Decision No. 4056/QD-BTC Issuing the Plan for Developing the Insurance Market of Vietnam from 2006 to 2010

Pursuant to …;

Issuing the Plan for Developing the Insurance Market of Vietnam 2006-2010

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THE MINISTER OF FINANCE

Pursuant to Decree No. 86/2002/ND-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of ministries and ministerial-level agencies;
Pursuant to Decree No. 77/2003/ND-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;
Pursuant to Decision No. 175/2003/QD-TTg dated August 29, 2003 of the Prime Minister approving the Strategy for Developing the Insurance Market of Vietnam from 2003 to 2010;
Considering the proposal of the Director of the Insurance Department and the Head of the Office of the Ministry of Finance,

DECISION:

Article 1. Issuing the Plan for Developing the Insurance Market of Vietnam 2006-2010 with the main contents as follows:

I OBJECTIVES

1.Developing a comprehensive, safe, and effective insurance market that meets the basic insurance needs of the economy and the population; striving for average annual growth rate of total insurance premium income of about 24% during the period 2001-2010. The ratio of the insurance industry's revenue to GDP should reach 4.2% in 2010;

2.Continuing to implement the development and restructuring of enterprises, enhancing their financial capacity, business capabilities, and investment activity efficiency in the insurance sector;

3.Developing and improving the quality of insurance products towards diversification to meet various insurance needs of the economy; developing a network of professional insurance agents, insurance brokerage companies, and other distribution channels;

4.Implementing the opening up of the insurance market according to the commitments made in bilateral and multilateral agreements. Encouraging domestic insurance companies to expand their operations abroad;

5.Completing mechanisms and policies in insurance business activities to create a fair legal environment for all types of enterprises; mobilizing domestic and foreign resources to promote healthy and stable development of the insurance market;

6.Reforming management methods and enhancing state management capacity over insurance business activities, gradually implementing international principles and standards of insurance management. Improving the organizational structure of the Insurance Supervisory Authority.

II CONTENTS OF THE PLAN

1.Developing and restructuring insurance enterprises and insurance brokerage companies

a Establishing enterprises:

- Continuing to develop the insurance market towards diversifying ownership forms, leveraging the strengths of each economic component;

- Enhancing transparency, equality in granting licenses for establishing insurance companies and insurance brokerage companies; financial and legal capacity of investors; corporate governance;

- Continuing to implement the strategy for developing the insurance market towards not establishing specialized insurance companies under state-owned corporations, industries, and technical sectors to avoid monopolistic insurance in industries and fragmenting the insurance market.

b Organizing and restructuring enterprises:

- Implementing the project to develop Bao Viet according to the model of a Financial-Insurance Group approved by the Prime Minister;

- For Bao Minh and Vinare: enhancing financial capacity, business capability, reducing the proportion of state-held shares to meet competition requirements, international integration, and listing on the stock exchange;

- For specialized insurance companies and joint-stock insurance companies: implementing restructuring towards increasing charter capital, reducing the shareholding ratio of large shareholders who are state-owned corporations, enhancing financial capacity to serve the common interests of the entire economy, moving towards listing on the stock exchange.

2.Enhancing the competitiveness of insurance enterprises to meet economic development and integration requirements

a Developing and improving the quality of insurance products:

- Studying mechanisms to encourage enterprises to gradually organize and implement insurance for risks in agriculture, forestry, and fisheries; Creating favorable conditions for insurance companies to design suitable products for participants, cooperating between the State and insurance companies to distribute insurance risks;

- Building and submitting to competent authorities for issuance of rules, terms, and rates for compulsory insurance types;

- Promoting administrative reform, simplifying and publicizing supervision and approval mechanisms for new insurance products; Standardizing the conditions and terms of insurance contracts;

- Studying the construction and amendment of tax policies to encourage people to participate in insurance to increase national savings for development; stabilizing material and spiritual life for people, especially those in areas frequently affected by natural disasters, remote areas, and moving towards replacing social security programs.

b Developing distribution channels:

Continuing to develop insurance brokerage companies and insurance agents; studying and issuing regulations to create a legal framework for the development of underdeveloped but potential distribution channels such as through banking systems, e-commerce, telephones, postal systems.

c Effectively utilizing the investment capital of insurance enterprises:

- Encouraging insurance companies to establish investment funds, trust funds, and fund management companies in accordance with the Securities Law and the Insurance Business Law to enhance professionalism in investment activities;

- Studying the construction of mechanisms to encourage long-term investment forms; creating an equal and favorable investment environment for insurance companies of all economic components;

- Encouraging insurance companies to participate in securities trading and listing on the stock exchange.

d Enhancing the competitiveness of insurance enterprises to meet economic development and integration requirements:

Encourage insurance enterprises to increase capital; improve governance and self-management supervision capabilities; invest in equipment and technology to serve management and business activities, meeting competition and integration requirements.

3. Integration and international cooperation

- Continue to open up the insurance market according to the integration roadmap that Vietnam has committed to in bilateral and multilateral agreements;

- Develop, adjust, and supplement regulations on licensing establishment and operation of insurance businesses towards non-discrimination, in line with commitments and the World Trade Organization accession timeline;

- Review and compare the current legal documents on insurance business with World Trade Organization provisions, propose necessary amendments to ensure compliance with international principles and standards;

- Consider abolishing regulations restricting foreign-invested insurance enterprises from expanding their scope of operations, customer base, and product offerings to create an equal competitive environment according to the integration roadmap;

- Expand cooperative relations with insurance regulatory agencies of other countries and international organizations to seek technical assistance, information exchange, experience sharing, staff training, etc., to accelerate integration into regional and global insurance markets;

- Prepare necessary conditions for joining the International Association of Insurance Supervisors in 2007.

4. State Management of Insurance Business

a) Mechanisms and Policies:

Develop and submit to competent state authorities for issuance of legal documents:

- Guidelines for implementing the Law on Insurance Business in line with international principles and standards, adapting to the development of the insurance market;

- Compulsory insurance regimes for construction and installation; compulsory third-party liability insurance for motor vehicles; compulsory insurance for Vietnamese citizens traveling abroad; compulsory fire and explosion insurance, etc.;

- Administrative penalties in the field of insurance business;

- Accounting systems and insurance accounting standards consistent with international accounting standards for insurance;

- Standardize training programs and develop plans for training insurance sector staff in Vietnam.

Amend and supplement the Law on Insurance Business and guiding documents in accordance with current laws, market development needs, and integration commitments.

b) Strengthen inspection and supervision of insurance enterprises:

- Specify requirements for governance, management, and professional qualifications of insurance enterprise managers and brokers. Supplement regulations related to corporate governance and financial transparency in line with international standards and legal compliance;

- Enhance prudent management and improve financial capacity and payment ability of insurance enterprises; Increase autonomy and responsibility of enterprises regarding financial issues, business results, and legal compliance;

- Improve remote monitoring and on-site inspection procedures for insurance enterprises; amend and supplement enterprise monitoring indicators to suit market development realities;

- Strengthen inspection and supervision of insurance enterprises towards gradually reducing administrative intervention in enterprise activities; Enhance enterprise analysis and evaluation, remote monitoring, and on-site inspection work;

- Timely and legally handle violations in insurance business activities; maintain order, discipline, and ensure a fair business environment among economic sectors, healthy competition, and legal compliance.

c) Perfect organizational structure:

- Consolidate, perfect, and enhance the capacity of the Insurance Regulatory Authority. By 2007, basically complete the organizational structure of the insurance regulatory authority, ensuring full advisory functions for the Ministry in policy formulation, inspection, supervision, and administrative violation handling in the insurance business field, in line with Vietnam's insurance market characteristics and international standards;

- Build an information technology infrastructure system and a data collection, storage, and processing system for the insurance industry to meet insurance supervision management requirements by 2007;

- Train and develop human resources for the Insurance Regulatory Authority. Establish and implement recruitment and talent training mechanisms to attract skilled personnel in areas such as risk assessment experts and financial activity evaluators for insurance enterprises;

- Enhance the role of the Vietnam Insurance Association to effectively fulfill its role as a bridge and representative for insurance enterprises before state management agencies and the public.

Article 2. Implementation

1. The Insurance Department shall take the lead in coordinating with relevant units to implement this Plan, report annually to the Minister of Finance on the progress of Plan implementation; propose solutions for implementation, content adjustments to the Plan when necessary.

2. The Tax Policy Department shall take the lead in developing tax regulations in the insurance business field.

3. The Accounting and Audit System Department shall take the lead in developing accounting systems and insurance accounting standards.

4. The Information Technology and Financial Statistics Bureau shall cooperate with the Insurance Department to develop a project on Developing Information Technology Infrastructure and Building a Data Collection, Storage, and Processing System for the Insurance Industry.

5. Units under the Ministry of Finance, according to assigned tasks, shall cooperate with the Insurance Department, Tax Policy Department, Accounting and Audit System Department, and Information Technology and Financial Statistics Bureau to complete the tasks outlined in this Plan.

Article 3. This Decision takes effect from the date of signature. The Insurance Department Director, the Ministry of Finance Office Director, heads of related organizations and units are responsible for implementing this Decision./.