Forcing customers to buy insurance is fined 100 million VND

In the draft Decree amending and supplementing a number of articles of the Government regulating insurance and lottery business, the Ministry of Finance proposed to double the penalty for violations of regulations on the implementation of life insurance and health insurance. Specifically, the current penalty (from 40 - 50 million VND) will be increased to 90 - 100 million VND for many violations.

Violations that are penalized in this framework include consultants not clearly and fully explaining to buyers about the benefits, liability exclusion clauses, rights and obligations of the buyer when entering into an insurance contract; not providing the buyer with evidence of entering into an insurance contract. Or there is a phenomenon of threatening or forcing to enter into an insurance contract; product introduction documents do not honestly reflect the basic information in the rules and terms of the insurance product; do not clearly state that participating in the insurance product is not a mandatory requirement to perform or enjoy any other service of the distribution partner; deploying insurance products belonging to investment-linked insurance, retirement insurance, health insurance not in accordance with regulations...

Ép khách hàng mua bảo hiểm bị phạt 100 triệu đồng - Ảnh 1. — Need to increase penalties for violations in life insurance activities

Revenue of thousands of billions, fine of 100 million is too low

According to Dr. Tran Nguyen Dan, Ho Chi Minh City University of Economics, the fine increased to about 100 million VND for violations in the insurance field is not enough to deter and prevent. Especially with actions such as forcing people to buy insurance; inadequate advice on the responsibilities, rights and obligations of customers causing them to misunderstand the nature of insurance. In particular, the revenue from insurance activities can be up to thousands of billions of VND each year that businesses receive, so the above fine is too low.

For actions such as forcing customers to buy insurance or irresponsible advice, only offering more benefits to "entice" buyers, penalties should be imposed on a case-by-case basis. For example, if there is a phenomenon of "forcing" customers to buy insurance when there are many complaints, the whole process must be considered. If there are thousands of such cases, then a fine of 100 million VND should be calculated for one contract, not just a fine of 100 million VND for this act because thousands of other people have suffered losses.

"Many countries have very heavy administrative penalties related to insurance activities. The penalty will be calculated based on the revenue ratio. For example, in the UK, there was a major lawsuit in which millions of customers were sold insurance contracts that they did not need. As a result, the banks and insurance companies involved had to pay billions of pounds in compensation. Therefore, the penalty in the draft proposed by the Ministry of Finance this time is still too low. With such a large annual profit, insurance companies and agents are still willing to withdraw money to pay the fine to sell insurance without fear of being fined," said Dr. Tran Nguyen Dan.

Thinking about punishment must be scary, it is enough to deter.

Lawyer Truong Thanh Duc, Director of ANVI Law Firm, also assessed that although the fine has doubled compared to the present, this is still too little, not enough to scare individuals or businesses. While in many countries, the principle of punishment is to make individuals and organizations think about it and be afraid, that they can go bankrupt if they violate. Especially in some dangerous fields, related to life and trust such as insurance, it is mandatory that the product seller is not allowed to violate. There are recent violations that have had their fines increased to high levels, such as violations in the banking and securities sectors. Therefore, it is necessary to review all related regulations. In particular, starting to adjust from the Law on Handling of Administrative Violations and clearly stating the fines for specific activities, including insurance business.

Lawyer Truong Thanh Duc emphasized: Penalties must be increased as other countries have applied. Specifically, in the insurance sector, for individuals who violate the law, the fine is usually in the billions, for organizations, it is also from billions and up, and can be up to hundreds of billions of dong. Only heavy fines can make individuals and insurance agents not dare to commit wrongdoings or turn a blind eye to wrongdoings, forcing customers to buy insurance as in the recent past. In addition, it is necessary to clearly define the sanctioning authority of relevant agencies from local authorities to the Ministry of Finance. At the same time, state management agencies must continue to promote propaganda for customers participating in insurance activities to clearly understand the regulations on rights and responsibilities; strengthen inspection and punishment.

Dr. Tran Nguyen Dan proposed that the Ministry of Finance should regulate which entities should be punished when there is a violation. For example, in "forcing" customers to buy insurance, the subjects to be punished must be individuals and large agents such as banks when violations occur. Insurance companies can also be jointly punished when there is no supervision during the business process. In addition, there should be more regulations on the supervisory role of the Ministry of Finance for insurance agents such as banks and financial institutions. This is an area under the management of the Ministry of Finance, so all participants in the insurance market can be inspected during the implementation and deployment of insurance products to protect customers. Especially after the story of punishment, the inspection and supervision of the implementation and deployment of insurance products must also be strengthened to limit wrongdoings in the market and regain people's trust.

The Resolution of the 5th Session of the 15th National Assembly, issued in June 2023, clearly stated that one of the tasks that needs to be done is to comprehensively inspect the life insurance market, focusing on investment-linked insurance. In 2023, the Ministry of Finance will develop a plan to inspect and examine 10 insurance companies. At the end of June, the Ministry of Finance announced the results of the inspection of 4 life insurance companies and implemented activities through cooperation with banks to conduct life insurance business with many violations. This agency said that it will continue to develop a plan to inspect insurance companies as well as develop an inspection plan in 2024.

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