Research scope About content: The thesis focuses on researching the commercial insurance development policy of Thailand and Singapore in terms of policy planning and implementation, fo
Trang 1ACADEMY OF SOCIAL SCIENCES
DUONG TRONG KHOA
Commercial insurance development policies in some Southeast Asian countries and lessons
Trang 2The thesis was completed at the Academy of Social Sciences
Scientific instructor: Associate Professor Dr Nguyen Huy Hoang
Dr Nguyen Bui Nam
Reviewer 1:
Reviewer 2:
Reviewer 3:
The thesis will be defended before the school-level Thesis
Evaluation Council meeting at the Academy of Social Sciences
At the hour, day, month, year
The thesis can be consulted at the National Library and the Library
Trang 3PREAMBLE
1 Urgency of the topic
Insurance plays an increasingly important role in the socio-economic development process Every country in the world always offers policy solutions
to promote and encourage the development of insurance activities, increase the number of compulsory insurance types, and reduce income tax for insurance businesses create favorable conditions for insurers to invest Vietnam is one
of the rapidly developing countries in the ASEAN region Increasing openness and integration have helped the financial market in general and the insurance market in particular to access major insurance companies in the world, providing increasingly diverse products to the market Vietnamese school However, according to an assessment from the Vietnam Insurance Association, Vietnam's current insurance policies have not really created a solid foundation to ensure the commercial insurance market develops safely and sustainably solid The level
of penetration and development of the Vietnamese insurance market is not commensurate with its potential The implementation of compensation policies
is not good, there are many problems with administrative procedures , and transparency is not high Beside edge Accordingly , insurance products in some important fields such as agriculture, natural disasters, credit and financial risks
do not have reasonable insurance policies Not yet Have much these main policies to develop micro insurance products - insurance products for disadvantaged people in society The insurance markets of Thailand and Singapore are the two leading vibrant markets in Southeast Asia Therefore, learning from the experiences of neighboring countries in Southeast Asia such as Thailand and Singapore is necessary On that basis, Vietnam can have directions and adjust the policy system so that it can exploit the potential of the Vietnamese insurance market in the future With those urgent implications, the author chose
the topic " Commercial insurance development policies in some Southeast
Asian countries and lessons for Vietnam " as the research topic for his doctoral
thesis in economics
Research objectives
The research objective of the thesis is to study the commercial insurance development policies of some Southeast Asian countries, and from there draw lessons for Vietnam in perfecting insurance development policies commerce Specific objectives: Generalize and systematize the analytical framework of commercial insurance development policy, the current situation in some Southeast Asian countries and Vietnam, analyze the positive aspects and limitations as well as the causes of limitations in the policy policy to develop commercial insurance in some Southeast Asian countries and draw lessons for Vietnam, and at the same time propose some solutions to improve policy for Vietnam
Trang 4Research question: What is the current policy of developing commercial insurance in some Southeast Asian countries? Are there any similarities or differences between commercial insurance policies of different countries ? What lessons can be drawn for Vietnam in perfecting the policy of developing commercial insurance?
3 Subject and scope of research
3.1 Research subjects
The research object of the thesis is commercial insurance development policy
in some Southeast Asian countries and the article learn terrible experience for Vietnam
3.2 Research scope
About content: The thesis focuses on researching the commercial insurance
development policy of Thailand and Singapore in terms of policy planning and implementation, focusing on policy
About space: Focusing on policies from Thailand and Singapore, which are
the two markets with the largest insurance density and insurance penetration in Southeast Asia
About time: The period from 2010 - 2022 is the period of implementing the
strategy to develop the Vietnamese insurance market for the period 2011 - 2020 and promulgating the new Law on Insurance Business in 2022
4 Methodology and research methods of the Thesis
4.1 Methodology
The thesis is researched on the basis of the historical materialism and dialectical materialism methodology of Marxism-Leninism, Ho Chi Minh's thought and the views and guidelines of the Communist Party of Vietnam and the policies of the Communist Party of Vietnam State on insurance, especially policies on commercial insurance development
4.2 Research method of the thesis
In addition to using research methodologies, PhD students also use other scientific research methods, specifically including: statistical analysis methods, comparative research methods, analysis and synthesis methods Besides, the author also uses other research methods such as:
Descriptive statistical method, with data sources taken from insurance regulators of Singapore, Thailand and Vietnam
The thesis also used the case study method, focusing on studying the cases of Singapore and Thailand, which are the two largest insurance markets in Southeast Asian countries Learning from the experiences of these countries will help Vietnam perfect its policy system to develop its insurance
In addition, the author used in-depth expert interviews with 4 managers
of insurance companies (including 2 life insurance companies and 2 non-life insurance companies), and 6 experts coming from businesses - representing insurance buyers Experts' opinions will be used to supplement comments and
Trang 5assessments of Vietnam's insurance market, as well as Vietnam's insurance development policies, and serve as a basis for proposing new solutions suitable solution
5 Newness of the Thesis
* Theoretical contributions:
The thesis has systematized the theoretical basis for commercial insurance development policy in the context of international economic integration
The thesis uses in-depth expert interviews to evaluate the current status
of Vietnam's commercial insurance development policy in the context of international economic integration
* Practical contributions:
The thesis analyzes the experience of commercial insurance development policies of Singapore and Thailand to provide lessons for Vietnam
in adjusting commercial insurance development policies
The thesis also proposed a number of solutions to improve Vietnam's commercial insurance development policy in the context of international economic integration
6 Structure of the Thesis
In addition to the Table of Contents, lists of figures, tables, list of acronyms, Introduction, Conclusion, References, the thesis has a structure of 4 chapters, specifically as follows:
Chapter 1: Overview of research situation related to the topic
Chapter 2: Theoretical basis for commercial insurance development policy
Chapter 3: Commercial insurance development policies of some Southeast Asian countries
Chapter 4: Current status of Vietnam's commercial insurance development policy and some perfect solutions
Chapter 1 OVERVIEW OF RESEARCH SITUATION RELATED TO THE TOPIC
In the thesis, the content related to the thesis topic was researched such as
1.1 Research related to insurance
Many studies by Nguyen , HQN (2021) , Nguyen, QP (2021) , Huan, NB (2014) , Hoang, TTH (2008) , Nguyen, HHN (2022) , Trinh Thi Xuan Dung (2012), Nguyen Tien Hung (2015) , Ho Cong Trung (2015) , Cummins and Venard (2008) there was mention of insurance content
1.2 Research projects related to commercial insurance development policy
* Insurance development: Studies referring to insurance development are mainly mentioned through developing the insurance market ( Tran, TT (2002) ), developing distribution channels ( Bui, PT (2013 ), Tran, TNY (2017) )
Trang 6develop activities such as bancassurance of insurance companies belonging to state-owned commercial banks ( Nguyen, TTT (2014) , Tran, TNY (2017) , or deploy micro insurance in Vietnam ( Nguyen, TV (2022) ) However, most of these studies have not proposed specific criteria for evaluating insurance development
* Insurance policy
Many proposals on developing insurance products through the creation
of specific mechanisms for micro-insurance policies ( Nguyen, TV (2022) , Ngo Anh Phuong (2023) , Do Thi Dien (2017) , Drechsler D and Jütting, J (2005) , Hoang Tran Hau and Hoang Manh Cu (2011) , Nguyen Thi Thanh Vinh (2023) , Tran Vu Hai (2014) , Doan Thanh Tuan (2016) , Pham Thu Phuong (2016 ) ) , Chang et al (2013) , Wat, S.S., & Tatiyakawee, K (2000) , Chow-Chua, C., & Lim, G (2000) , Pachanee, CA , & Wibulpolprasert, S (2006) ) , Li, C et al (2011)
Studies on insurance market development policies by many domestic and foreign scholars have also had certain results, however, no research has evaluated commercial insurance market development policies in the world certain criteria, through which appropriate solutions can be proposed to develop the commercial insurance market in a sustainable way
1.3 Agreed points on the theoretical basis and research gaps of the Thesis
1.3.1 The results reach consensus across research projects
First : Previous studies have emphasized the role of insurance in each
country's economy Second : Studies agree that the impact of state policies can affect the commercial insurance market Third : Scientists all agree on a number
of reasons affecting the implementation of policies that are not strong enough to
develop commercial insurance Fourth : from many different angles and research
fields, scientists have had different insights, predictions, and directions on implementing commercial insurance policies At the same time, research projects propose directions and solutions; Recommendations for governments to promote and improve the effectiveness of policy implementation in the coming time
1.3.2 Gaps and directions for further research in LA
It can be affirmed that the results of previous studies are convincing, but
in reality, there are still issues that need to be further researched, including:
First : Although previous studies mentioned the role of policy in
developing commercial insurance during the period of international economic integration, they did not provide criteria to evaluate policy implementation to commercial insurance development
Second : The results and limitations in the implementation of
commercial insurance development policies of Southeast Asian countries such
as Singapore and Thailand as well as the similarities and differences between the policy systems have not been analyzed in depth of countries
Trang 7Third : There have been no studies using in-depth interview methods to
evaluate policies to develop the Vietnamese insurance market in recent times , from which to propose appropriate solutions for perfecting policies this policy
Chapter 2 THEORETICAL BASIS OF COMMERCIAL INSURANCE
DEVELOPMENT POLICY 2.1 Theoretical basis of commercial insurance
2.1.1 Commercial insurance concept
“Insurance is an agreement in which the insurer will commit to compensate for damages to the insured object caused by risks within the scope of insurance,
in return the insured will have to pay a The amount of money is called insurance premium
Within the research scope of this thesis, commercial insurance is understood
as an industry created by insurance businesses, trading products and services on the insurance market through insurance contracts under provisions of law for profit purposes
2.1.2 Subjects participating in insurance
Insurance participants may include all insurance businesses and insurance agents and brokers
2.1.3 Commercial insurance products
There are many ways to classify commercial insurance products according
to different criteria
In this thesis , the researcher classifies based on insurance techniques and mainly analyzes from the perspective of life insurance and non-life insurance
2.1.3.1 Life insurance products:
Classifying types of life insurance according to scope Based on scope, life insurance is divided into 5 types: term insurance, death insurance, whole life insurance, combined insurance and life insurance Periodic insurance payments
2.1.3.2 Non-life insurance
According to the Office of the Insurance Commission of Thailand (OIC), non-life insurance is all types of insurance other than Life Insurance for which the insurance company agrees to compensate the insured for a chargeable amount loss or damage from any hazard whatsoever
Non-life insurance products are often very diverse, with many types, related
to many different subjects, such as property and civil liability
2.2 Theoretical basis for commercial insurance development policy
2.2.1 Related concepts
* Develop commercial insurance
This research methodology is based on indicators showing the size of the insurance market and economic growth in the countries of the European Union most indicators used in recent studies and international statistics (Akinlo &
Trang 8Apanisile, 2014; Cristea et al., 2014; Insurance Europe, 2016; Ndalu, 2016; Olayungbo & Akinlo, 2016; Zouhaier , 2014) in the insurance sector as follows: total insurance premiums per GDP, called insurance penetration, and total insurance premiums per insured, called insurance density
* Economic policy:
Economic policies are said to be solutions or tools that the state or state
management agencies use to influence economic entities to develop the national economy
* Commercial insurance development policy
Based on the concept of economic policy, it can be seen that
commercial insurance development policy is a system of solutions and tools of state management to develop commercial insurance
2.2.2 The role of commercial insurance development policy in the context of international economic integration
Commercial insurance development policy has many different roles such as: (i)
Role in the development of the national economy ; (ii) Role in transnational labor protection ; (iii) Role in import and export, GNP growth ; (iv) Role in maintaining and protecting the economy in crisis ; (v) Role in international economic integration
2.2.3 Agency for operating and supervising commercial insurance business
In many countries around the world, insurance management and supervision agencies often have general financial management functions Because insurance is also a major capital mobilization channel in society, managing and monitoring cash flows distributed and circulated in and out between subjects in the economy is very important
2.2.4 Commercial insurance development policy system
To manage the state in the insurance sector, governments need to promulgate a system of laws, regulations and guidelines for the implementation
of insurance business by insurance enterprises, insurance brokerage enterprises, and insurance companies including both domestic and foreign enterprises State policies from licensing operations, guiding implementation, as well as monitoring activities will help the insurance market develop in accordance with policy goals Support activities such as training, building a team of management staff as well as international cooperation on insurance will help commercial insurance of countries integrate into the insurance market in particular and the financial market in general together effectively
Insurance development policies often follow the direction of:
* Regulations on operating licenses :
* Policies guiding the implementation of insurance business activities
* Policy for monitoring insurance business activities of enterprises
* Policy on training and building a team of management staff
* Policy to strengthen international cooperation on insurance
Trang 92.3 Criteria for measuring the results of commercial insurance development policies
2.3.1 Criteria for commercial insurance development
Insurance market development is measured by criteria such as: + Market penetration level: This index is measured according to the formula of total insurance premiums over gross domestic product (GDP) and calculated as a percentage
+ Insurance density: measured by micro insurance premiums per capita (in USD) (IAIS, 2017)
It can also be measured by indicators such as average insurance value, microinsurance penetration rate, insurance coverage ratio, or indicators such as : insurance revenue, amount of money collected in the bank State policies, number of insurance businesses participating in the market, number of insurance products provided
2.3.2 Criteria for evaluating commercial insurance development policies
* Evaluate commercial insurance policies
* Criteria for evaluating commercial insurance development policies
To evaluate and compare policies, there needs to be clear, transparent criteria to identify and measure policies in an appropriate approach
(Netherlands Ministry of Foreign Affairs, 2009), on that basis can identify the results and limitations in implementing policies in practice
There are many domestic and foreign studies that propose criteria for evaluating policies on many different angles and fields of the economy However, these criteria are still appropriate when evaluating in the insurance field Besides, a number of other criteria were studied by the NCS Proposal to suit the specific nature of the insurance field The proposed criteria for evaluating commercial insurance development policies include: effectiveness, safety, sustainability, efficiency, diversity, suitability and integration
Trang 10Figure 2.1 Framework for evaluating commercial insurance development
policies Source: suggested by the author
2.4 Factors affecting commercial insurance development policy
2.4.1 Factors from the State side
The legal system of the financial sector in general and the insurance sector
in particular, the general socio-economic development goals of each country, in each period, the synchronization of the legal system with the legal system international law in the field of insurance
2.4.2 Factors from the commercial insurance market
Including factors from insurance businesses, the quality of human resources
in the insurance industry, and the development of technology in the market, especially AI technology
Chapter 3 COMMERCIAL INSURANCE DEVELOPMENT POLICY OF SOME
SOUTHEAST ASIA COUNTRIES 3.1 Current status of commercial insurance development policy in the context of Thailand's international economic integration
3.1.1 Commercial insurance market in Thailand
3.1.1.1 Introduction to Thailand
Thailand is one of the leading countries in Southeast Asia, in the Andaman Sea and Gulf of Thailand region, with borders adjacent to Myanmar, Cambodia, Laos and Malaysia Thailand is a mixed economy with a constitutional monarchy, which allows for private freedom combined with a centrally planned economy and regulation by the government, headed by the
prime minister ( Globaledge.msu.edu, 2020 ) Thailand is also one of the leading
development
Efficiency Safety
Sustainability
Effectiveness
Diversity
Suitability Integration
Trang 11growing economies in Southeast Asia, with strengths in rice, fruit and tourism exports
3.1.1.2 Thai insurance company
Thai insurance businesses has not changed much over the years, however, life insurance businesses tend to decrease The reason is that some insurance businesses are operating ineffectively and have been temporarily suspended or had their operating licenses revoked This is necessary to ensure the stable and sustainable development of the insurance system in Thailand
In Thailand there are 22 life insurance companies, 58 non-life insurance companies
Activities in Thailand mainly depend on the distribution channels of insurance agents, leading to higher costs compared to other countries and making the ROE ratio of businesses lower The majority of businesses in the industry are small businesses (accounting for 50%) that operate inefficiently, requiring the government to provide necessary attention and support It can be seen that most small insurance companies often have low ROE ratios, many of which are even negative, showing that the competitiveness of these businesses is quite poor
3.1.1.3 Insurance products
In Insurance Development Plan Vol 4 of Thailand, OIC is currently focusing on developing a variety of products
+ For Life Insurance: Life insurance products will place more emphasis
on protective products such as health insurance products, products for the elderly and retired people to provide protection diverse protection and meet specific needs
+ For Non-Life insurance: There are more diverse products besides motor insurance products New products are developed to meet specific consumer behaviors and needs At the same time, strive to develop insurance products that meet the needs of low-income people and farmers
3.1.2 Agency for operating and supervising commercial insurance business
The Office of the Insurance Commission (OIC) is Thailand's insurance regulator operating under the supervision of the Minister of Finance of Thailand The OIC Office is responsible for supervising and promoting the development of business activities of insurance companies, monitoring the quality, knowledge and activities of agents and brokers of both natural and legal persons agent, the insured person and the person with rights and interests under the insurance contract to receive full and timely benefits from the insurance system (OIC.or.th)
OIC has four main strategic directions, outlined in its website, the strategic objectives are (i) Building public trust and access to the insurance system; (ii) Building stability and competitiveness; (iii) Develop and protect insurance-related rights for the public; (iv) Developing insurance infrastructure
Trang 123.1.3 Thailand's commercial insurance development policy system
Thailand's legal system and court system are very developed The legal system is a blend of Thai civil and commercial law, influenced by British common law and statute and also by practice in continental Europe, especially Germany and Switzerland The Civil and Commercial Code is the most important
of the four codes dealing with civil matters In the insurance sector, the LIA life insurance and NLIA non-life insurance acts play the most important role, and the Insurance Commission and OIC are responsible for insurance supervision
* Regulations on operating licenses:
Under the Insurance Act, business entities that can apply for insurance licenses are limited to public limited companies incorporated in Thailand (Thai PLC) or branches of foreign insurance companies Insurance businesses are only allowed to choose whether to do business in the field of life insurance or non-life insurance Since 1995, the Thai government has not issued new insurance licenses However, the government is currently reviewing licensing requirements with the goal of allowing increased foreign ownership and opening the market to potential new entrants as well as being more consistent with the ICP
All licensed businesses and the scope of their licenses are published on the OIC website
* Policy guiding the implementation of insurance business activities
The Office of Insurance Commission (OIC) has made many amendments and supplements to modernize and improve Thailand's insurance laws The amendments also allow the OIC to issue a number of new regulations governing the activities of insurance intermediaries, including the collection and remittance of insurance premiums, and the disclosure of information on the activities of agents and brokers broker, etc
* Policy for monitoring insurance business activities of enterprises
Insurance business supervision has been of concern to the Thai government for many years Thailand’s insurance market is growing Many diverse products and distribution channels, especially in the field of life insurance, make insurance business more complex Supervision activities focus on contents such as: (i) developing and maintaining an effective supervision team; (ii) strengthen governance and internal control requirements; (iii) promulgate a risk-based supervisory framework and requirements on capital adequacy, valuation, provisioning, investment and reinsurance; (iv) enhance information exchange and cross-border cooperation to reach international standards in the insurance sector
The supervisory authority will evaluate the organization's capital, profitability and liquidity to rank the organization's aggregate risk
The OIC requires insurance companies to submit financial, financial and operating reports annually and quarterly All annual financial reports must
be audited and quarterly reports must be reviewed by auditors
* Policy on training and building a team of management staff
Trang 13Many training courses on insurance and insurance technology are organized
by OIC to help insurance businesses update knowledge, new insurance policies, and proactively develop business plans to meet risks new, while improving the competitiveness and readiness of the insurance system to protect the interests of the people
An actuary must be licensed to certify annual liability valuations on both a gross and net reinsurance basis The license is issued by the OIC and must be renewed every two years
The majority of practicing actuaries in Thailand undergo training at internationally recognized actuarial associations such as the Association of Actuaries
in the United States, the Institute of Actuaries of Australia (IAA), the Institute of Actuaries and Faculty of Actuaries (IFoA) (UK) or CAS in the US
Thai government also regularly organizes talks or dialogues between businesses and management agencies to disseminate the actual environmental situation and socio-economic context Various knowledge has been shared and disseminated to different audiences, from both the public and private sectors, both in the financial sector and the insurance sector
The website also provides legal guidance, knowledge related to life insurance agents, codes of conduct and service practices for typical cases, and offers advice on insurance Life and non-life insurance
* Policy to strengthen international cooperation on insurance
Cross-Border Cooperation and Coordination on Crisis Management: OIC does not officially participate in all supervising colleges or crisis management groups, foreign-based groups operating in Thailand , partly because the proportion of domestic business of some groups is relatively small compared to the group on a consolidated basis
3.1 4 Evaluation of commercial insurance development policies in Thailand
3.1.4.1 Criteria for evaluating commercial insurance development policies
in Thailand
+ Effectiveness:
Thailand 's policy system covers many different aspects of economic life, from areas such as construction insurance, investment, agricultural products, and Covid insurance
+ Safety:
Thai legal system regulates the solvency maintenance ratio of insurance companies with a minimum capital adequacy ratio (CAR) (equal to total available capital/regulatory risk capital) of 140 % since 2013 Basically, Thai insurance still achieves capital adequacy
+ Sustainability:
Thailand has unified regulations on a common database, creating a competitive insurance environment for businesses This ensures that the Thai
Trang 14insurance market develops healthily, maintaining stability in insurance business activities in the market
+ Diversity:
In Thailand, motorbike third-party liability insurance is mandatory for vehicle owners (Tilleke & Gibbins, 2013) In addition to mandatory products , OIC has recently encouraged insurance businesses to expand and develop necessary insurance products such as micro insurance and agricultural insurance to finance production activities Agriculture is an advantage of this country
However, Thailand is still not really open to receiving foreign investment
in the insurance sector, diversifying investment capital sources for this field because this is also a quite sensitive field This also partly affects the diversity in providing insurance products in the Thai market
+ Suitability:
Thailand's legal system has had many changes to suit the new business environment In each different period, insurance market development plans have been adjusted and introduced by OIC to be compatible with Thailand's economic and social development goals in each period and changes in the economy insurance market
+ Integration:
Regulations in the Thai law system show that, right from the conditions for establishment, enforcement and supervision of insurance company activities, Thailand has approached the international law system to ensure ensure the insurance business environment achieves good results
3.1.4.3 Limit
The country itself also faces many internal instabilities, such as changes
in population structure leading to Thailand entering an aging society,