A life insurance contract. Insurance companies could face fines of up to VNĐ100 million for intentionally providing incorrect advice under a new Ministry of Finance decree that is in the works. VNA/VNS Photo

The decree to tackle violations in the insurance industry, once issued, will include severe fines to deter wrongful conduct and protect consumers.

The proposed regulations will focus on the distribution of insurance products and services. 

Acts such as providing unclear and inaccurate product information will no longer attract just warnings, and fines would also be slapped for things like promising illegal benefits, advising clients to buy insurance with less competitive terms and using unqualified brokers.

Trần Nguyên Đán, a member of the Vietnam Lawyers Association, recommended even harsher action, saying severe violations should be treated as criminal offences. 

Recently Prime Minister Phạm Minh Chính had sought a report on bancassurance, or selling insurance products through banks, which has come under criticism for misleading customers, even fraud, and coercion.

Many people have complained about being sold insurance by bankers by falsely claiming they were high-interest banking products and coerced into buying them to get loans.

An employee at a State-owned bank in HCM City, who declined to be named, told Việt Nam News that it is an “unwritten rule” that a borrower has to buy  life insurance if they wanted a loan.

In recent years bancassurance has generated substantial incomes through fees and commissions for many banks. 

A recent Ministry of Finance investigation found violations such as a failure by insurers to provide direct advice to customers about products and procedures and violations of regulations by insurance agents and bank employees. 

Việt Nam is a key life insurance market in Asia, according to the Insurance Association of Việt Nam. 

The significant growth in the market in recent years has led to stricter regulations. — VNS