TOPIC 1: 1.

Analyze opportunities and

challenges of the Vietnam Social Insurance and
give recommendations to improve this policy.

Social insurance is one of the most beneficial

security packages for employees. Humans
require work activities to exist and flourish,
hence there is a link between the employee and
the employer. In addition to the monthly
income, the employer is required by law to pay
the employees' social insurance contributions.
Therefore, social insurance has many
opportunities, however, it also faces many
challenges in recent years.
The Covid-19 pandemic has had a significant
impact on the development of the number of
people participating in social insurance. People
have a clearer understanding of the benefits and
implications of insurance. Therefore, in 2021,
the Covid-19 epidemic will continue to be
complicated. Moreover, the whole Vietnamese
social insurance industry has applied flexible
solutions, suitable to the actual situation, so the
number of people participating in social
insurance has increased significantly compared
to the same period of 2020. This shows that
Covid and social distancing promote the
development of social insurance in the future.
However, in order to meet the State's
insurance sector growth target, Vietnam's social
insurance still confronts numerous challenges
that need both the state, companies, and
connected organizations and individuals to
make significant efforts and work in concert
with one another. The attainment of the goal of
universal social insurance is the first challenge
in revising social insurance policy. This is a
difficulty for the ability to protect the state
budget in the context of Vietnam's aging
population, with the number of old people
expected to grow rapidly in the coming years.
On the other hand, if multi-tier social insurance
is not successfully administered, it would easily
lead to people's reliance on social pension
policies and unwillingness to join in voluntary
social insurance, making it difficult to develop
for those who participate in voluntary social
insurance. The coverage of social insurance has
been consistently increased, with the proportion
of participants growing year after year, however
looking back over the last ten years (2009-
2018), the pace of population growth has been
quite modest. Participation in obligatory social
insurance spans from 3.24% to 7.03%, with an
average rise of 5.83% per year. If this trend
continues, the number of persons enrolling in
compulsory social insurance is predicted to
reach 17.1 million, 21.5 million, and 28.5
million by 2021, 2025, and 2030, respectively.
With an estimated labor force of 50.4 million,
52.1 million, and 53.8 million people, the
proportion of people participating in
compulsory social insurance compared to the
labor force in the respective age group is 34%,
41.3%, and 53%, respectively, falling short of
the target set by Resolution 28. Meanwhile,
every year, a large number of workers are still
choosing to receive one-time social insurance
benefits, which means they leave the social
insurance system and lose the opportunity to
access pensions in old age. This fact is going
against the goal of developing and expanding
the participants and increasing the coverage of
the social insurance policy. The number of
people participating in voluntary social
insurance is still far from the set target. In terms
of policy, the scope of application is expanded,
but there is little change in policy design, the
contribution-receiving relationship is not
appropriate, the benefit level is still much higher
than the contribution-responsibility level, poses
challenges to ensuring the balance of the social
insurance fund in Vietnam in the long term.
Flexible, short-term voluntary social insurance
packages are designed to increase the
attractiveness of the policy. However, because
this is a voluntary policy, if it is not
implemented properly, it will easily lead to the
phenomenon of "reverse insurance," which
means that only people with illnesses or who are
at high risk can participate, that shared
contributions among social insurance
participants cannot be mobilized, that healthy
people must pay for the sick, putting a strain on
finances, and that the contribution-benefit
relationship in implementation is broken.
It is critical to think strategically about
Vietnam's social security policy in the new
period, support the process of
institutionalization and refining the legal system
to fit the demands of reality and improve
governance capacity and policy implementation
effectiveness. The effective reform of social
insurance policy, in particular, necessitates
strong political will from the leadership and
guidance of Party committees and the political
system at all levels, as well as direct
responsibility from state management agencies.
the country, the social insurance agency, and
employer and employee involvement.
TOPIC 2: Analyze opportunities and
challenges of bancassurance and give
recommendations to develop bancassurance in
Vietnamese insurance market.
Bancassurance is a form of business association
between commercial banks and insurance
companies in distributing insurance products to
potential customers. In addition to the strategy
of developing agents, bancassuarance is defined
as the second major distribution channel of
insurance enterprises with the expectation to
contribute more positively to the revenue of
exploiting new premium for business.
Over the last few years, the number of banking-
insurance deals has increased, bancassurance in
Vietnam has recorded remarkable
developments. The boom of bancassurance
began in 2017, when a series of large- scale
cooperation contracts between life insurance
business and banks were signed and put into
operation: the cooperation between Dai-ichi
Life and Sacombank, Manulife and
Techcombank, AIA and VP Bank. Statistics
from insurance companies said that in 2016,
new premium revenue from bancassurance only
accounted for 10% of the total market
premiums, rising to 20% in 2018. According to
preliminary data of insurance businesses, as of
August 2019, this rate is nearly 30%.
Prelimunary data shows that the total revenue of
new premium exploitation for the whole market
estimated nearly VND 20,000 billion and new
revenue from bancassurance is about VND
4,000 billion. Bancassurance activities are
carried out in both non-life insurance and life
insurance, but mainly in life insurance. In
Vietnam, the life insurance market is evaluated
by industry experts as very potential and there
are many areas of growth when only about 0.7%
of the population uses life insurance. Moreover,
the exploitation of insurance through
bancassurance channel only reached 6% of the
total revenue of the industry while the world
rate is 70%. This shows that the development
potential of bancassurance is still very large and
it is not fully exploited.
Vietnam market creates many opportunities to
promote the development of this form of
distribution. The first is an increase of customer
demand. In 2019, the Vietnamese economy is
expected to continue to grow, leading to an
increasing demand for insurance in Vietnam,
and people or economic organizations are
increasingly interested in insurance. It is
forecasted that Vietnam's insurance market will
continue to develop strongly in the next time, in
which life insurance sector will grow over 25%.
However, the traditional channels of insurance
businesses are saturated, requiring businesses to
develop new exploitation channels to improve
efficiency, bancassurance is one of those
channels. Secondly, the development
opportunities of bancassurance are from the
benefits that it brings. It is considered a gold
mine of banks, they can exploit more potential
market services, take advantage of insurance
customers to exploit savings services, lend
through security contracts or life insurance,
besides, in addition to receiving a non-small
admission fee that the insurance company pays
for the first time, the bank will also be entitled
to insurance premiums and commissions in the
following years, but not having to invest much
in capital or risk management like other
business activities. On the insurance companies'
side, they will take advantage of the bank's
distribution network, and access the bank's huge
customer data source for research and
development of new products more suitable for
their customer demand and risk management
activities. For customers, they also enjoy
benefits such as saving time and cost when
integrating services, taking advantage of saving
money, ... Besides opportunities, bancassurance
still faces many challenges. In fact, the
combination of banks and insurance companies
is not easy to happen because it requires
insurance companies to pay a huge fee, while
the bank is not willing to share the source of
customers. In addition, the development of
bancassurance distribution channel requires
banks and insurance companies to jointly
implement human resource quality activities to
improve skills for bank's employee for
insurance consultants. In addition, customers are
still familiar with traditional distribution
channels, so changing their consumer behavior
is not easy. In summary, bancassurance is a very
potential insurance distribution channel with
benefits to all participants. However, in order to
fully exploit the benefits and promote it, it
requires insurance companies and banks to have
a closer combination of activities: promotion,
customer care and advice, ... In the coming
years, bancassurance will surely make great
strides in the insurance industry in Vietnam.