National Assembly Delegate: Microinsurance has not yet developed due to the lack of appropriate legal regulations.

On the morning of October 29, under the direction of Vice Chairman of the National Assembly Nguyen Duc Hai, the National Assembly discussed online the draft Law on Insurance Business (amended).

The draft Law's content includes 8 chapters and 156 articles, following the purpose, guiding viewpoints and specifying 7 groups of policies proposed to develop the Law project, which were approved by the Government in Resolution No. 121/NQ-CP dated December 31, 2019.

Panorama of the session at the National Assembly House. Photo: Quochoi.vn

At the discussion session, delegates agreed to promulgate the Law on Insurance Business (amended) to change the current Law on Insurance Business which was issued 20 years ago, to perfect legal regulations on insurance business and expected to bring a boost to our country's commercial insurance market.

Delegates also had many opinions on each group of policies and specific provisions in the draft law; especially related to micro-insurance, which is a type of insurance for low-income individuals and households to protect life, health and property against possible risks.

Delegate Dieu Huynh Sang - Binh Phuoc delegation commented: Micro-insurance plays an important role in ensuring social security, contributing to hunger eradication and poverty reduction. However, according to the delegate, the implementation in our country has not really developed, currently there are only about 200,000 contracts.

The reason is that the product is mainly aimed at customers in remote, hard-to-reach areas; while the implementation cost is often higher than conventional products but the risk is higher, so most insurance businesses do not want to provide micro-insurance and in reality there is still a gap in policies and laws on micro-insurance.

Vice Chairman of the National Assembly Nguyen Duc Hai chaired the meeting. Photo: VNA

According to the draft Law on Insurance Business (amended), organizations that are provided with micro-insurance include insurance enterprises licensed to establish and operate in Vietnam and mutual support organizations that provide it to their own members.

However, delegate Dieu Huynh Sang expressed concern that the provisions in the draft law are not strict and specific in preventing risks for micro-insurance business activities of mutual organizations; therefore, if there are risks, it will have a huge impact on society.

Therefore, the delegates suggested that the drafting committee clarify the profit and non-profit requirements of micro-insurance; at the same time carefully assess the economic impact, costs, and benefits of this type of insurance; fully supplement regulations; clarify the difference between micro-insurance and conventional insurance; and determine the role of participating organizations.

Also related to microinsurance, delegate Lam Van Doan - Lam Dong delegation agreed on the need to add regulations on microinsurance in the draft law because the current law does not have separate regulations on microinsurance.

“Due to the lack of appropriate legal regulations, microinsurance has not yet developed,” said delegate Doan, while analyzing that in our country there is a huge market potential for microinsurance development when by 2021, 67% of the working-age workforce, an estimated 35 million people, have not participated in social insurance; and voluntary social insurance has only about 1.3 million participants.

National Assembly delegates from Nghe An attend the meeting at the headquarters of the National Assembly Delegation, People's Council and People's Committee of the province. Photo: Thanh Duy

On the other hand, international experience also shows that many governments consider developing microinsurance as one of the solutions to improve people's lives, especially the poor and low-income people.

The effectiveness and potential of micro-insurance products are large, but according to the Lam Dong delegation, the design in the draft Law on Insurance Business (amended), the content mentioning micro-insurance is still thin, only 1 chapter including 2 articles with very framework regulations. This is also the opinion that many delegates agree with and express their opinions.

On that basis, delegate Lam Van Doan recommended that attention should be paid to developing a system of organizations, programs, and micro-insurance projects that operate safely and sustainably, targeting the poor, near-poor, and low-income people, in line with the goals and policies of the Party and State on social security and sustainable poverty reduction.

To make regulations on microinsurance feasible, delegates also suggested that drafting and reviewing agencies need to consult, seek opinions, and have direct dialogue with insurance companies and socio-political organizations that want to participate in microinsurance business to learn, analyze, and understand the needs, difficulties, and barriers in implementing microinsurance products; thereby building a legal framework that is appropriate to reality.

“If we do not determine the specificity of this product compared to regular commercial insurance products, the regulations will be very difficult to implement,” said delegate Doan.

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On the other hand, it is necessary to study and promulgate mechanisms and policies to encourage micro-insurance products for the poor and low-income people, including cooperation policies between businesses, micro-insurance providers and financial technology organizations to increase the application of technology to simplify procedures, provide convenient services at low costs for the poor and people in rural areas; create conditions to encourage socio-political organizations, local authorities, social organizations, and postal networks to actively participate in coordinating to support the development of micro-finance activities, including micro-insurance.

Also at the discussion session, delegates discussed many contents related to new regulations to protect the rights of insurance participants and overcome current shortcomings in insurance business activities; insurance contracts; types of compulsory insurance; anti-profiteering and fraud in insurance business; policies to develop insurance business activities, insurance database system...

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