At the conference, brokerage firms spoke about the difficulties they face and proposed various improvement measures to the insurance watchdog. Firms said that detailed regulations for operations and insurance brokerage fees are needed. — Photo tinnhanhchungkhoan

HA NOI (Biz Hub) — The legal framework for the operation of insurance brokerage companies will be improved to enhance their competitiveness, according to the Insurance Supervisory Authority under the Ministry of Finance.

The department's director Phung Ngoc Khanh said at a conference on Wednesday that insurance brokerage was becoming an important factor for the development of the insurance market as well as the country's socio-economic development.

At the conference, brokerage firms spoke about the difficulties they face and proposed various improvement measures to the insurance watchdog.

Firms said that detailed regulations for operations and insurance brokerage fees are needed.

They pointed out that in Viet Nam, there are currently no regulations allowing firms to charge fees for providing consultancies to customers and this has limited the operations of insurance brokerage firms.

According to the statistics of the Ministry of Finance, total insurance premiums through the brokerage channel increased rapidly by 22 per cent last year.

During the 2011-14 period, total insurance premiums through brokerage reached VND21.165 trillion (US$979.8 million), or equivalent to 22.7 per cent of the total non-life insurance premiums during the period, and contributed nearly VND300 billion ($13.88 million) to the State budget.

Commissions from insurance brokerage last year reached VND492 billion ($22.7 million), rising by around 10 per cent.

A representative of the department said that studies on the development of insurance brokerage in foreign countries are being carried out to seek measures that can be applicable to boost the development of this sector in Viet Nam.

Currently, there are major gaps between foreign insurance brokerage firms and domestic firms in management capacity and market shares. Last year, five foreign brokers dominated the market, holding a combined share of more than 92 per cent.

In addition, insurance premiums collected through brokerage remained modest, just 12 per cent of the total premium of the insurance market, while the percentage of Thailand and the US were 30 per cent and 85 per cent, respectively.

The department revealed that a regulation to allow insurance brokerage firms to offer consultancy services will be taken up for consideration in line with international practices.

Meanwhile, firms have urged the foundation of an association of insurance brokers to enhance their operation capacity and standards. — VNS