Law on life insurance business in Vietnam - Theoretical and practical issues

- 4 -

With the capacity requirement, the thesis is defined as follows:

- The research object is the system of legal regulations on life insurance business in Vietnam since the Law on Insurance Business in 2000 until now, in which the author focuses mainly on the system of current legal regulations. The period before the Law on Insurance Business comes into effect is not within the scope of the thesis, but can be mentioned when comparing and evaluating current legal regulations.

- The research of the thesis focuses on the system of legal regulations regulating life insurance business activities in general, not going into specific regulations to regulate some specific life insurance products.

Maybe you are interested!

4. Research methods

To carry out the research tasks and research purposes, from a general perspective, the thesis is approached according to the methodology of Marxism-Leninism in solving the research tasks. For each specific content, the topic mainly uses the method of analysis, statistics, comparative legal method and historical method.

The analytical method is commonly used in building arguments in each content of the thesis. Through analyzing each aspect of the research object, the thesis will build concepts or prove the arguments that have been put forward.

Statistical methods are applied in the process of evaluating the practical application of the law on life insurance business. By using actual data through statistical methods, the statements made will be proven.

The comparative legal method is applied relatively commonly in the process of analyzing arguments. The comparison content mainly includes comparing current legal regulations of Vietnam with legal regulations of some countries in the world and comparing current legal regulations of Vietnam with international standards and practices.

Historical method is used to study the development process of the life insurance business legal system associated with the context of Vietnam's socio-economic development.

5. Scientific significance and practicality

The thesis is a monograph that builds a theoretical system on the law of life insurance business as well as a relatively comprehensive assessment of the current legal status regulating this field. Therefore, the thesis will contribute to supplementing knowledge in the legal science sector in general and the field of Economic Law in particular in the field of life insurance business law.

- 5 -

The research results of the thesis have practical applications. Firstly , the thesis contributes scientific basis for the continued improvement of the law on life insurance business in Vietnam. Secondly , the thesis will contribute to the legal knowledge system so that state management agencies, insurance companies and insurance participants can effectively apply the provisions of the law.

6. Structure of the thesis

In addition to the Introduction and Conclusion, the thesis has 4 chapters, specifically as follows: Chapter 1: Overview of research situation

Chapter 2: Theoretical issues on life insurance business and life insurance business law

Chapter 3: Current status of life insurance business law in Vietnam Chapter 4: Solutions to improve life insurance business law

In Vietnam

- 6 -

CHAPTER 1

OVERVIEW OF RESEARCH SITUATION

1.1. EVALUATION OF PUBLISHED RESEARCH RESULTS RELATED TO THE TOPIC

The topic " Law on life insurance business in Vietnam - Theoretical and practical issues " is a topic that has not been studied at the level of law graduate students. However, along with the development of hundreds of years in the world and more than 20 years in Vietnam, the research works related to the topic are also quite diverse. The research works can be temporarily divided into two groups: foreign works and domestic works. Foreign research works either focus only on foreign legal issues, or on a general level, very few works mention the Vietnamese life insurance market as well as the Vietnamese legal system, however, the theoretical content is also very valuable for reference. For domestic research works related to the topic, the authors often mention one or several aspects of life insurance and life insurance business law at different levels suitable for the research tasks of that scientific work.

The objective of this Chapter 1 is to present an overview of published research results related to the topic, and at the same time evaluate the reference value of those results in the process of conducting research on the topic. From the evaluation of research results of published scientific works, the author will determine the direction and specific research objectives of the following Chapters.

The order of evaluation of research results will be consistent with the research tasks of the topic, including evaluation of research results on the theory of life insurance business law, research results on the current state of law and proposals and solutions proposed by previous research works to improve life insurance business law.

1.1.1. Theoretical research results on life insurance business and life insurance business law

a) Theory of life insurance business

- About the concept and characteristics of life insurance

In Vietnam, in domestic research works, there are many definitions of life insurance such as: Truong Moc Lam and Luu Nguyen Khanh (2001) in the work " Some things to know about the law in insurance business " [50]; Nguyen Thi Hai Duong (2006) in the work " Some solutions to develop the life insurance market in Vietnam" [51 ].

- 7 -

Vietnam ” [37]; Nguyen Van Dinh (2008) in “ Insurance Textbook ” [33]; and Doan Minh Phung and Hoang Manh Cu (2011) in “ Life Insurance Textbook ” [56].

Abroad, there are also many scientific works referring to the concept of life insurance, such as: " Black's Law Dictionary " by Bryan A.Garner (1999) [111]; " International textbook on insurance " by Jérôme Yeatman (2001) [89]; and John Birds & Norma J.Hird (2004) in " Modern Insurance Law " [94].

From the definitions of life insurance mentioned in the above works, the author can evaluate as follows:

Firstly , the definitions often refer to the nature of life insurance in the direction of describing insurance techniques (insurance objects and insurance responsibilities) but do not refer to life insurance in the legal aspect as a relationship between the insurance company and the insurance buyer expressed by the basic obligations of the two parties to each other.

Second , the definitions have not highlighted the nature of life insurance as a commercial service that the insurer provides to the insurance buyer and related parties (such as the insured and the beneficiary).

Third , the definitions have not been analyzed to clarify the basic characteristics of life insurance, such as the analysis of the subject of insurance as human life, the diversity of insurance events, and the savings and investment elements present in most life insurance products.

- About the concept of life insurance products

Approaching life insurance business from the perspective of a service product provided by an insurance company has not received attention in research documents. David Bland (1993) in “ Insurance: Principles and Practice ” [2] argues that insurance in general is certainly a service, and the concept of whether it is a product or not is still very vague and controversial. However, David Bland’s point of view is incorrect because although the term “ life insurance product ” is not defined, it is used quite commonly in the legal regulations of many countries and in research works, so it cannot be considered that there is a debate about whether life insurance products are “products” or not.

Regarding the concept of products in general, Bryan A. Garner's (1999) conception can be found in " Black's Law Dictionary " [111]. In Vietnam, some definitions of life insurance products can be found in: Nguyen Van Dinh (editor) in " Insurance Business Management Textbook" and Nguyen Thi Hai Duong (2006) in " Some solutions to develop the life insurance market in Vietnam " cited above. In general, the authors also mention the basic characteristics of insurance products as a service such as intangibility, non-exclusive protection, etc. However, there are some characteristics that have very little scientific value because of their ambiguity, for example, "unexpectedness", "shifting effect", even author Nguyen Tien Hung (2005)

- 8 -

believes that life insurance products are still "difficult to understand" (speech read at the Workshop on " Compensation in life insurance - issues raised " organized by the Ministry of Finance) [46a].

Thus, it can be affirmed that up to this point, the concept of life insurance products has many different meanings and from a legal perspective, this concept has not yet been accurately constructed based on its nature with characteristics that clearly distinguish it from other commercial services.

- About the concept of life insurance business activities

Currently, research documents often do not mention the concept of life insurance business but only stop at the definition of insurance business in general, including life insurance business such as Nguyen Van Dinh (2009) in " Insurance Business Management Textbook " [34]; David Bland (1993) in " Insurance: Principles and Practice " [2] and Ho Thuy Tien (2007) in her doctoral thesis in economics with the topic " Development of Vietnam's life insurance market in the period of international economic integration " [82]. Each work has a different definition such as: insurance business is the activity of an insurance company with the purpose of making a profit based on the risk acceptance of the insurance buyer; Insurance business is the insurance business in which insurance business is the performance of insurance business activities including insurance exploitation, record keeping and claim settlement, or including product design, pricing, provisioning and insurance distribution.

Thus, currently, the concept of life insurance business still has many different understandings and some approaches have not clearly shown the nature of life insurance business activities including what business contents, so the relationship between life insurance product provision activities and investment activities of insurance companies has not been seen.

b) Theory of life insurance business law

The theoretical content of life insurance business law focuses on three basic issues: principles of life insurance business law, structure of life insurance business law and factors influencing life insurance business law.

- On the principles of life insurance business law

Currently, research works hardly study the legal principles of life insurance business, while this theoretical content is extremely important in explaining the legal structure as well as the contents that need to be recorded in the legal regulations regulating life insurance business activities.

However, at each specific level, there are a number of typical research works that mention two basic principles: the principle of ensuring freedom of business and the principle of protecting the rights of insurance participants.

The principle of freedom of enterprise was analyzed quite well by Dr. Bui Ngoc Cuong (2004).

- 9 -

in-depth and comprehensive in the work " Some issues on freedom of business in current economic law in Vietnam " [27]. These viewpoints can be applied in analyzing the contents of the principle of freedom of business in the field of life insurance.

The principle of protecting the rights of insurance participants has some notable views such as: Dominique Ponsot (2010) in the paper " Protecting consumers against abusive terms " [57] and Takahiro Yasui (2001) in the work " Policyholder Protection Fund: Rationale and Structure " [148].

Through the above works, we can evaluate as follows:

- The works often do not mention at the same time two important principles of life insurance business law: the principle of ensuring freedom of business and the principle of protecting the rights of insurance participants.

- The content of the principles has not been analyzed specifically, especially the principle of protecting the rights of insurance participants. At the same time, research projects have not mentioned how to build legal regulations to ensure that these principles are implemented.

- On the legal structure of life insurance business

The study of the legal structure of life insurance business is of great significance in determining the legal content of this field. Regarding this issue, there are the following main viewpoints: John Birds and Norma J.Hird (2004) in the work “ Modern Insurance Law ” [94]; Muriel L.Crawford (1998) in the work “ Life & Health Insurance Law ” [102]. Jérôme Yeatman (2001) in “ International textbook on insurance ” [89] and some other works.

Through the above works, it can be assessed that the majority of studies often aim to determine the source of law regulating certain contents of the law on life insurance business rather than answering the question of what contents the law in this field needs to regulate. Many works (for example, by John Birds and Norma J.Hird, by Muriel L.Crawford) have viewed the structure of insurance business law as originating from the insurance contract relationship. The viewpoint of Jérôme Yeatman (2001) is more reasonable when the author sees that the insurance business relationship is broader than the insurance contract relationship, but the author only considers the regulations regulating the legal status of insurance enterprises as belonging to the state's supervision content.

Going into each theoretical content of each part in the legal structure of life insurance business, there are some notable works such as:

- Publications published by the International Association of Insurance Supervisors (IAIS), the most notable of which are: IAIS (2011), Insurance core principles, standards, guidance and assessment methodology [121]; IAIS (2002), Guidance Paper

- 10 -

on Public Disclosure by Insurers [117]; IAIS (2007), Guidance paper on use of internal models for risks and capital management purposes by insurers [120], etc. These works are research works in which IAIS has summarized many practical contents, from which it has given its views and recommendations on insurance supervision activities of member countries. These views and recommendations have a strong influence on the legal regulations of many countries, including Vietnam. However, IAIS only looks at it from the perspective of management and supervision, and how to specifically apply it to legal regulations is not mentioned.

- Some works focus on the solvency of insurance companies, the most prominent of which is the research work of Takahiro Yasui (2001) called “ Policyholder Protection Fund: Rationale and Structure ” [148]. This work contributes a lot of theoretical content when the author has researched and compared from many different countries. Besides, another very notable work is Nguyen Van Thanh & Takao Atsushi (2005) called “ Proposals of the Suitable Solvency Regulation for the Vietnamese Life Insurance Industry - Based on the Experience from the US and Japan ” [145]. In this work, the authors quantitatively researched the solvency of insurance companies in Vietnam in the period 1998 - 2004 according to the risk-based assessment model and made important comments, especially comparing the solvency approach of the European Union and the approach of the US and Japan. However, the legal proposals made from this work are not many.

- Some research works on different aspects of life insurance contracts, in which the most prominent are: Professor, Dr. Truong Moc Lam and Luu Nguyen Khanh (2001) with the work " Some things to know about the law in insurance business " [50], John Birds and Norma J. Hird (2004) with " Modern Insurance Law " [94] and Tran Vu Hai (2006) with " Life insurance contracts - theoretical and practical issues " [39]. In the work " Some things to know about the law in insurance business ", the authors analyzed many types of insurance contracts, including life insurance, but only focused on the characteristics of life insurance contracts and did not mention much about other theoretical content. Author Tran Vu Hai (2006) has built many important theoretical contents, especially the content on model clauses. However, the author only stops at analyzing from a personal perspective, without a thorough comparison with other scientific perspectives.

- In addition to the works of IAIS, there are a number of research works on insurance business supervision activities, the most notable of which are: Rodney Lester (2009) with the work " Consumer Protection Insurance " has assessments on the importance of the private sector (in addition to public agencies) in supervision activities [127]; Vo Tri Thanh & Le Xuan Sang (2013) in " Supervision of the financial system: Indicators and quantitative models " mention supervision models [75]. However, these works

- 11 -

This program has not yet discussed the structure of regulations on life insurance business supervision activities, including what content.

Thus, it can be concluded that the issue of legal structure of life insurance business in Vietnam has not been studied comprehensively, and the approaches of the authors are also very different and need to be further studied and clarified. The authors have not started from the legal relationships arising in life insurance business activities with one party being the insurance company. For each part of the legal structure of life insurance business, there are a number of research works that can be inherited, thereby forming new arguments to build the legal structure of life insurance business.

- On factors affecting the law on life insurance business

It can be affirmed that currently there is no work that indicates the overall factors that influence the law on life insurance business. However, in general and specific factors, there have been some authors who have researched with certain results.

From the perspective of general theory of law, author Nguyen Minh Doan (2008) in his work " The role of law in social life " analyzed the factors of customs and practices that influence the development and implementation of law [36]. Author Bui Ngoc Cuong in his work " Vietnamese law in the process of international integration and sustainable development " mentioned the factors of economic thinking and the current context of Vietnam [85]. The Institute of Financial Science (2005) had relatively detailed assessments of the impacts of market opening on the insurance industry from the implementation of commitments when joining the WTO, the Vietnam - US trade agreement, including domestic and foreign-invested insurance companies; innovation in state management such as licensing, etc. [87]. The policy factors of the Party and State in the development and improvement of insurance laws are also mentioned sporadically by some authors in their research works.

Regarding this content, the following general assessments can be made:

- Research projects have not comprehensively addressed the main factors affecting the law on life insurance business, but often only focus on certain factors, in which the international integration factor is especially emphasized. However, for the international integration factor, the projects only focus on studying the impacts of joining the WTO and the Vietnam-US Trade Agreement without studying the content of international practices in the insurance business sector. Since 2009, the insurance management agency of Vietnam has been a member of the International Association of Insurance Supervisors (IAIS), so the rules and guidelines of this agency have a great influence on the content of Vietnamese law but have not been studied.

- Many important factors are not studied such as the interactions between the components

Law on life insurance business in Vietnam - Theoretical and practical issues - 2

Comment