Securities Company (BSC), new technologies related to big data, artificial intelligence (AI), digital technologies, mobile telecommunications (telematics) are changing the face of the insurance market. Therefore, insurance companies must pay attention to improving service quality, diversifying products and applying technology in customer care, compensation settlement to retain customers and expand their market share.

Adding regulations on technology application in management

The Ministry of Finance said that, with digital transformation of insurance businesses in the trend of the fourth industrial revolution, the development of a legal framework to manage technology application activities in insurance business is a must.

The prevailing Law on Insurance Business does not stipulate the application of information technology in insurance business and management. Therefore, the draft Law on Insurance Business (revised) is developed on the basis of the application of information technology.

The Draft Law adds regulations on information technology application in management and supervision activities of management agencies and in insurance business activities of insurers; assigns the Government to regulate newly arising issues related to information technology application (such as an experimental legal framework with regulatory sandboxes); and stipulates principles for providing insurance services and products on the network environment under the guidance of the Ministry of Finance.

The draft clearly stipulates that the State will invest in building a centralized database of the entire insurance industry, which is connected to the national database system and relevant specialized database systems to establish the insurance premium rates corresponding to the insurance benefits, ensure the legitimate rights and interests of the insurance buyers and the providers and prevent insurance fraud.

According to the Ministry of Finance, digital transformation is taking place very quickly while digital transformation in the insurance market is at an initial stage. Many new technologies may appear in the future, so the draft Law provides regulations on principles, detailed regulations on technology that will be guided in the sub-law documents.