Vietnamese Finance Minister Ho Duc Phoc has said that quality needs to be lifted in the country’s fast-expanding life insurance sector following multiple customer complaints.
He explained that many established life insurers, including some that have been operating in the Vietnamese market for more than 25 years, only focus on revenue and ignore quality.
The market has recently witnessed a crisis of confidence because many residents are frustrated with the quality of life insurance enterprises, including bancassurance services, a popular channel through which life insurers and banks cooperate to sell insurance policies.
People have complained that they were forced by banks to buy insurance policies in order to access bank loans. Others have said their savings deposits were partially used to purchase insurance without their knowledge.
The life insurance market has recorded an average growth rate of 20% a year, and the minister said the sector has contributed to forming the backbone of the financial industry.
Overall, he said the quality of insurance agents has improved over the years. Businesses have invested in agent training, information technology, and increased service quality and customer care.
However, sales are still the top priority to maximize profit, and some companies have failed to properly manage their agents, with misappropriation cases hitting customers who had not carefully read their contracts before signing.
The minister said regulators are dealing with wrongdoings in the market. Regarding bancassurance, he said regulators are aware of the recent problems and are working to resolve the situation. The Ministry of Finance and the State Bank of Vietnam have been working together to crack down on any wrongdoings.
He elaborated that new regulations on insurance agents, including bancassurance, have been drafted in a stricter and more comprehensive manner to add to the Law on Insurance Business. The ministry has submitted them to the government and expects the changes to be made soon to improve market quality and better protect customers' interests.
In mid-April, the Insurance Supervisory Authority requested life insurance companies to ensure the information in their product introduction documents complies with the law. The order came amid complaints from many customers saying they had been misled by life insurers.
Insurers have been instructed to strictly comply with regulations on the disclosure of information on insurance operations, especially information related to the content customers need to pay attention to for each insurance product as prescribed in Article 119 of the Law on Insurance Business.
Companies also need to control the information published in their sales brochures.
The regulatory agency has instructed businesses to strictly deal with insurance agents who arbitrarily change the information in these documents that could lead to customers being misled about insurance benefits.
Baoviet Life, Dai-ichi, Prudential, Manulife and AIA were the top life insurers in Vietnam in terms of premiums from 2015-2022, according to the companies' reports.
In 2022, Baoviet Life ranked first with VND41.68 trillion ($1.78 billion) in insurance premiums, up 10.1% year-on-year. The company's after-tax profit reached VND975 billion ($41.59 million), up 10%.
Prudential Vietnam followed with more than VND30.56 trillion ($1.3 billion) in 2022, up 8.1% year-on-year. The firm earned after-tax profit of VND3.64 trillion ($155.2 million), a 7.7-fold increase.
Manulife, the first foreign-invested life insurer in the country, recorded insurance premiums of VND26.84 trillion ($1.14 billion), up 9.5%, and after-tax profit of VND2.56 trillion ($109.3 million) after making a loss of VND4.74 trillion ($202.3 million) in 2021.