Receiving questions from many National Assembly deputies about solutions to improve the health of the insurance market, Minister of Finance Ho Duc Phoc said that he will inspect all insurance companies, promptly correct violations, and resolve benefits for participants.
 |
| Questioning session with Minister of Finance Ho Duc Phoc |
Not sure if there is still cross-selling of insurance or not.
All 43 delegates who registered to question and 4 who registered to debate were given the opportunity to express their opinions. The questioning session with Minister of Finance Ho Duc Phoc earlier this week raised many hot issues, from gold and foreign currency management, price appraisal to betting business, restoring order to the insurance market...
However, the moderator did not invite anyone to "share the fire", so Minister Ho Duc Phoc alone could not clarify all the concerns of the delegates, including the management and supervision of insurance business activities and service activities in the life insurance business sector - an issue that many delegates were interested in questioning from the beginning of the session to the end of the session.
The results of the first inspection of 4 cross-selling insurance companies through banks announced by the Ministry of Finance in July 2023 showed that the total revenue from insurance sold through commercial banks as of December 31, 2021 was about VND 5,000 billion. However, there are companies where up to 70% of customers who bought insurance canceled after the first premium payment (usually the first premium payment is for 1 year or 2 years). Most customers who bought insurance through banks immediately after signing the contract decided to cancel, accepting to lose all the insurance premiums they had paid.
Citing the above information, member of the National Assembly's Economic Committee, delegate Pham Van Thinh (Bac Giang) asked: "How does the Minister assess and handle the responsibilities of related organizations through the results of this inspection? Are there signs of law violations causing consequences and great damage to the majority of customers who have canceled their contracts?"
“What measures does the Ministry of Finance have to ensure that in the future, insurance companies do not commit similar violations, especially in the context of the prohibition of selling non-compulsory insurance products associated with the provision of banking products and services in any form, which has been added to Clause 5, Article 15 of the Law on Credit Institutions, passed by the National Assembly at the recent Fifth Extraordinary Session?”, Mr. Thinh continued to ask.
Responding to questions, Minister Ho Duc Phoc said he “did not dare to confirm” whether the situation mentioned by the delegate still exists or not. But in the past, there were commercial banks where when employees advised people to borrow money, they also instructed them to buy insurance. If the borrower bought insurance, the benefits for the bank and the consultant were huge.
“Therefore, when businesses borrow money and pay the first insurance, they cancel it. If they continue to pay in the following years, it will be prolonged and the damage will be greater. It is better to lose an initial amount and have this initial amount added to the loan cost so that it does not have to be prolonged in the following years,” Mr. Phoc explained.
Life insurance revenue decreased significantly.- Minister of Finance Ho Duc Phoc
Vietnam currently has 82 insurance companies and enterprises, of which 19 are life insurance companies (2 are domestic insurance companies, the rest are foreign and foreign joint ventures). The total assets of these companies are about 913,000 billion VND and the investment back into the economy is nearly 700,000 billion VND. Insurance revenue in 2023 will reach 227,000 billion VND, down 8% compared to 2022, of which non-life insurance revenue accounts for 71,000 billion VND, life insurance is about 155,000 billion VND. Life insurance revenue will decrease significantly, in 2023 it will decrease by nearly 13%, while non-life insurance will decrease by nearly 3%. People's demand for life insurance to accumulate and ensure a long-term life will decrease due to difficult life or because they find other better channels.
The head of the financial sector said that he had coordinated with the bank's inspection and supervision agency to check and handle and prevent the situation mentioned by the delegate. One measure included fully recording the consultation process to serve the inspection and examination work later.
In addition to questioning from delegate Pham Van Thinh, Minister Ho Duc Phoc also received a series of other questions about solutions to rectify the shortcomings of the insurance market. Delegate Nguyen Thi Viet Nga (Hai Duong) asked: "Does the Minister think that it is necessary to conduct a large-scale, comprehensive inspection of life insurance companies to better manage this field?". The answer from the Minister was that the Ministry of Finance has inspected 10 insurance companies and will continue to inspect 7 more insurance companies next year.
“We think we will inspect all insurance companies. However, in addition to scheduled inspections to correct loopholes or repeated violations, we will conduct surprise inspections based on complaints and denunciations from insurance participants to resolve the rights of participants, and promptly correct violations of insurance companies, so that these companies must operate equally and comply with the law, demonstrating fairness and transparency in the insurance market,” said Mr. Phoc.
Tighten management, prevent smuggling of gold and foreign currency
Preventing smuggling and illegal transportation of goods across borders is also among the issues questioned by the head of the financial sector.
According to delegate Huynh Thi Phuc (Ba Ria - Vung Tau), in recent times, there have been many cases of smuggling, illegal transportation of goods across the border, and tax evasion that have been quite complicated for many items, including gold and foreign currency. These activities are quite sophisticated and widespread, and have affected the Vietnamese market, especially during the days when domestic gold prices fluctuated a lot and increased quite high.
The delegates asked the Minister of Finance to provide solutions to effectively control the domestic gold and foreign currency markets to overcome the above situation. Stating that gold and foreign currency are under the State management of the State Bank, not the responsibility of the Ministry of Finance, Mr. Phoc said that the Ministry of Finance has the responsibility to combat smuggling and trade fraud, and manage border areas so that when the price of gold and USD in Vietnam increases, smuggled goods will not be smuggled into Vietnam.
“We have tightened the border gates to manage this amount of gold and foreign currency. In the past, we have caught a number of cases related to the transportation of foreign currency, such as the transfer of 1.6 billion USD to South Korea or are investigating to handle 3,700 billion VND or 1 million USD faked through the aviation system,” the Minister replied.
To reduce the price of gold and USD, in the Minister's personal opinion, a series of solutions must be implemented, because the price of gold is related to supply and demand, to import and export. "Is there gold import? How to tighten the buying and selling issue? Is there any exploitation of the psychology when investment in production and business is not effective, money deposited in banks is low, to transfer this money flow into gold? A series of solutions are needed to solve and prevent the price increase situation", the Minister stated his opinion.
Regarding the USD, Mr. Phoc said that the exchange rate shows the strength of the currency. However, when the Vietnamese currency depreciates, it can also benefit exports. "However, how exports are affected and how to prevent VND from depreciating requires a series of monetary management solutions. The Governor of the State Bank will give additional answers later," Mr. Phoc said.
At that time, State Bank Governor Nguyen Thi Hong was also present at Dien Hong Hall - where the question and answer session took place, but the Executive Vice President of the National Assembly did not invite Ms. Hong to "share the burden" with Minister Phuc.
At the question-and-answer session, delegate Trinh Xuan An (Dong Nai) said that the high airfares are not necessarily due to the gap between supply and demand or fuel, but rather due to the inadequate calculation of input costs by businesses. “Price management has a complete framework and legal framework, but the paradox is that the more the price of goods increases, the more businesses lose,” Mr. An commented and suggested that the Ministry of Finance review the pricing.
Minister Ho Duc Phoc affirmed that the airfare framework issued by the Ministry of Transport has 15 levels and is being operated within the framework, and “has not yet exceeded the framework”. Some countries have removed the ceiling price of airfares so that businesses can decide for themselves according to market supply and demand. However, the Law on Prices still stipulates a ceiling price for airfares, and businesses “are operating in accordance with regulations, so they have not violated the law on prices”.
Source
Comment (0)