Over the last 3 years, life insurers in Vietnam have been subject to a registration requirement by the Ministry of Industry and Trade ("MOIT") as the consumer protection authority for life insurance policies' standard contracts and general terms and conditions, introduced in 2015 under Decision No. 351 as part of the Law on Consumer Protection. That process has created certain overlapping procedures with the existing approval process of life insurance products by the Ministry of Finance ("MOF")'s Insurance Supervisory Authority under the Law on Insurance Business.
During 2016 and 2017, Decree No. 732 was issued and followed by a coordinated process between the MOIT and the MOF to connect the MOF's approval under the Law on Insurance Business with the MOIT's registration process under the Law on Consumer Protection. However, given that both Ministries have still been involved, certain issues, including prolonged approval process remain outstanding.3
To offer a complete solution to address unnecessary overlapping procedures for life insurers in Vietnam following 3 years of implementation and necessary adjustments by involved parties, the MOIT recently proposed to the Prime Minister a draft Decision amending Decision No. 35 ("Draft Decision") to abolish such additional registration requirements. Specifically, the Draft Decision proposes removing "life insurance" from the list of essential goods and services subject to the "standard contracts and general trading conditions" registration requirements under the Law on Consumer Protection. Accordingly, life insurers will only need to register its life insurance products with the MOF's Insurance Supervisory Authority under the Law on Insurance Business.
MOIT's Explanations for the Proposed Simplication
In the MOIT's report and explanations enclosed with the Draft Decision, the MOIT provided the following five (5) main reasons for their proposal for excluding life insurance from the Law on Consumer Protection's registration requirement:
(i) The insurance industry-specific regulations implementing the Law on Insurance Business have now covered necessary aspects to sufficiently protects consumers’ rights in the relationship between the life insurers and their customers;
(ii) In the past three (3) years of the MOIT's review of applications and registration of policy forms and terms and conditions of life insurance products for 18 life insurers operating in Vietnam, the MOIT has provided their suggested revisions to the life insurers as part of their review and approval process;
(iii) In practice, most life insurers have formulated certain internal regulations to cover required protections of the rights of their customers following the suggestions of the MOIT;
(v) The centralization in management to a single authority (i.e., the MOF as the insurance regulator for life insurance) (known as a "one-stop shop" mechanism) as recommended is in line with international best practices.
Having said that, from the insurers' perspectives, this proposed reform should be adopted soon, if not already, to simplify these administrative procedures for the life insurers, given the fact that these issues have been raised over the course of the past 3 years
Currently, the Draft Decision's proposed reform is still in a draft form, meaning that in order to make this reform effective, the life insurers still need to await the Prime Minister's official signing of the proposed Decision approving this reform.
In the meantime, if you would like to seek further details of the Proposed Decision and the MOIT's related report to the Prime Minister, how to handle transitional periods or outstanding issues in relation to these registration requirements, please do not hesitate to contact us.
1 Decision No. 35/2015/QD-TTg of the Prime Minister dated on 20 August 2015 amending and supplementing Decision No. 02/2012/QD-TTg of the Prime Minister dated 13 January 2012, on the list of essential goods and services for which contract forms and general transaction terms must be registered ("Decision No. 35"). Decision No. 35 is a guiding regulation to the Law on Consumer Protection.
2 Decree No. 73/2016/ND-CP dated 01 July 2016 of the Government providing detailed regulations on the implementation of Law on Insurance Business and amended Law on Insurance Business (“Decree No. 73”).
3 Coordination Regulation No. 4330/QCPH/BTC-BCT of the Ministry of Industry and Trade and the Ministry of Finance dated 31 March 2017 regarding their coordination in the approval of life insurance products and registration of contract templates and terms & conditions for life insurance ("Regulation No. 4330")