Friday, July 19, 2024 8:43:38 AM - Markets open
VN-INDEX 1,274.44 +5.78/+0.46%
HNX-INDEX 242.49 +1.59/+0.66%
UPCOM-INDEX 97.61 +0.34/+0.35%
Detailed guidance needed to have new insurance agency policy run smoothly
vietnamnews - 7/10/2024 2:42:28 PM
 (0 ratings. You must sign in to rate.)
Due to confusion, some banks have temporarily suspended the sale of insurance products, causing their revenue to decline sharply since the law took effect.
A customer during a policy consultation. Some banks have had to temporarily suspend the sale of insurance products, causing their revenue to decline sharply since the law took effect. Photo courtesy of Baoviet Life Corp
 Insurance companies and banks expect the State Bank of Vietnam to issue detailed guidance on implementing the insurance agency regulation under the new Law on Credit Institutions, because they are confused about the policy.
According to the insurers and banks, Article 113 of the revised Law on Credit Institutions, which took effect from July 1 this year, regulates commercial banks are allowed to carry out insurance agency activities in accordance with regulations of the Law on Insurance Business and the State Bank of Vietnam. It means that the Law on Credit Institutions allows commercial banks to consult and offer insurance products to customers.
However, Clause 5 of Article 15 of the Law on Credit Institutions prohibits banks from ‘linking’ the sale of non-mandatory insurance products with the provision of banking products or services in any form.
The regulation has been issued as despite unwillingness, some bank customers were forced to buy insurance products introduced by bank staff to get bank loans. Therefore, the new policy is aimed at stopping the bancassurance cross-selling mechanisms.
According to industry insiders, not only banks and insurance companies, but also management agencies at localities have different understandings of the law’s Clause 5 of Article 15, especially the concept of ‘linking’. While some said the regulation means banks are not allowed to force bank borrowers to buy insurance products, others thought the regulation means when making loan applications for customers, banks are not allowed to make any advice or offer insurance products.
According to a leader of an insurance company, who declined to be named, his company has insurance consulting desks at many bank branches and it sells insurance products independently from banks’ products. However, after consultation with both State management agencies and legal experts, his company still cannot find whether it is legal or not if it advises and offers customers with insurance products and customers are free to choose whether to buy the insurance products or not.
Due to the confusion, some banks have temporarily suspended the sale of insurance products, causing their revenue to decline sharply since the law took effect.
A representative of BIC Insurance Company said that in the first two days of July 2024 alone, the company's insurance sales through banks decreased by up to 50 per cent. The main reason is that many bank branches temporarily stopped selling insurance and were waiting for specific guidance.
The insurance industry recorded double-digit premium revenue growth in about ten consecutive years before 2023. However, insurance premium revenue declined in 2023 and the first quarter of 2024 following an insurance crisis, during which consumer trust was said to be at an all-time low after numerous scandals broke out. The crisis has negatively impacted the entire insurance industry and has forced management authorities to take action to rectify the sector.
Since the crisis, regulatory agencies and insurance companies have taken measures to reassess the situation, considering it an opportunity to cleanse and readjust the market after a period of rapid growth. The focus is on developing the market sustainably, transparently and safely.
Solutions have been proposed by the Ministry of Finance’s Insurance Supervisory Authority (ISA) to enhance market transparency and safeguard the rights of insurance participants.
According to Phạm Thu Phương, deputy director of the ISA, the department last year completed the inspection of five insurance companies, including three life insurance companies and two non-life insurance companies. The inspections found that insurance companies violated regulations on supervising and managing insurance agents. Accounting of insurance companies were also still negligent, Phương said, adding the ISA carefully reviewed the violations and imposed fines.
In 2024, according to the approved plan, the ISA will inspect six insurance companies. — VNS
Read original article here
Newer News
18/07 Petrol distributors not allowed to buy from each other: Draft
18/07 MoF considers withdrawing 50 per cent car registration fee reduction proposal
17/07 H1 State budget revenue increases over 17%: MoF
17/07 HCM City Tax Department refunds VNĐ4.7 trillion of VAT
16/07 Mobile Money users in Vietnam rise rapidly
16/07 Cheap money period in Vietnam forecast to come to an end
16/07 Taxing gold buyers is a tax-on-tax, say experts
15/07 Compulsory e-signature might be a cost burden: banking association
15/07 PM asks SOEs to consider hiring foreign CEOs to improve efficiency
15/07 Vietnamese cashback app aims for 10 million users by 2025
Older News
10/07 Temporary exit suspension due to tax debts applied for some people
08/07 Ministry of Finance to release final draft circular on stock market upgrades
05/07 Credit growth soars in June
05/07 MOF proposes exemption on corporate taxes on income from green bond interest and carbon credits
04/07 Inflation target is achievable, wage increase expected not to have significant impact on prices
04/07 Ha Noi collects over $390m in taxes from e-commerce
03/07 New law tightens cross-ownership in credit institutions
02/07 Delays loom for trillions of đồng in bond payments in June
02/07 New policy on reducing credit limits to have impacts on big banks, groups
01/07 8% VAT rate extended to the end of this year
Newsletter Signup
Top Stories
VCCI recommends mineral mining rights be granted through auction and bidding
Central bank works to raise interbank rates and ease forex market
Inflation a concern following salary increases
National Council for Sustainable Development established
Việt Nam, Cambodia look forward to $20 billion trade
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,274.44 +5.78/+0.46%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.