Restructuring in Focus

According to statistics, the revenue of entire insurance market was estimated to reach VND44,388 billion, 7.6 percent higher than that of 2012, including VND23,968 billion from non-life insurance with 5 percent higher; and VND20,420 billion from life insurance with 11 percent higher.

All compensations and payments by ICs reached about VND17,685 billion, including VND8,095 billion paid by life ICs and VND9,590 billion paid by non-life ICs.

All investment cost accounted for approximately VND109 trillion, 21.7 percent higher than that of 2012, of which VND81trillion was from life ICs and VND28 trillion from non-life ICs.

 

In 2013, many ICs deployed measures to exploit potential markets and improved services to take better care of customers. Eight ICs extended their branches and representative offices; about 39 new life insurance products and supplemented insurance products were ratified by the Ministry of Finance, raising the overall number of current life insurance products to 325.

 

As requested by the Ministry of Finance, many ICs have reviewed and adjusted their regulations, terms and premiums of motor vehicle insurance products to ensure financial safety of ICs and interests of clients.

 

Especially, some ICs have launched the online sale channel that is potential and appropriate with the development tendency of the market to modernise sales technology and improve quality of services.

 

Based on criteria regulated in Decision 1826/QD-TTg, the Ministry of Finance classified many ICs, into 9 non-life ICs and 15 life ICs placed in group 1; 19 non-life ICs in group 2; 01 non-life IC (that is Vien Dong Assurance Corporation) in group 3 and no IC in group 4. According to this classification, 44 out of 45 ICs meet the financial safety criteria. As the result, the Ministry of Finance has directed ICs to deploy restructuring solutions. The only one having signs of loosing liquidation is requested to build the restructuring its plan by re-evaluating its equity, issuing more shares for more capital, restructuring its management boards, reducing the number of branches. Up to now, its charter capital and liquidation have improved. The Ministry of Finance is still supervising it and has applied some solutions to improve its charter capital to an appropriate level.

 

In 2013, about 2 out of 7 corporations namely the Vietnam Electricity, Vietnam National Coal - Mineral Industry Holding Corporation Limited completed withdrawing capital from the insurance sector. This withdrawal was suitable with the regulations, not influencing the governance of ICs.

 

In 2013, six ICs improved charter capital with total amount of over VND1 trillion. Many ICs followed the regulations in capital investment, established contingency for repayment and the use of contingency fund was strongly fluctuated.

 

Some ICs expanded, developed and improved products’ quality, such as Dai-ichi deployed retirement products for both individuals and groups. Furthermore, in order to create opportunities for low - income individuals to approach insurance products, the Ministry of Finance published the document guiding the pilot deployment of micro-insurance within the Project “Protecting mutual welfare Union” initiated by Community Finance Resource Centre under Vietnam Association for Promoting and Supporting Educational Development.

 

Implementing ICs restructuring process ratified by the Prime Minister at Decision 1826/QD-TTg, in 2014, the Ministry of Finance will concentrate on improving policy and mechanism, including the issuance of criteria for the assessment of ICs for their active and timely restructuring; submitting to the Government the supplementation and amendment of Decree 45/2007/ND-CP guiding implementation of some regulations of the Law on Insurance Business, allowing performance of insurance underwriting.

 

Moreover, the Ministry of Finance will expand and improve insurance products; review and assess the pilot implementation of agriculture insurance and export credit insurance; deploy voluntary retirement insurance as ratified by the Prime Minister, and direct micro-insurance implementation including the pilot insurance of the Community Finance Resource Centre for members of M7 micro-finance institutions. In addition, the Ministry will also coordinate with State Bank of Vietnam to build and issue a joint circular guiding the operation of life insurance agencies through credit institutions.

 

In particular, the Ministry will continue to direct the restructuring of Vien Dong Assurance Corporation, requiring it to improve charter capital in an approved schedule; assessing financial safety criteria of ICs with the purpose of discovering solutions; improving the governance of ICs, thus closely monitoring the increase/decrease of capital, financial safety and establishment of contingency as well as governance.