Basic Insurance Agent Draft April 2013

DEPARTMENT OF INSURANCEMANAGEMENT AND SUPERVISION

INSURANCE RESEARCH AND TRAINING CENTER

BASIC INSURANCE AGENCY COURSE

( Draft April 2013 )

Hanoi , April 2013

INTRODUCTION

The insurance agency system is the main distribution channel for insurance products in the Vietnamese insurance market. The development of the insurance market means the development of the agency system in terms of network, scale and number of agents operating nationwide.

Equipping agents with basic knowledge during their operations and providing insurance-related services to customers is very important. This is not only a channel for distributing insurance products but also a tool to help improve the quality of customer service during and after sales of insurance companies.

In recent times, the legal system has changed, including regulations on insurance agents. Based on the legal documents of the State regulating issues related to insurance business activities, as a basis for training insurance agents in a uniform, high-quality manner, updating knowledge and the latest regulations of the law, the Insurance Research and Training Center under the Department of Insurance Management and Supervision has compiled the book "Basic insurance agent training curriculum". Within the framework of the content of this "Curriculum", we would like to introduce four basic issues related to the activities of insurance agents in both life and non-life insurance, including:

1. General knowledge of insurance;

2. Law on insurance business;

3. Rights and obligations of insurance businesses, foreign branches and insurance agents in insurance agency activities;

4. Agent's responsibility, agent's professional ethics;

This course is compiled by lecturers from the National Economics University, the Academy of Finance, and experienced staff from leading insurance companies in the Vietnamese insurance market. The Department of Insurance Management and Supervision and the Insurance Research and Training Center are responsible for editing and revising to ensure that it is consistent with the basic training objectives for insurance agents. The course has also been sent for comments from the Insurance Association and insurance companies in the market.

With the desire to provide agents with the most basic knowledge about insurance and insurance law in order to meet the requirements of the law and serve the agent's practice well, we believe that the content of the book "Basic insurance agent training curriculum" will be the common voice of the whole market in insurance agent training.

However, this is the first edition so it is inevitable that there will be certain errors. In order to contribute to the improvement and enhancement of the quality of insurance agent training, the Insurance Research and Training Center always hopes for and appreciates the contributions of insurance companies and readers. All contributions should be sent to:

Insurance Research and Training Center No. 6, Phan Huy Chu; Hoan Kiem; Hanoi.

Thank you very much.

Insurance Research and Training Center

Chapter 1: General knowledge about insurance	5
1. Overview of insurance	5
1.1. Origin and concept of insurance	5
1.2 . The role of insurance	7
1.3 . Basic terms in insurance	10
1.4. Principles of insurance	18
1.5. Insurance classification	22
2. Basic content of some types of insurance services	24
2.1. Life insurance	24
2.2. Non-life insurance	37
Chapter 1 review questions	57
Chapter 2: Law on insurance business	65
1. Overview of legal documents on insurance business	65
1.1. Basis for building a system of legal regulations on insurance	65
1.2. System of groups of laws regulating business activities insurance	66
2. Current laws on insurance business	67
2.1. General provisions on insurance contracts	68
2.2. Some regulations on insurance business activities	77
3. State management of insurance business	82
Chapter 2 review questions	83
Chapter 3: Insurance agents, rights and obligations of insurance agents insurance, insurance company for insurance agency activities	90
1. Insurance agent	90
1.1. Sales method	90
1.2. Concept of insurance agent	90
1.3. Contents of insurance agent activities	91
1.4. Conditions to become an insurance agent	91
1.5. Subjects not allowed to be insurance agents	92
1.6. The role of insurance agents	93
2. Rights, obligations and responsibilities of insurance agents	95
2.1. Rights of insurance agents	95
2.2. Obligations of insurance agents	96
2.3. Prohibited acts for insurance agents	98
2.4. Insurance agent's responsibility	98
3. Rights and obligations of insurance enterprises in agency activities insurance agent	98
3.1 Rights of insurance companies.	98
3.2. Obligations of insurance companies	100
Chapter 3 review questions	102

Maybe you are interested!

INDEX

related to the ethics of insurance agents in Vietnam

110
1. Ethics of insurance agent practice	110
1.1. In consulting activities for customers participating in insurance	110
1.2. In providing information	111
1.3. Customer information security	112
1.4. Management of insurance policies or insurance certificates	112
1.5. Comply with the insurance premium collection and payment regime	112
1.6. Be loyal to the insurance company for which you are an agent.	112
1.7. Dedicated to serving customers	113
1.8. Relationship with colleagues and insurance companies	113
2. Regulations related to ethics of insurance agents	113
Chapter 4 review questions	114
References	116

Chapter 4: Insurance agent ethics and regulations

Chapter 1

GENERAL KNOWLEDGE ABOUT INSURANCE

1. Overview of insurance

1.1. Origin and concept of insurance

1.1.1 . Origin of insurance

Risk is the source of the need for insurance. In life and work, although people pay attention to preventing and minimizing losses, risks can still occur. Risks that arise cause damage to the body, life, property and affect the production and business activities of individuals and economic and social organizations in the economy.

There are many concepts of risk, however these concepts all have similarities with two basic characteristics: abnormality in the possibility of occurrence and leading to bad consequences.

In the most general understanding: Risk is the possibility of an unusual event occurring with damaging consequences or bringing about unexpected results.

Depending on the purpose of assessment and management, risks can be classified according to many different criteria. According to the possibility of consequences, risks are divided into speculative risks and pure risks; according to impact and influence, risks are of two types: basic risks and separate risks; according to the nature of consequences, risks include financial risks and

non-financial risks. In terms of insurance techniques, risks are divided

into insurable and uninsurable risks . Within the scope of a contract

In insurance , risks are often divided into: insured risks and uninsured risks.

insured and excluded risks . Risks are also known as events, incidents, incidents , etc.

When risks occur, they often result in damage to the body, life, and property.

production, business interruption,... affecting our finances and lives. Since ancient times, people have had many measures to limit (or control) risks. However, there are 4 basic methods commonly used as follows:

Risk avoidance : This is a common measure and is used quite often in life, especially in underdeveloped or developing societies and economies. Each individual and organization has their own measures to avoid risks that may occur to them, that is, to find ways to avoid, eliminate or minimize the possibility of risks. For example: To avoid traffic accidents, some people will not choose to drive or limit their travel, or to avoid work accidents, some people will not choose dangerous jobs...

Risk control : Measures to minimize possible losses. For example: Limiting fire losses by purchasing fire extinguishers, limiting losses due to work accidents by equipping equipment and training in occupational safety skills...

Risk acceptance : This is the form in which the person who suffers the loss accepts the loss. A typical case of risk acceptance is self-insurance. There are many forms of risk acceptance, however, they are usually divided into two main groups: passive and active risk acceptance. Passive acceptance is the act of not preparing in advance but only when the risk occurs, then looking for financial resources to overcome and compensate; active acceptance is the act of establishing a reserve fund, a contingency fund to compensate for the loss. According to

form of risk acceptance, which will not be used optimally, or even very badly

dynamic because the extent of loss is not entirely uniform and unpredictable.

Risk transfer : Risk transfer is the most ideal model, from the primitive form of risk transfer to the form of insurance participation. This is the most effective tool to deal with the consequences of loss caused by risk. The form of risk dispersion or primitive risk transfer dates back to the Middle Ages; the owners of sea freight ships knew how not to concentrate all their goods on one ship but to disperse them to different ships or to the ships of other owners to limit the possibility of large losses. When the economy reached a certain level of development, the insurance business really appeared. When owning a large amount of valuable assets, the owner must face losses caused by unforeseen risks, and the wisest way for them to protect that asset is to transfer the risk. The insured transfers the risk to the insurer in exchange for financial security during the transfer period. This is the basic principle of insurance business.

Insurance business is the activity of insurance enterprises for the purpose of

profit, whereby the insurance company accepts the risk of the insured,

On the basis of the insurance buyer paying the insurance premium, the insurance company pays the insurance money.

insurance for the insured when an insured event occurs.

The more the socio-economy develops, the more diverse the demand for insurance becomes with higher demands. Today, insurance has penetrated into all areas of socio-economic life. Most countries have implemented an open-door policy and integrated the domestic insurance market with the world to create conditions for insurance activities to develop. The insurance market holds a very important position in the economy of many countries, especially developed countries. The countries with the highest insurance sales are the US, Japan, UK, Germany and France. In these countries, insurance sales can be higher or equivalent to important industries such as automobile manufacturing, electricity, electronics, etc.

1.1.2. Insurance concept

In the scope of this document, insurance is understood as a concept in the field of business insurance. In addition, the term "insurance" is also used in the systems of Social Insurance, Health Insurance, etc.

Although insurance has been around for a long time, many authors still have different views on insurance. These differences come from looking at insurance from different angles and approaches.

Insurance is a broad and complex field, containing specific business, legal and technical elements, so it is difficult to find a perfect definition that reflects all these aspects. It is important to build a concept from a perspective and approach that is useful for research purposes. In economic terms, insurance is a measure of risk transfer through an insurance contract, in which the policyholder agrees to pay the insurance premium and the insurance company commits to indemnify or pay the insurance money when the insured event occurs.

The above concept emphasizes the origin of insurance as a measure to transfer the financial consequences of risks; the legal basis governing this economic transfer relationship is the insurance contract; the typical subjects of the insurance relationship are the insurance buyer and the insurance company; the core issue expressing the rights and obligations of the subjects is the movement of financial resources to pay insurance premiums.

insurance and compensation or insurance payment.

In terms of finance, insurance is the mobilization of resources in mobilizing contributions (insurance premiums) of economic organizations and individuals participating in insurance (buying insurance) to establish an insurance fund and distribute it, using it to compensate for material losses, pay for unexpected accidents that occur to insured objects. In essence, insurance activities are the process of redistributing a part of national income among insurance participants through insurers. This distribution process, thanks to insurers, has created relationships between insurance participants. The nature of insurance activities is the economic relationships that arise in the process of forming, distributing and using insurance funds to ensure the safety of production and human life against risks and accidents that may occur.

1.2 . The role of insurance

1.2.1 . The economic role of insurance

Insurance has a profound impact and influence on all activities of economic and social life. Insurance plays a very important role in stabilizing and developing the economy of countries.

- Insurance contributes to financial stability of organizations and individuals participating in insurance.

Insurance companies in the market provide insurance services to meet the need to ensure financial security and stability when insurance events occur. This service aims to create financial resources for organizations and individuals to buy insurance to stabilize their business and life when they encounter risks. In fact , compensation and payment

Insurance money has helped economic and social organizations preserve assets and capital; individuals and families overcome financial difficulties, avoiding material and spiritual exhaustion. Thereby, insurance has contributed to ensuring the stable development of the economy.

Basic Insurance Agent Draft April 2013 - 1

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