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. Such registration requirement was 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 the Prime Minister has issued new Decision No. 25/2019/QD-TTg ("Decision No. 25") on 13 August 2019 to abolish such additional registration requirements.4
Specifically, Decision No. 25 has removed "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 their life insurance products with the MOF's Insurance Supervisory Authority under the Law on Insurance Business (as they used to do before Decision No. 35).
MOIT's Explanations for the new Simplication
In the MOIT's earlier report and explanations to the Prime Minister, 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:
- 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;
- 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;
- 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;
- In the life insurance space, the number of disputes between the life insurers and their customers that have been reported to the MOIT and the MOF in the past three (3) years was not remarkable; and
- 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 reform should have been completely adopted sooner 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.
Decision No. 25 takes effect from 1 October 2019 without specific clarity and guidelines on transitional periods for existing life insurance policies.
Life insurers may want to review their life insurance portfolios to address how best to handle transitional periods or any outstanding issues in relation to these registration requirements.-------------------------------
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).
4 Decision No. 25/2019/QD-TTg of the Prime Minister dated 13 August 2019 amending Decision No. 35.