DECISION

APPROVING STRATEGY FOR DEVELOPMENT OF VIETNAM'S INSURANCE MARKET BY 2030

THE PRIME MINISTER OF VIETNAM

Pursuant to the Law on Government Organization dated June 19, 2015; the Law on Amendments to the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

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

At the request of the Minister of Finance of Vietnam;

HEREBY DECIDES:

Article 1. The Strategy for development of Vietnam’s insurance market by 2030 (hereinafter referred to as “Strategy”) is hereby given approval. The Strategy, inter alia, includes the following contents:

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1. Comprehensively develop the insurance market in the spirit of policies and guidelines of the Communist Party of Vietnam as well as the State regulations and laws on insurance; establish and develop the insurance market in a modern manner that should access the best international practices and standards, meet various insurance demands of organizations and individuals, ensure social security, be sustainable and conformable with actual conditions, ensure balance of interests of parties of insurance policies, and closely follow the Financial Strategy by 2030.

2. Develop the insurance market towards paying attention to scale and quality of insurance services; improve the competitiveness of intermediaries, create the connection between the insurance market and the financial market in order to ensure the balance of parts of the financial market.

3. Improve the efficiency in management, supervision and inspection of regulatory authorities. Improve the capacity for managing market risks in order to ensure the safe, healthy, sustainable and efficient operation of the insurance market.

4. Develop the insurance market in a synchronous and comprehensive manner according to specific, prudent and firm plans and roadmap that should be made available to the public, avoid disruption to the insurance market, and ensure legitimate rights and interests of policyholders as well as the safety of the entire insurance system; reduce social costs; ensure the compliance with market principles and promote the autonomy of enterprises while regulatory authorities shall only perform their managerial and supervision tasks without performing tasks on behalf of enterprises.

II. OBJECTIVES

1. General objectives

a) Establish mechanisms and policies on insurance business in a sufficient, transparent, fair and synchronous manner, access international practices and standards for insurance business operations, facilitate the comprehensive development of the insurance market, and ensure the fulfillment of Vietnam’s international commitments.

b) Improve the systematic safety, sustainability and efficiency in operation of the insurance market; contribute to the economic stability and ensure social security. Develop insurance companies that should have a strong financial capability and managerial capacity satisfying international standards, operate efficiently and should be capable of positively competing in the domestic market and regional markets.

c) Step up digital transformation with the aim of facilitating the organizations and individuals' participation in insurance. Encourage insurance companies to apply information technology to their insurance business operations, diversify insurance products and professionalize insurance distribution channels to meet more and more increasing demands of organizations and individuals. Improve risk management, cybersecurity and safety as well as cyberspace transactions.

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2. Specific objectives

a) The average growth rate in revenues of the insurance industry is expected to reach 15%/year in the 2021 – 2025 period with a scale reaching 3% - 3,3% of GDP by 2025; that average growth rate is expected to reach 10%/year in the 2026 – 2030 period with a scale reaching 3,3% - 3,5% of GDP by 2030.

b) By 2025, 15% of the population is expected to have life insurance policies, and this number is expected to reach 18% by 2030.

c) The average growth rate in total assets, total investment, total technical provisions, and equity is expected to reach 15%/year in the 2021 – 2025 period, and 10%/year in the 2026 – 2030 period.

d) The average growth rate in revenues earned from provision of insurance products online is expected to reach 10%/year in the 2023 – 2030 period.

dd) The average insurance spending per capital is expected to reach VND 3 million and VND 5 million by 2025 and by 2030 respectively.

III. SOLUTIONS BY 2030

1. Revise legal framework on insurance business

Formulate and promulgate guiding documents for implementation of the Law on Insurance Business in respect of the matters set forth in that Law and the following contents:

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b) Provide guidelines on data collection, management of shared databases and synchronization of information on the insurance market so as to serve the management and supervision of insurance business operations;

c) Review and revise legislative documents on development of specific insurance products and insurance products that may impact on social security, promote investment and socio-economic development such as compulsory insurance, microinsurance, agricultural insurance, voluntary pension insurance, investment-linked insurance, disaster insurance, combined commercial and social health insurance products, etc.

d) Provide detailed guidelines on insurance practicing certificates, insurance agent practicing certificates, insurance brokerage practicing certificates and certificates of practicing in insurance ancillary services that should be conformable with the provisions of the Law on Insurance Business, international practices as well as actual situations of Vietnam's insurance market;

dd) Continue performing administrative reform, facilitate and provide business opportunity for insurance companies.

2. Increase financial, risk management and corporate management capability, quality of customer services and transparency of insurance companies

a) Increase financial and financial management capability, thereby improving their competitiveness with the aim of meeting market demands and adhering to regulations of law.

b) Insurance companies shall assume responsibility to establish their own risk management systems that will promptly detect risks arising from insurance operations, financial activities and corporate management so as to measure, assess, control and eliminate risks, manage and re-assess risks from each of these operations as well as their related risks.

c) Insurance companies shall carry out internal assessment and classification, proactively adopt measures for controlling, preventing and reducing risks, and minimizing losses, implement timely intervention and corrective measures during their operation with the aim of avoiding insolvency and improving their operational efficiency.

d) Strengthen the disclosure of adequate, comprehensive and timely information to help insurance buyers and relevant organizations clearly know about the organizational structure, business and financial status of insurance companies, thereby improving the market discipline and transparency.

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e) Insurance companies shall self-assess and submit reports to regulatory authorities on quality criteria, settlement of claims and payment of insurance benefits in accordance with regulations of law.

3. Develop and diversify insurance products

a) Encourage insurance companies to develop and diversify new and customer-oriented insurance product lines so as to meet various demands of organizations and individuals in economic activities and everyday life. To be specific:

- Regarding life insurance: encourage study and development of insurance products for the elderly; insurance products integrated with provision of medical and healthcare services for policyholders;

- Regarding non-life insurance: speed up the development of agricultural insurance products; insurance products for natural calamities, disasters and other risks through insurance risk funds; green insurance products; insurance products for cybersecurity and safety, and cyberspace transactions; cooperation and sharing of information to set up net premiums, avoid competition by means of driving down insurance premiums resulting in adverse influences on financial safety, and preventing insurance frauds.

b) Pay attention to development of community-based insurance products which contribute to stabilization of social security systems such as microinsurance, health insurance and voluntary pension insurance products, etc.

c) Encourage the adoption of new methods for developing and designing insurance products associated with the industrial revolution; insurance products designed based on specific demands of customers.

d) Speed up the application of electronic transactions, electronic signatures and electronic contracts in insurance transactions, ensuring safety, confidentiality and reliability.

4. Diversify and professionalize insurance distribution channels

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b) Professionalize distribution channels by means of promulgating regulations or code of ethics for practicing insurance; establish the quality assessment system for distribution channels.

c) Standardize the distribution of insurance products through organizational agents or banking agents; improve quality of training and examination for insurance agent practicing certificates.

5. Develop and improve quality of human resources

a) Improve quality of human resources, especially human resources in new fields prescribed in the Law on Insurance Business such as risk management, risk-based capital, financial management of insurance companies, information technology, etc. by means of recruitment, training, payment policies, etc.

b) Strengthen and diversify activities of training, drilling and dissemination of knowledge about insurance market.

c) Apply information technology and promote private sector involvement in training, organization of examinations and issuance of insurance practicing certificates, insurance agent practicing certificates, insurance brokerage practicing certificates, and certificates of practicing in insurance ancillary services; intensify cooperation with international training institutions in providing training courses in insurance and other specialized fields.

6. Speed up dissemination of information about insurance

a) Speed up the dissemination of information on roles, significance and necessity of insurance and law regulations on insurance business to organizations and individuals. Increase people’s awareness of insurance and insurance market.

b) Promptly disseminate information about changes in regulations of law on insurance business, and the State policies on insurance to people, insurance companies and relevant organizations.

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7. Speed up application of information technology to insurance business operations and state management of such insurance business operations

a) Encourage and promote insurance companies, reinsurance companies and insurance brokerage companies to build and apply modern information technology systems to all insurance business stages, and adopt measures for protecting information and ensuring confidentiality of information on customers.

b) Establish a trial legal framework for insurance technology (Insurtech) services according to the best practices so as to facilitate enterprises’ development of new digital insurance services.

c) Formulate mechanisms for sharing of information between insurance companies with the aim of preventing insurance frauds, assisting and providing legal consulting, and settling complaints; mechanisms for sharing of information between the insurance business database and other specialized databases and national databases.

d) Promote digital transformation in management and development of insurance market, development and use of digital platforms for promoting development and optimization of insurance market. Apply digital technology solutions and digital platforms to online supervision and measurement of outcomes of state management criteria in insurance industry which should be transparent, accurate and timely.

8. Intensify effectiveness of state management and efficiency in supervision, inspection and imposition of penalties for administrative violations in insurance sector

a) Adopt risk-based management and supervision methods by means of inspecting the maintenance of required capital adequacy ratios, carrying out classification and assessment of enterprises, risk management, updating and maintaining a completed supervision and early warning system.

b) Formulate and issue manuals for risk-based insurance management and supervision, including guidelines for formulation of business profiles and risk-based ranking of insurance companies, and criteria for implementing intervention measures (if any); manuals for inspection of insurance companies.

c) Enhance the role and responsibility of the Ministry of Finance of Vietnam in managing, supervising, inspecting and taking strong actions against violations in order to warn insurance companies and increase their compliance with laws.

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dd) Intensify cooperation with foreign regulatory authorities in managing and supervising insurance companies and reinsurance companies, performing anti-money laundering and terrorism financing tasks, especially managing and supervising provision of cross-border insurance services and multinational business operations of insurance companies, reinsurance companies and branches of foreign companies in Vietnam.

e) Intensify the transparency in management and supervision of insurance market by regulatory authorities, promote the disclosure of annual management and supervision tasks of regulatory authorities which should be same as that of other insurance supervisory authorities in the world.

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

a) Enhance the role of socio-professional organizations in disseminating information on insurance, participation in remediation, settlement of disputes arising in insurance business sector.

b) Encourage socio-professional organizations to proactively act as the contact points for the entire insurance market in consolidating opinions, enquiries and proposals made by members of trade associations concerning policies, mechanisms and policies for development of insurance market, and connecting them with relevant regulatory authorities in order to effectively implement policies.

c) Promote the autonomy of socio-professional organizations in insurance industry in assisting regulatory authorities in implementing legislation, rules, policies and providing human resource training, supervising compliance with regulations of law by their members; preventing insurance frauds, money laundering and terrorism financing in insurance business operations.

10. Strengthen international cooperation and integration in insurance industry

a) Formulate and implement the roadmap for insurance market integration which should be conformable with ASEAN’s insurance market integration roadmap and other international commitments.

b) Proactively and actively join forums of insurance supervisory authorities of the Southeast Asian Nations and the International Association of Insurance Supervisors; take advantage of assistance and bilateral cooperation between insurance supervisory authorities by means of cooperation programs, memorandum of understanding, personnel training, and professional insurance seminars.

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d) Encourage insurance companies to continue doing outward investment studies so as to find new business opportunities, paying attention to areas with potential advantages and ensuring safety and efficiency.

Article 2. Responsibilities of ministries and relevant regulatory authorities

1. The Minister of Finance of Vietnam shall play the leading role and cooperate with relevant Ministries, ministerial agencies, Governmental agencies, and provincial People's Committees in organizing the implementation of the Strategy enclosed with this Decision; formulate plan and roadmap for implementing the Strategy, and direct the implementation thereof; cooperate with relevant Ministries and regulatory authorities in balancing and allocating annual state budget for implementing the Strategy in accordance with regulations of law on state budget and other relevant laws; submit timely reports to the Prime Minister of Vietnam for making appropriate amendments to the Strategy.

2. Ministries, ministerial agencies, Governmental agencies, and provincial People's Committees shall cooperate with the Ministry of Finance of Vietnam in organizing the implementation of the Strategy which should be consistent and in line with the implementation of sectoral and provincial social – economic development plans.

Article 3. This Decision comes into force from the date on which it is signed.

Article 4. Ministers, heads of ministerial agencies, heads of governmental agencies, Chairpersons of Provincial People’s Committees, and relevant organizations and individuals shall implement this Decision.

PP. PRIME MINISTER
DEPUTY PRIME MINISTER




Le Minh Khai

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