Delegate Nguyen Thi Thuy requested to inspect and clarify whether there are signs of fraud and deception of customers in insurance sales consulting.
At the National Assembly’s discussion session on socio-economics and budget this morning, Ms. Nguyen Thi Thuy, Vice Chairwoman of the Judicial Committee, raised the shortcomings of the insurance market. She mentioned life insurance and investment-linked insurance products in which customers are forced by banks to buy insurance with loans or are tricked from saving to buying insurance.
"The Ministry of Finance needs to conduct a comprehensive inspection of life insurance, focusing on investment-linked insurance. The Ministry of Public Security must verify and clarify whether there are signs of fraud or deception of customers. If there are, it should propose to initiate an investigation," said the Deputy Chairman of the Judiciary Committee.
For insurance companies, she said, they need to review the stages of contract design, consulting, signing contracts and handling customer complaints.
The National Assembly delegate's proposal was made in the context of many recent complaints and lawsuits by life insurance buyers and companies selling this product, making buyers feel insecure.
She analyzed that life insurance contracts are often hundreds of pages thick with terms, and the main loss lies with the buyer if they encounter an unscrupulous consultant.
"Even financial and legal experts have difficulty accessing insurance contracts. Many experts say they only understand 70% of the contract's content. No matter how carefully they read it, they still cannot understand the flexibility of the insurance contract's content," said Ms. Thuy.
In addition, life insurance contracts are often in the form of investment links, meaning that a portion of the customer's money is used by the company to invest in stocks and bonds, making it even more complicated.
Ms. Nguyen Thi Thuy, Vice Chairwoman of the National Assembly's Judicial Committee, spoke at the socio-economic discussion session on the morning of May 31. Photo: Hoang Phong
Meanwhile, the team of insurance consultants - the key link leading to recent disputes and lawsuits - many people give ambiguous and misleading advice on products to quickly "close deals", sign contracts and receive commissions.
According to the regulations of the Ministry of Finance, the maximum commission rate for consultants is 40% of the contract value in the first year. And currently, this rate at insurance companies is 30-40%. For example, with an insurance contract of 100 million VND, the consultant will receive 30-40 million VND in the first year.
Therefore, in order to achieve sales, many consultants have given incorrect advice, making customers mistakenly believe that they are participating in a highly profitable product, are protected from health and compensated if something unfortunate happens, and when the contract ends, they will receive the entire amount paid plus interest.
But according to her, the reality is not like that. Some investment-linked insurance products only have expected profits, completely dependent on the market. Insurance companies investing this amount are not sure to bring profits.
Or many consultants only tell customers about the benefits they are entitled to, without clearly stating the binding terms, the disadvantage of early termination of the contract (first 1-2 years after joining) is the risk of losing all the money paid. "This is the source of the recent frustration due to the lack of transparency in consulting," she commented.
In addition, according to the Vietnam Insurance Association, in 2022, there were 3,100 insurance agents who committed violations, including intentionally giving wrong advice on insurance contracts. "It is unreasonable and unethical for consultants not to have enough heart and experience to push all the responsibility onto the buyer. Insurance companies know but deliberately ignore the mistakes of consultants and insurance agents, causing disadvantages to customers?", the Deputy Chairman of the Judicial Committee raised the issue.
Sharing recently about the insurance market, Finance Minister Ho Duc Phoc also admitted that many insurance companies only focus on revenue, neglecting quality, causing the industry to grow rapidly in quantity, but not in quality. "Many insurance companies in fact only focus on training agents in the direction of how to sell products. That means, they bias training in sales skills over basic economic knowledge, insurance expertise, as well as professional ethics," the Minister assessed.
He also said that the market needs to change drastically. The Minister said that many new regulations on insurance agents, including bancassurance, have been specified in a stricter and more complete manner in the draft documents guiding the revised Law on Insurance Business. The Ministry of Finance has submitted them to the Government and expects them to be issued soon to improve quality in the direction of protecting customers' rights.
According to statistics, the rate of life insurance participation in Vietnam is 11% of the population, while in the Philippines it is 38%, in Malaysia it is 50%, and in the US it is 90%. Ms. Thuy believes that insurance companies need to convince customers.
"Participating in insurance requires honesty and transparency from both sides to bring benefits. Only when there is transparency and sincerity will people not turn their backs on life insurance," Ms. Nguyen Thi Thuy concluded.
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