Decision 07/QD-TTg 2023 approve Strategy on Vietnam’s insurance market development through 2030

DECISION

Approving the Strategy on Vietnam’s insurance market development through 2030^[1]

THE PRIME MINISTER

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 16, 2022 Law on Insurance Business;

At the proposal of the Minister of Finance,

DECIDES:

Article 1. To approve the Strategy on Vietnam’s insurance market development through 2030 (below referred to as the Strategy) with the following principal contents:

I. VIEWPOINTS ON DEVELOPMENT OF THE INSURANCE MARKET

1. To comprehensively develop the insurance market on the basis of thoroughly grasping the Party’s line and guidelines and the State’s policies and laws on the insurance field; to build and develop the insurance market toward modernity, approaching the best international standards and practices, meeting the diversified insurance needs of organizations and individuals, ensuring social security, conformity with practical conditions, sustainability, and harmony of interests of insurance participants, and adhering to the Financial Strategy through 2030.

2. To develop the insurance market in the direction of attaching importance to development in terms of both scale and quality; to strengthen the competitiveness of intermediary institutions and create connection between the insurance market and the financial market to balance components of the financial market.

3. To step up the management, supervision, inspection and examination by regulatory authorities. To improve market risk management capacity, ensuring that the market operates in a safe, healthy, sustainable and efficient manner.

4. To develop the insurance market in a synchronous and comprehensive manner under a specific plan and roadmap with cautious and firm steps which must be made public, thus not disturbing activities in the insurance market, guaranteeing the lawful rights and interests of insurance participants and the safety of the whole insurance system; to reduce social costs; to ensure the market principle with enterprises taking responsibility for their operation and state regulatory authorities playing the role of management and supervision without acting on behalf of enterprises.

II. OBJECTIVES OF THE STRATEGY

1. General objectives

a/ To complete the system of mechanisms and policies on insurance business to be adequate, transparent, fair and synchronous, approaching international standards and practices on insurance business, facilitating the comprehensive development of the insurance market, and ensuring the implementation of international commitments of Vietnam.

b/ To raise the systematic safety, sustainability and effectiveness of the market; to contribute to stabilizing the economy and ensuring social security. To develop insurance enterprises that have strong financial capacity and administration and governance capacity up to international standards, operate efficiently and are capable of competing in the domestic and regional markets.

c/ To promote digital transformation so as to create the most convenient conditions for organizations and individuals to participate in insurance. To encourage insurance enterprises to apply information technology in insurance business, diversify insurance products, and professionalize insurance distribution channels to meet incrementally increasing insurance needs of organizations and individuals. To improve risk management, cybersecurity and transactions in the cyberspace.

d/ To strengthen the effectiveness of state management of insurance business; to promote international cooperation and integration in the insurance field.

2. Specific objectives

a/ The insurance industry’s revenue will annually grow at 15% in the 2021-2025 period, reaching 3%-3.3% of GDP by 2025; and at 10% in the 2026-2030 period, reaching 3.3%-3.5% of GDP by 2030.

b/ Life insurance will cover 15% and 18% of the population by 2025 and 2030, respectively.

c/ The average annual growth rate of total assets, total investment, total technical reserves and total equity will be 15% in the 2021-2025 period and 10% in the 2026-2030 period.

d/ The revenue from provision of insurance products in the cyberspace will annually grow at the rate 10% in the 2023-2030 period.

dd/ The per-capita insurance premium will reach VND 3 million in 2025 and VND 5 million in 2030.

III. SOLUTIONS FOR IMPLEMENTATION OF THE STRATEGY THROUGH 2030

1. Completing the legal system on insurance business

To formulate and promulgate documents guiding the implementation of the Law on Insurance Business regarding issues mentioned in the Law with the following contents:

a/ To provide detailed guidance on risk-based capital, risk management, internal control and intervention measures applicable to insurance enterprises;

b/ To guide the collection and management of share-used databases and synchronization of information in the insurance market in order to serve the management and supervision of insurance business activities;

c/ To review and complete legal documents on the development of special insurance products and insurance products capable of affecting social security and promoting investment and socio-economic development such as compulsory insurance, micro-insurance, agricultural insurance, voluntary pension insurance, investment-linked insurance, disaster insurance, complementary health insurance, etc.

d/ To provide detailed guidance on types of insurance certificates, insurance agent’s certificates, insurance broker’s certificates, and insurance auxiliary operations certificates, ensuring compliance with the Law on Insurance Business and conformity with international practices and reality in Vietnam’s insurance market;

dd/ To continue reforming administrative procedures, creating favorable conditions and business opportunities for insurance enterprises.

2. Strengthening financial capacity, risk management, corporate governance, customer service quality, and publicity and transparency of insurance enterprises

a/ To improve financial capacity and financial administration, thereby increasing competitiveness in order to meet market requirements and comply with legal regulations.

b/ To build a complete risk management system at insurance enterprises, promptly detect risks arising from business operations, financial operations and corporate governance in order to measure, assess, control and eliminate risks, monitor and re-assess risks of each operation and risks related to these operations.

c/ Insurance enterprises shall self-assess, classify, and proactively adopt measures to control, prevent and mitigate risks, limit losses, and take interventions and adjustments in the course of operation so as to prevent insolvency risk and improve business efficiency.

d/ To enhance disclosure of information in a complete, comprehensive and prompt manner in order to help insurance buyers and related organizations have a clear awareness and understanding of organizational structures, business operations and financial situation of insurance enterprises, improve the discipline and transparency of the market.

dd/ To promote the listing of qualified enterprises in the securities market if they so wish; to promote credit ratings of qualified insurance enterprises and reinsurance enterprises.

e/ To self-assess and report to state regulatory authorities on indicators on quality of settlement of insurance claims and insurance benefits in accordance with law.

3. Developing and diversifying insurance products

a/ To encourage insurance enterprises to develop and diversify new product lines, following the client-centric approach in order to better meet diversified needs of organizations and individuals in different economic and social life activities, specifically as follows:

- For life insurance: to encourage research and development of insurance products for the elderly; and insurance products integrated with medical support and healthcare services for insurance participants;

- For non-life insurance: to promote the development of agricultural insurance products; catastrophe insurance, disaster insurance and insurance against new types of risks under the mechanism of the insurance risk fund; green insurance; insurance products concerning cybersecurity and transactions in the cyberspace; to cooperate and share information to build a base net insurance premium and restrict competition by lowering insurance premiums which affects financial prudence, and reduce the risk of insurance profiteering.

b/ To promote products that are meaningful to the community and contribute to stabilizing social security such as micro-insurance, health insurance, and voluntary retirement insurance, etc.

c/ To encourage the renewal of the method of developing and designing insurance products associated with the Industrial Revolution toward personalization based on customers’ characteristics and needs.

d/ To promote the application of e-transactions, e-signatures and e-contracts in insurance transactions, ensuring safety, confidentiality and reliability.

4. Diversifying and professionalizing insurance distribution channels

a/ To diversify distribution channels toward providing the best services to insurance buyers and facilitating customers’ access to insurance.

b/ To professionalize distribution channels through the issuance of regulations on or professional codes of ethics; to build a system to assess quality of the system of distribution channels.

c/ To standardize insurance distribution via institutional agents and banking agents; to improve the quality of training and exams of insurance agents.

5. Developing and improving the quality of human resources

a/ To improve the quality of human resources, especially human resources in the new fields specified in the Law on Insurance Business such as risk management, risk-based capital, financial administration of insurance enterprises; information technology, etc., through training, recruitment, payment, etc.

b/ To strengthen and diversify the training, further training and dissemination of knowledge on the insurance market.

c/ To apply information technology and mobilize social resources for training, organizing exams and granting insurance certificates, insurance agent’s certificates, insurance broker’s certificates, and insurance auxiliary operations certificates; to strengthen training cooperation with international training institutions in insurance and other fields of operation.

6. Promoting public communications about insurance

a/ To promote public communications about and dissemination of information on the role, significance and necessity of insurance and the law on insurance business to organizations and individuals. To raise people’s awareness about insurance and the insurance market.

b/ To promptly disseminate changes in regulations on insurance business, and the State’s insurance policies for people and insurance enterprises and related organizations.

c/ To diversify methods of public communications about and dissemination of insurance knowledge through websites, the mass media, the insurance industry’s events, fairs, and contests, etc.

7. Promoting the application of information technology in insurance business and state management of insurance business

a/ To encourage and promote insurance enterprises, reinsurance enterprises and insurance brokerage enterprises to set up modern information technology systems for application in all stages of the insurance business operation and adopt measures to protect and ensure confidentiality for customers’ information.

b/ To formulate a regulatory sandbox for insurance technology services (Insurtech) according to the best practices, creating favorable conditions for enterprises to develop new digital insurance services.

c/ To establish a mechanism for sharing of information among insurance enterprises in order to prevent and control insurance fraud, provide legal support and consultancy, and settle complaints; to establish a mechanism for sharing of information between the insurance business database and specialized databases and  national databases.

d/ To promote digital transformation of insurance market management and development, and develop and use digital platforms to promote the development and optimization of the insurance market. To apply digital technology solutions and digital platforms to conduct online monitoring and measurement of results of implementation of state management criteria in the insurance field, ensuring transparency, accuracy and timeliness.

8. Strengthening the effect of state management and the effectiveness of inspection, examination, supervision and administrative sanctioning in the insurance field

a/ To shift to risk-based management and supervision through examination of capital adequacy criteria, classification and evaluation of enterprises, risk management, and updating and completion of the monitoring and early warning system.

b/ To develop and issue a manual on risk-based insurance management and supervision, including risk-based formulation of enterprise profiles and classification and criteria for application of interventions (if any); to develop and issue a manual on examination and inspection of insurance enterprises.

c/ To enhance the Ministry of Finance’s role and responsibilities in management, supervision, inspection, examination, and handling of cases of violation so as to deter and raise enterprises’ sense of compliance.

d/ To enhance the exchange of information and coordination with regulatory agencies in other related fields in development of new insurance products, new business methods and management, supervision, examination and inspection of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam.

dd/ To promote coordination with foreign regulatory authorities in managing and supervising insurance enterprises and reinsurance enterprises, and preventing and controlling money laundering and terrorist financing, especially in managing and supervising cross-border insurance provision and multinational business of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam.

e/ To promote transparency in regulatory authorities’ management and supervision of the insurance market, promoting the publicization of information on annual supervision and management activities like other insurance regulatory authorities in the world.

9. Strengthening the role of socio-professional organizations in insurance business

a/ To enhance the role of socio-professional organizations in conducting public communications about insurance and participating in mediation and settlement of disputes in insurance business.

b/ To encourage socio-professional organizations to act as focal points of the whole insurance market in summing up members’ opinions, feedback and proposals regarding mechanisms, policies, solutions for development of the insurance market and to connect with related agencies so as to ensure effective implementation of policies.

c/ To promote self-governance of socio-professional organizations in the insurance industry in supporting state regulatory authorities in the fields of legal affairs, institution and policy making and human resource training; supervising members’ law compliance; and preventing insurance profiteering, money laundering and terrorist financing in insurance business.

10. Promoting international cooperation and integration in the insurance field

a/ To formulate and implement an integration roadmap in the insurance business in line with ASEAN’s insurance integration roadmap and other international commitments.

b/ To proactively and actively participate in the Southeast Asian Forum of Insurance Regulators and the International Association of Insurance Regulators; to make the best of the support and bilateral cooperation between insurance regulatory authorities through cooperation programs, memorandums of understanding, staff training and professional seminars.

c/ To properly and effectively implement commitments on international economic integration in the insurance field, ongoing cooperation programs with international organizations and partners, especially insurance services in trade agreements to which Vietnam is a contracting party.

d/ To encourage insurance enterprises to continue to research and make offshore investment to expand business opportunities, focusing on potential and favorable areas on the principles of safety and efficiency.

Article 2. Responsibilities of related ministries, sectors and agencies in organizing the implementation of the Strategy

1. The Minister of Finance shall assume the prime responsibility for, and coordinate with ministries, ministerial-level agencies, government-attached agencies and provincial-level People’s Committees in, organizing the implementation of the Strategy according to this Decision; formulate plans and roadmaps for, and direct and monitor, the implementation of the Strategy; coordinate with related ministries and sectors in balancing and allocating annual state budget funds for implementation of the Strategy in accordance with the law on the state budget and other relevant laws; and promptly report adjustments and supplementations to the Strategy to the Prime Minister for consideration so as to meet practical requirements.

2. Ministries, ministerial-level agencies, government-attached agencies and provincial-level People’s Committees shall coordinate with the Ministry of Finance in implementing the Strategy, ensuring consistency and uniformity so as to serve the implementation of sectoral and local socio-economic development plans.

Article 3. This Decision takes effect on the date of its signing.

Article 4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related organizations and individuals shall implement this Decision.-

For the Prime Minister
Deputy Prime Minister
LE MINH KHAI