Enhance transparency in life insurance contract signing activities

Enhance transparency in life insurance contract signing activities 13/11/2023 12:55:00 443

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Mr. Ngo Viet Trung, Director of the Department of Insurance Management and Supervision, recently spoke at a press conference about the importance of Circular No. 67/2023/TT-BTC (Circular 67). This circular provides detailed guidance on several articles of the Law on Insurance Business and Decree No. 46/2023/ND-CP and is expected to improve the system of insurance business activities. Circular No. 67 also includes regulations that aim to enhance the overall quality of insurance consulting services, especially those provided through credit institutions and foreign bank branches. By implementing these regulations, the performance of insurance agencies is expected to be elevated.

Mr. Ngo Viet Trung, Director of the Department of Insurance Management and Supervision, recently spoke at a press conference about the importance of Circular No. 67/2023/TT-BTC (Circular 67). This circular provides detailed guidance on several articles of the Law on Insurance Business and Decree No. 46/2023/ND-CP and is expected to improve the system of insurance business activities. Circular No. 67 also includes regulations that aim to enhance the overall quality of insurance consulting services, especially those provided through credit institutions and foreign bank branches. By implementing these regulations, the performance of insurance agencies is expected to be elevated.

Director of the Department of Insurance Management and Supervision Ngo Viet Trung at the interview

Reporter: Over the past two years, a comprehensive legal framework has been established to regulate insurance business activities. This framework ensures that all legal documents are in sync. Can you elaborate further on this topic?

Mr. Ngo Viet Trung: On November 2, 2023, the Minister of Finance signed and issued Circular No. 67/2023/TT-BTC, which provides detailed information about various articles of the Law on Insurance Business and Decree No. 46/2023/ND-CP. These legal documents, including the Law on Insurance Business No. 08/2022/QH15, Decree No. 46/2023/ND-CP, Decree 67/2023/ND-CP, and Decree No. 21/2023/ND-CP on microinsurance, have contributed to creating a more comprehensive and robust legal framework for insurance business activities in Vietnam.

The Ministry of Finance is currently working on a Decree that will amend and supplement the sanctions for administrative violations in the insurance sector. This Decree is expected to be submitted to the Government before the end of the year. The goal is to ensure that the legal system of the insurance business is synchronized and consistent with other relevant legal systems and market practices and that the insurance business is strictly managed.

Reporter: Circular 67 introduces new regulations aimed at enhancing the quality of insurance agents' operations during the consultation and transaction phases of co-insurance contracts. Can you please provide additional information on this subject matter?

Mr. Ngo Viet Trung: Circular No. 67 is a set of guidelines that provides detailed instructions on the Law of Insurance Business and Decree No. 46/2023/ND-CP. It consists of seven chapters, 62 articles, and 13 appendices. These regulations aim to set the foundation for new market activities that align with global development trends. They cover areas such as the application of information technology in insurance business activities, the types and operations of insurance, information disclosure, and the promotion of management and supervision of insurance business activities.

Circular No. 67 includes several crucial contents that aim to implement the direction of the National Assembly, Prime Minister, and Minister of Finance. Its focus is improving insurance agency activities' quality, emphasizing depth rather than breadth of development. One of the regulations highlights the need for transparency in agency activities, particularly those carried out through credit institutions and foreign bank branches.

For example, credit institutions must establish a separate transaction counter for insurance agency activities, separate from other professional areas of the credit institution. The regulations also require insurance agents to record the insurance consulting process for complex products such as investment-linked insurance products. This is necessary to improve the quality of consulting and to prevent consultants from forcing customers to participate in insurance products that fail to meet their needs and financial capabilities.

Insurance agents or employees involved in agency operations must provide complete and accurate information to insurance buyers about insurance products through documents developed and provided by insurance businesses. Circular 67 also mandates that banks operating as agents must clearly advise customers that insurance products distributed through credit institutions are not products of the credit institution. Additionally, it is not mandatory to participate in insurance products to use other services and products of the credit institution.

Credit institutions cannot advise, introduce, offer, or arrange the conclusion of investment-linked insurance contracts for customers within 60 days before and after 60 days from the date of disbursement of the entire loan. Circular No. 67 also emphasizes the responsibility of credit institutions operating as insurance agents. These institutions must establish a specialized department to monitor and ensure the quality of insurance sales activities. The process must ensure that employees in the agency organization directly carrying out agency activities comply with the principles of agency operations, the authorized content in the agency contract, and the provisions of law.

In conclusion, Circular No. 67 is a comprehensive set of guidelines that introduce new regulations for the insurance business in Vietnam. These regulations aim to improve the quality of insurance agency activities, promote transparency, and ensure that customers have access to complete and accurate information about insurance products.

Reporter: Does the Circular include provisions to protect customer rights and supervise agents during consultations and contract negotiations?

Mr. Ngo Viet Trung: Circular 67 introduces several measures to ensure insurance companies provide adequate documentation to their customers. This documentation will help customers understand their rights, obligations, and products before entering into a life insurance contract. The insurers must provide paper copies of summary documents to the insurance buyers and confirm that they have received them to make it easier for them to access information. Additionally, the circular stipulates that insurance companies must set up a calculation tool on their website so that customers can build their own insurance plan that suits them before entering into a contract.

To ensure the quality of agency activities of employees in the agency organization, insurance businesses can participate in the process of inspection, supervision, and handling of violations. They must carry out periodic supervision and inspection to ensure the quality of insurance product introduction and consulting activities by employees of the agency operating organizations. Insurance companies must also coordinate with the agency activities to check, review, and handle complaints related to consulting by staff and handling violations.

In terms of commissions, Circular No. 67 amends the limits by requiring a longer commission payment period. This is aimed at encouraging agents to focus on the quality of exploitation and maintenance of insurance contracts. A limit on bonus and agent support costs is also added to ensure the efficiency of business operations of insurance enterprises. This is done with the aim of developing quality rather than focusing on quantity. Overall, these measures aim to ensure transparency, fairness, and quality services in the insurance industry, promoting customer satisfaction.

Reporter: Are there any differences in the methods used to impose penalties for administrative infractions in the insurance industry?

Mr. Ngo Viet Trung: We are in the final stages of completing the draft decree for sanctioning administrative violations in the insurance sector. Our main objective is to identify any violations and create stronger administrative sanctions, including monetary fines, additional penalties, and remedial measures. Our aim is to deter potential violations and improve overall transparency in the insurance market. To achieve this, we plan to strengthen management, supervision, inspection, and examination processes for insurance businesses and credit institutions. Ultimately, our goal is to enhance the quality of insurance consulting, particularly in credit institutions, and better protect the interests of insurance participants.

Reporter: Thank you so much for the interview today!

Translator: Thúy Nga

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