Insurance companies saw high profits last year, with insurance premiums totalling 30.8 trillion VND (1.5 billion USD) in 2010 – far surpassing 2009's total of 25.5 trillion VND (1.2 billion USD), said the president of the Association of Vietnamese Insurers, Trinh Quang Tuyen.
The life insurance market this year welcomed a new competitor, Fubon, bringing the total number of life insurers nationwide to 12. This suggested that competition and the hunt for profits was becoming more heated.
However, by prioritising earnings, many of the nation's insurance companies have neglected to invest adequately in developing their operations, cautioned the director of the Insurance Supervisory Authority (ISA), Trinh Thanh Hoan.
Firms needed to improve their capacity to meet financial solvency requirements, foster research and development of new products, restructure to retain investors, and enhance their ability to transfer technology, Tuyen said.
Current regulations also needed to be adjusted to meet international insurance standards, prevent fraud and limit risks, he added.
Many non-life insurers had violated existing regulations on risk provision requiring risks not exceed 10 percent of total equity, he said, while life insurance companies had, in some instances, shifted idle capital to operating costs, without keeping enough in reserve for regular indemnity.
Some insurers had also been found having paid for non-covered claims, or accepting late premiums from customers after losses had occurred, practices considered fraudulent and a form of profiteering, Tuyen said.
He expressed his hope that the amended Law on Insurance Business, to take effect on July 1, will create a unified legal framework for the sustainable development of the Vietnamese insurance market
The ISA will standardise training ground for insurance brokers and agents, and will urge companies to review and evaluate existing staff./.