Business performance of investment linked insurance products at baoviet life corporation

Master of Finance - Banking - Insurance Southeast Asia Cohort 2016-2018 Master’s Thesis: BUSINESS PERFORMANCE OF INVESTMENT- LINKED INSURANCE PRODUCTS AT BAOVIET LIFE CORPORATION Author : Nguyen Thi To Trinh Supervisor : Nguyen Thi Hai Duong, Ph.D Hanoi, May 2018 ACKNOWLEDGEMENT I would like to send my sincere thanks to my supervisor: Dr Nguyen Thi Hai Duong, whose kind support and continued advices helped me with the completion of my thesis I would like to send my great thanks to professors, lecturers and staffs at the IVNUS, the University of Nantes for the knowledge and experience that have been shared through their lectures during the master program My thesis was also completed with the help from my superiors and colleagues at Baoviet Life Corporation Last but not least, I would like to express my gratitude to my friends and family for giving me encouragement and supports during my studying time and completion of my thesis Hanoi, May 2018 i DECLARATION OF ORIGINALITY I hereby declare that the thesis is my own, unaided work All information in this thesis has been obtained and presented in accordance with academic rules I also declare that I have fully cited and referenced all material and results that are not original to this work Author Nguyen Thi To Trinh ii ABSTRACT The research concentrates on the analysis of the business of BaoViet Life Corporation, focusing on issues of the business performance of investment- linked insurance product In order to arrive at the research objective, the main methods used are comparative analysis, statistical analysis and illustrative graphs The data used are secondary data, collected from BaoViet Life‟s business performance report, as well as published figures by Vietnam Insurance Association and Insurance Supervisory Authority of Ministry of Finance The findings of the research are (i) Theory: clarified theoretical issues relating to life insurance, characteristics of life insurance and the procedure of life insurance business (ii) Practice: the research has analyzed the business performance of investment- linked products at BaoViet Life with respect to product development, distribution channel, customer service, and has detailed their achievement and outstanding concerns due to limitations on product range, agent professionalism, customer services in addition to the investment results from premium not yet matched to the investment resources From the findings, the research proposes solutions to enhance business performance of investment- linked product at BaoViet Life, centering on (i) diversifying investment- linked products (ii) upgrading distribution channel, (iii) bettering investment efficiency to bring value to participating customers, and (iv) improving customer services In addition, the thesis also makes recommendations to the authority to facilitate life insurance companies in promoting business performance of investment- linked insurance products in Vietnam in the time to come iii TABLES OF CONTENTS ACKNOWLEDGEMENT i DECLARATION OF ORIGINALITY ii ABSTRACT .iii TABLES OF CONTENTS iv LIST OF TABLES AND CHARTS vi CHAPTER 1: INTRODUCTION 1.1 Background 1.2 Reason of the research 1.3 Subject and Scope of the Research 1.4 Objective and Research Question 1.5 Literature Review 1.6 Research Methodology 1.7 Thesis Structure CHAPTER 2: THEORETICAL ISSUES 2.1 Overview of Life Insurance 2.1.1 Definition of Life Insurance 2.1.2 Characteristics of life insurance 2.1.3 Life insurance products 2.2 Investment- linked Insurance Products 11 2.2.1 Definition 11 2.2.2 Characteristics of investment- linked insurance 12 2.2.3 Funds in Investment- linked Insurance Products 13 2.3 Business Performance of Investment- linked Insurance 17 2.3.1 Distribution Channel 17 2.3.2 Customers Services 19 2.3.3 Criteria to assess Business Performance of Investment- linked Insurance 20 CHAPTER 3: BUSINESS PERFORMANCE OF INVESTMENT- LINKED INSURANCE PRODUCTS AT BAO VIET LIFE CORPORATION (2013-2016) 24 3.1 Influencing factors on the development of life insurance market in Vietnam 24 3.1.1 Economic condition as the development basis of Life Insurance 24 3.1.2 Cultural-social condition 24 3.1.3 Information technology 25 3.1.4 Openness and international economic integration 26 3.1.5 Legal environment 26 3.2 Introduction to Bao Viet Life 27 3.2.1 History and Development 27 3.2.2 Organization structure 28 3.2.3 Business operation 29 iv 3.3 Business Performance of Investment- linked Insurance Products of Bao Viet Life 31 3.3.1 Investment- linked Insurance Products of Bao Viet Life 31 3.3.2 Distribution channels 33 3.3.3 Customer service 34 3.4 Assessment on the Business Performance of Investment- linked Insurance products of Bao Viet Life 34 3.4.1 Results 34 3.4.2 Existences and causes 41 CHAPTER 4: SOLUTIONS TO IMPROVE BUSINESS PERFORMANCE OF INVESTMENT- LINKED INSURANCE PRODUCTS AT BAOVIET LIFE 46 4.1 Vietnamese insurance market development strategies to 2020 46 4.2 Forecast the development of the life insurance market in Vietnam 47 4.3 Development orientation of Baoviet Life 49 4.4 Solutions to improve business performance of Investment- linked Insurance Products at BaoViet Life 50 4.4.1 Diversify investment- linked insurance products provided to the market 50 4.4.2 Improve the quality of distribution channels, promote product promotion activities 51 4.4.3 Improve the efficiency of investment and fund management to preserve and develop the capital and increase the value for customers when investing in the investment- linked fund 52 4.4.4 Improve the quality of customer service 55 4.5 Recommendations 57 4.5.1 Recommendations to the State 57 4.5.2 Recommendations to the Insurance Association 60 CONCLUSION 62 REFERENCES 63 v LIST OF TABLES AND CHARTS Table 3.1 The number of agents of Baoviet Life (2013-2016) 35 Table 3.2 Data on new business premium revenue of Baoviet Life (2013-2016) 36 Table 3.3 Total premium revenues of Baoviet Life by product line (2013-2016) 37 Table 3.4 Summary on business performance of Baoviet Life‟s Universal Fund (2013-2016) 39 Table 3.5 Premium revenue of universal life product and investment revenue of Baoviet Life‟s Universal Fund (2011-2016) 42 Figure 3.1: Business organization model diagram of Baoviet Life (Baoviet Life, 2016) 28 Figure 3.2: Diagram of product distribution channel of Baoviet Life (Baoviet Life, 2016) 33 Figure 3.3 Number of universal life policies and attached riders products by years 36 Figure 3.4 Marketshare of new business premium revenue of Universal Life (2013-2016) 38 Figure 3.5 Marketshare of total premium revenue of Universal Life (2013-2016) 38 Figure 3.6 Growth rate of Universal Fund by years (2013-2019) 40 Figure 3.7 Announced interest rate for Universal Life Policy (2009-2016) 40 Figure 3.8 The policy persistency rate of Universal Life products (2012-2016) 41 vi CHAPTER 1: INTRODUCTION 1.1 Background Since the first life insurance contract appeared in Vietnam more than 20 years ago, Vietnam life insurance industry has been growing at remarkable rate The market size is increasing with widespread network in every cities and provinces throughout the country As at 31 December 2016, there were 18 life insurance enterprises, including Vietnamese insurer, joint venture insurers and 13 insurers with 100% foreign capital The competition among life insurers is becoming intense as all of them possess substantial financial capacity, good brand reputation, innovative products and effective marketing strategy In 2016, along with the prosperity of the Vietnamese economy, the life insurance market continued to maintain its positive momentum The total gross written premium in 2016 was VND 50,471 billion, which was 32% higher than in 2015, in which the greatest contribution came from endowment insurance with VND 24,012 billion, accounting for 47% Next came investment- linked insurance with 41% of the total gross written premium, approximately VND 21,081 billion New business premium in 2016 was approximately VND 17,546 billion, equivalent to an increase of 32% in comparison to 2015 figures Of which, new premium from investment- linked insurance represented the highest proportion of 51% and was VND 8,903 billion According to the statistics of the Insurance Supervision Authority, the average new premium in 2016 was VND 10.4 million per policy, which was 8.3% higher than 2015, in which Investment- linked insurance had the highest average new premium at VND 12.8 million per policy These figures clearly show the increasing trend of people in choosing investmentlinked insurance In the past, life insurance was often viewed only as a protective and saving channel, but now it is also considered as an investment channel and chosen by many clients With the development of the life insurance market, a number of saving heavily-characterized products such as endowment insurance and pure endowment insurance will gradually give way to more protective and flexible products According to experts in the insurance industry, when people‟s ability to accumulate wealth is enhanced while the prospects of several investment channels (gold, foreign currencies, real estate or bank) not look as promising as before, investment in investmentlinked insurance products seems like a more preferred channel Accordingly, the segment of investment- linked insurance products in the upcoming years will continue to be dynamic and will become an investment channel trusted and chosen by many people, which is in line with the trend of the global financial market Investment- linked insurance is predicted to become a popular trend because of the great benefits that this form of investment entails After 10 years of presence in the market, investment- linked insurance has gradually affirmed its important role and has become a core product of life insurance enterprises Selected by the majority of customers because it combines all factors: Protection – Saving Investment The emergence of investment- linked insurance product is an inevitable requirement for market development, as well as a way to bring many benefits to all parties: to the life insurance market, to the stock market, and to the investors Despite the significant growth in recent years together with the general upward trend of the world insurance market, the number of investment- linked insurance policies issued in Vietnam, in fact, accounted for only 16.5% of total new policies Meanwhile, it made up about 31% and 39% in China and Hong Kong respectively Experts' opinions demonstrate that, although this is an emerging market, the number of new investment- linked insurance policies of several life insurance enterprises has not yet surpassed those of traditional products The revenue growth rate reaches over 20% of the insurance industry in recent years, in which the average growth rate of the life insurance sector leveled up to 30% in the past consecutive years However, this figure was still a modest achievement as the total market turnover remained at only 2% of Gross Domestic Product The proportion of the population protected by life insurance was still very low, only at 6-7%, a very low percentage compared with many markets in the region The government‟s Vietnamese Insurance Market Development Strategy in the 2011 – 2020 period stated that, by 2020, the insurance market was forecasted to achieve total revenue of 3-4% of Gross Domestic Product Investors also expect that, in to years, Vietnamese insurance market is likely to grow by 60 to 120% The life insurance market in Vietnam, with a population of over 90 million along with the increase in disposable income and consumption, and the improvement in standards of living, as well as the increased customer awareness of life insurance, are considered key elements in driving the growth of the Vietnamese life insurance market 1.2 Reason of the research Baoviet Life is the only Vietnamese enterprise in the Vietnamese life insurance market Taking the advance of that, during the past years, Baoviet Life has maintained the rapid growth in gross written premium and new business premium Especially, in 2016, Baoviet Life ranked 1st in new premium with 20.9% market share and grew by 41% which was higher than the average market growth of 32.6% After more than 20 years operating in the field of life insurance, the insurance products of Baoviet Life at the moment are very diversified, focusing on main product groups which are traditional insurance, investment- linked insurance, pension insurance and term life insurance Currently, the increasing number of foreign life insurance enterprises entering the market leads to fierce competition of product, distribution channel, customer service, investment, etc between Baoviet Life and foreign competitors which are big life insurance corporations with many years of operation in the world market So as to survive and develop, Baoviet Life has to determine suitable solutions to enhance their competitiveness with focal point on strengthening financial capacity, diversifying products as well as distribution channels to meet the varied needs of customers, improving management technology, applying electronic commerce in dealing with customers, developing brand, raising human resources, etc In the new trend of the market together with the increase of demand for insurance saving- investment, investment- linked insurance is regarded as a new investment channel selected by many customers Investment- linked insurance is predicted to become a popular trend of people thanks to the great benefits it brings Therefore, in order to keep up with the rising demand of the customers, life insurance enterprises, besides dealing with the fierce competition and constant quest for product innovation, distribution channel expansion, also pay special attention to the operation of investment- linked insurance product, guaranteeing benefits for customers However, investment- linked insurance product operation requires extensive knowledge of market and product characteristics due to the more complex management technique for investment- linked insurance product compared to those for traditional products As an officer working in the finance – investment area of a life insurance enterprise, I recognize the huge potential of investment- linked insurance product in Vietnam in the near future Furthermore, with the significance and benefits of life insurance in general and of investment- linked insurance product in particular, researching and providing solutions to enhance investment- linked insurance product business performance at Baoviet Life Corporation is extremely necessary in both theoretical and practical bases For such reasons, I selected the topic: “Business Performance of Investment- linked Insurance Products at Baoviet Life Corporation” This is not only an opportunity to research, summarize and propose a strategic issue of life insurance enterprise, but also to practically apply the knowledge into the business activities of the Baoviet Life Corporation Through researching the topic, I will be able to gain comprehensive knowledge of Vietnamese life insurance market, a thorough understanding of the business operation of investment- linked insurance product, its advantages and disadvantages, and ultimately propose solutions to promote business performance this product line at Baoviet Life Corporation 1.3 Subject and Scope of the Research The subject of this thesis is the Business Performance of Investment- linked Insurance Product at the Baoviet Life Corporation The scope of research: Regarding time: The scope of the research focuses on the current status of business performance of investment- linked insurance products in Bao Viet Life Corporation in the period 2013-2016 Regarding Space: The scope of research focuses on Business Performance of Investment- linked Insurance Products at Bao Viet Life Corporation, at the same time, compare with some life insurance companies having majority market share in Vietnam‟s life insurance market The scope of research is also extended to the creation of an environment for In the years ahead, in 2016, the life insurance market continues to attract foreign investment by establishing new businesses and increasing capital for existing insurance enterprises Many life insurance companies enhanced their financial abilities in 2016, confirming the long-term investment and growth potential of Vietnam's life insurance market 4.3 Development orientation of Baoviet Life Based on the strategy of developing the insurance market to 2020, Baoviet Life has also developed a development strategy for 2016-2020 The main objectives of Baoviet Life's strategy to 2020 are: (i) About market position: strive to become the No.1 position in terms of total premium and chartered capital expected to increase to VND4,000 billion; (ii) About new business revenue: an average annual growth rate of 17% per year for 2016-2020, about VND 6,000 billion in 2020; (iii) About profit after tax: expected average growth rate of 9.5%/year in 2016-2020, reaching about VND1,000 billion in 2020; and (iv) The ratio of after-tax-profit to equity is expected to reach 23% in 2020, an average of 24% in 2016-2020 period To achieve these strategic objectives, Baoviet Life has set a strategic direction that includes the following contents (Baoviet Life, 2014): Firstly: Product development strategy is to bring long-term value to customers Baoviet Life will promote the development and exploitation of highly competitive products that bring high value to customers, focus on exploiting products and customer groups to bring high business efficiency Based on the analysis of the population, cultural and social factors influencing the life insurance market in general and Baoviet Life in particular, Baoviet Life will concentrate on exploiting the maximum number of middle-class customers Baoviet Life's product strategy is to develop insurance products that meet the needs and deliver high value to customers, create sustainable growth and profitability for businesses, make a difference and raise its position in the market In designing products, the focus is on promoting the closing and matching of products, exploiting the niche market, continuing to improve the standards and quality of product development procedure through the help of our counterparts In addition, the policy management procedures and programs, policy illustrator program, application of superior techniques in cost management and product management continue to be improved  For traditional product groups: Focus on the development/modification of traditional products to create a balance between traditional and investment- linked products Expect to launch new products with superior features, meet the market‟s needs and expectations of customers  For Universal Life Product Group: Continue to develop/modify the Universal Life Product for different market segments, with low interest rates along with other features In addition, continue to research and launch new universal products with the outstanding characteristics and advantages 49  For a group of Supplementary Benefits products: research and develop highprotection products such as comprehensive health care /accident/medical products  Unit-Linked Insurance: This is considered to be an important product of the life insurance market in the future Baoviet Life has researched and developed the plan to deploy this product, however, the software system has not met the regulations on implementing and managing the Unit-Link Fund; the regulations and guidance of the Ministry of Finance is not yet clear about the implementation of this product In the future, Baoviet Life will continue to research and develop this product Secondly: Enhance distribution channel capacity, multi-channel distribution strategy: Focus on developing traditional channels in parallel with developing new distribution channels Besides, improve the productivity and quality of agents, develop professional financial consultants Thirdly: Be professional in investment and risk management, investment orientation to ensure capital safety and efficiency Fourthly: Consolidate and improve the operation system based on market practice, improve and upgrade the information technology system, focus on marketing and customer service, complete internal control 4.4 Solutions to improve business performance of Investment- Linked Insurance Products at BaoViet Life 4.4.1 Diversify investment- linked insurance products provided to the market In the coming period, it is important to improve the existing investment- linked insurance products, research and develop new insurance products in this product line as the unit linked insurance Most insurance companies now try to diversify their products in order to serve the diverse needs of more customers Product diversification is not just research and application of new products, but it can also be a combination of existing products to create a new type that better meets the rigorous needs of the customers In the development strategy of the insurance industry, this is of great significance to expand the market share of insurance companies in particular, and expand the coverage of the insurance industry in general, bring insurance to a large number of individuals and organizations in the economy as well as the whole society On the other hand, as the economy grows, the financial market has gradually recovered, the people's life has been increasingly improved; many investment- linked insurance products no longer meet the needs of customers Therefore, in order to gain market share and continue to develop the investment- linked insurance products, Baoviet Life must continue to study and improve the benefits of existing investment- linked insurance products and continue to research and deploy the unit linked insurance products to attract customers Accordingly, the investment- linked products should meet the criteria such as: Customers can be flexible to change the limit of investment between funds, protection limit, premium, 50 investment fund; able to withdraw money to make financial plans that fit the needs of each life stage Baoviet Life's product development strategy should aim to deliver long-term value to customers Baoviet Life will promote the development and exploitation of investment- linked products with high competitiveness that bring high value to customers; continue to research, develop/modify the existing universal-linked products in the direction of separating different market segments, with low interest rates and other characteristics In other words, insurance enterprises not only provide an insurance product, but also together with customers design a financial plan, identify the right needs, thereby propose an investment solution that is suitable with financial ability and future targets for customers 4.4.2 Improve the quality of distribution channels, promote product promotion activities In order to improve the quality of distribution channels, Baoviet Life needs to improve the quality of human resources and the training and recruitment of agents In the coming time, Baoviet Life should continue to develop regulations to standardize the quality of human resources of agents; standardize training programs and certificates of sales in conformity with the characteristics of investment- linked insurance products according to regulations In addition, strengthen the insurance agent system through strict control of the certification; Develop and apply training programs and agent certificates based on the complexity of the type of investment- linked products the agent to consult customers Study and promulgate the compulsory regulations on professional liability for agent force As analyzed, the ratio of resignation or dismissal of agents in some life insurance companies is rather high due to their low qualification for the work Besides, the investmentlinked insurance product is a special product, requiring higher product knowledge and sales techniques than other conventional insurance products Therefore, in order to reduce the percentage of resignation or dismissal of agents, to reduce costs for insurance enterprises, the enterprises need to improve the criteria and quality of recruitment, such as: Requiring candidates to have experiences in sales, communication, at least graduated from high school, giving priority to those with high qualifications and experience in the field During the recruitment process, Baoviet Life needs to clearly show the candidates the difficulties and requirements of the life insurance agent Before recruitment, it is necessary to publicly announce the recruitment target for each batch, to give requirements in a clear and easilyunderstanding way The responsibilities and benefits to be enjoyed must be publicly announced, etc Recruitment of agent must be done well as the basis for improving the professional quality to serve clients In order to expand and develop the insurance market, Baoviet Life also needs to diversify distribution channels, consider further developing other sales channels along with traditional channels as agents, research and give specialty products for each sales channel 51 Baoviet Life is able to diversify its distribution channels through a variety of forms One of the most common methods available today in insurance companies is through the banking system and financial institutions Insurance companies will now have the opportunity to reach out to potential clients with high financial capacity and high demand In addition, access to customers by the Internet or direct mail can also be very effective In the current trend of e-developing commerce, the online sale of insurance is increasingly popular Most insurance companies in the Vietnamese market have their own websites, but only a few companies allow customers to apply for insurance and pay premium online The implementation of this form is still difficult, because our information infrastructure is weak, the payment of cash is still very popular but this is also an effective way that insurance companies need to be considered In the situation of increasing competition, trade promotion is one of the key elements of a successful business In the field of insurance, this factor plays a very important role, especially in Vietnam now, as there is a limitation in people's perceptions of the need for insurance in the economy, as well as for social life This is a good opportunity for Baoviet Life to improve people's understanding of insurance, and to build the image of its company in the potential customers Advertising insurance products, promoting the image of the company through advertising, through humanitarian social activities is the way that Baoviet Life has directed and implemented for many years Baoviet Life always links economic growth with environmental protection and social responsibility – these three factors are the basis for Baoviet Life's long-term success 4.4.3 Improve the efficiency of investment and fund management to preserve and develop the capital and increase the value for customers when investing in the investment- linked fund In activities of life insurance business, the enterprises must always manage a huge source of capital accumulated by contributors over the years For investment- linked insurance products, the premium paid by customers is contributed to the investment fund after subtracting the initial premium The value of assets of the Universal Fund at the end of each year shall correspond to the professional reserve fund of the universal life insurance products The law allows life insurance enterprises to use this capital source to invest in preserving and increasing the value of the universal fund through the profits earned after deducting relevant expenses The investment to preserve and grow capital is both the interest and the responsibility of the insurer The business result of life insurance enterprises is not only the profit generated from premium collection, but mainly from the result of financial investment in many forms Investment to preserve and develop capital is one of the most important solutions for current life insurance enterprises if they want to survive and develop However, the issue is to find ways to invest suitably with their business, while ensuring the interests of customers, ensuring high profitability, and achieving goals of profit and development In fact, the current investment activities of life insurance enterprises in the 52 market show that the flow of investment capital is not effective; the investment scope is limited and not diversified There are only few of investment opportunities of enterprises The stock market of Vietnam has not developed so it cannot be an attractive investment channel for life insurance companies Therefore, the investment of companies mainly focus on bank savings and government bonds, making investment efficiency of idle capital low The investment of life insurance companies usually has the following basic characteristics: Firstly, investment activities are long-term to generate stable income Most of insurance enterprise's portfolio in life insurance business over the world as well as in Vietnam is focused on long-term investment assets such as government bonds, corporate bonds, and stock Long-term investment comes from the characteristics of life insurance products Almost all investment- linked insurance products have long terms, thus allowing insurers to use long-term premium to make investments In addition, long-term investment assets, especially government bonds and corporate bonds, allow insurance enterprise to clearly determine the technical interest rate when designing life insurance products, thereby securing stable income for insurance enterprise Secondly, the large scale of investment due to the large amount of premiums over the course of the policy In addition to the long term, investment- linked insurance products also feature high premium revenue, especially in the early years of the insurance period With the life insurance products with economical and investment characteristics, one part of premium revenue is the amount that the policy owner entrusted to insurance enterprise to conduct investment Thus, insurance enterprise has a very strong premium reserve to invest steadily Thirdly, investment activities depend on the design of life insurance products As mentioned above, life insurance products may or may not have investment interests On the other hand, the investment benefit of each life insurance product is not the same because each type of product targets a different customer with different needs For investment- linked products, the investment of insurance enterprises should comply with commitments to customers So, each life insurance product requires a very different investment and complies with the law Due to the particularities of the investment business at life insurance enterprises, this activity should ensure certain principles, including two important principles: the principle of ensuring portfolio safety and the principle of ensuring liquidity Ensuring the safety of the portfolio is a general principle for all investment activities, but for Insurance enterprises, it is even more important, because most life insurance products require responsibility of insurance enterprise's payment, so if risky investment activities also mean that insurance enterprise‟s ability of payments is affected The risks faced by insurance enterprises are risks of currency, interest rate, liquidity, credit and risk due to excessive concentration of investment Therefore, for the sake of safety, insurance enterprises usually 53 focuses on its portfolio of high-safe assets such as government bonds, bonds and shares of companies listed on the stock exchange and other assets According to Review of the European Insurance and Reinsurance Federation (CEA) in 2015, over 80% of insurance enterprise's capital is invested in financial institutions Ensuring liquidity for investment assets is also an important principle because insurance enterprises need to maintain its affordability for insurance policies when the insurance event occurs One aspect of that insurance event is the unpredictability of when it happens Therefore, insurance enterprise must always be in a state of readiness to meet the interests of customers So, insurance enterprise's portfolio typically favors highly-liquid investment assets, such as financial products, because it can easily liquidate these assets in the financial markets Insurance enterprises often restricts direct investment because the liquidity of this kind of investment is much less than that of indirect investment in financial market In order to preserve and improve the efficiency of the investment capital, especially the capital created from the premium of the universal life insurance product, Baoviet Life researches and implements a number of specific measures as follows: - To ensure the implementation of the current law on the management of owners' equity with insurance premium and in line with the actual operation, the financial investment of Baoviet Life is separated by each investment fund based on the product line Set up investment objectives for each investment fund, develop investment strategies, investment plans, allocate investment assets for funds, monitor and follow investment trust, adjust portfolio, form specialized investment funds for each type of operation - Boost investment in the stock market: The experience of the life insurance market in developed market economies shows that this is the main form of investment of enterprises However, securities are only valuable papers, not real assets, and their circulation is governed by a special process Therefore, in order to ensure the safety, minimize investment risk, Baoviet Life should consider the investment options in the securities which were registered on the stock market In this type of investment, Baoviet Life can invest in: i Buying long-term government bonds: this is the current form of investment With this form, although the investment rate is not high, it has the advantage of ensuring safety and stable revenue ii Buying shares of enterprises and works: this is the second popular form of investment paid attention to by many life insurance companies followed by government bonds However, this form of investment does not have a high safety level, so it must be carefully evaluated on opportunities, risks and efficiency before deciding on investment iii Real estate investment: This form of investment is geared towards future benefits, so investment activities must be linked to new planning and development policies that minimize the risk of investment - Closely monitoring the management of investment funds by developing investment policies of each fund on the basis of complying with the law on investment activities, 54 ensuring safe investment activities, maintaining liquidity to meet business activities and obligations to policy holders, ensuring the required profits of investment funds The investment policy must control and manage risks in the investment process, ensuring the position of liquidity risk and interest rate risk in safe margins while complying with the investment limits including asset allocation limit and minimum rate of return of portfolio In addition, the investment policy needs to be revised periodically at least once a year to ensure that investment policy always complies with the requirements of changes in the legal documents regulating life insurance business activities, investment or business environment changes 4.4.4 Improve the quality of customer service Service quality plays a decisive role in the success of life insurance business in exploiting and developing the market The service of a life insurance company usually starts from introducing the product to the potential customer until paying the face amount This process can last for many years under the policy term Therefore, improving service quality is not simple and requires a continuous process, including: Firstly: Improve the quality of service in the stage of exploiting The first impression of the customer to the Insurance Company usually originates during this period Improving the quality of service in the stage of exploiting should focus on introducing the company image, introducing explanations about life insurance products and answering questions of customers when participating in insurance To this, Baoviet Life should focus on the following tasks: a) Strengthening the propaganda and advertising on media, television, at public places about Baoviet life in general and investment- linked insurance products in particular During the distribution of insurance products, Baoviet Life must ensure that the information about the products to be honest and not mislead customers b) Improving the quality of agents, equipping life insurance agents with the most basic knowledge about insurance, life insurance, professional ethics, and art of sales After having agent certificates, the agents still need to continue training, improving their knowledge to serve customers in the best way c) The risk assessment should be done accurately and promptly in order to quickly respond to customers about the refusal to insurance or to accept the insurance and to issue the policy Clearly and accurately explain customers about their rights and responsibilities when participating in insurance to avoid misunderstanding between the parties d) Ensuring the truthful information provided when entering into and implementing the life insurance policy Since insurance products are a financial service, it is important to provide information so that the policy owner can choose the right product For life insurance, because the insurance period is relatively long, the consideration of the insurance buyer before joining 55 again is more important, not only to ensure the interests of the policy owner but also help insurance enterprise avoid the policy termination ahead of its validity e) Every quarter, every year, Baoviet Life must conduct specific analysis to evaluate the quality of exploitation This work should be done by a specific, unified statistical indicator system After the assessment, appropriate adjustments and lessons learned in the recruitment, training and use of agents should be made Secondly: Improve the quality of service in the handling of claims In order to improve the quality of services in insurance inspection and payment, Life Insurance should carry out the following tasks: a) Instruct the beneficiary to compile a claim for insurance, then quickly receive the records and collect the necessary information In fact, many beneficiaries not understand the claim procedure and they are often confused about this The company can improve the quality of this work through flexible procedures: can instruct directly by telephone, through agents, or at the Company depending on the customer's condition b) When paying for face amount, there should be flexibility in payment method: cash payment, bank transfer, postal service This will facilitate customers who are living far away or not have direct access to the Insurance Company Thirdly: Improve the quality of premium collection: In order to improve the quality of premium collection, Baoviet Life will need to research into applications of online payment, payment via internet banking, through electronic applications to bring convenience to customers The customers can directly carry out transactions of paying their premium, reducing stage of agents wasting of time In addition, the information related to the payment process of customers should be promptly and fully informed to the customers Fourthly: Improve the quality of after-sales service; make it public and transparent information on insurance policies with customers As investment activities are often associated with risks, the transparency of investment activities and investment orientation is very important Customers need to know the exact costs and investment results through the annual information sheet on their investment- linked insurance policy To implement the provisions of the law on insurance business and ensure the interests of customers when participating in life insurance products in general and investment- linked insurance products in particular, insurance enterprise must report publicly on the situation of operation of investment-related funds, the revenue arising from the operation of the fund, the report on the fund's assets and capital, on the basis of calculating the interest rate for investment- linked insurance policies Carry out the annual notification to customers at the end of the financial year 56 Fourthly: Modernize management software and information technology Thoroughly applying new achievements of information technology for insurance management and business is one of the most necessary solutions for Baoviet Life In order to develop its competitiveness in the market, Baoviet Life must build and modernize the information technology system applied in business management and customer service, especially the application of information technology in the process of risk analysis and assessment, calculation of premium, extracting reserves for professional operations, analysis of financial information reporting systems, analysis and management of customer data systems 4.5 Recommendations 4.5.1 Recommendations to the State In the coming period, the State should further enhance its role in managing, creating a favorable legal environment and at the same time, adopting preferential mechanisms and policies for business of investment- linked products to develop stably and in the right direction 4.5.1.1 To create preferential mechanisms and policies; to create favorable conditions for promoting life insurance products with investment components In addition to strengthening the State management, building a complete and unified legal environment, the State should continue to perfect mechanisms and policies on insurance business activities for insurance-linked products to develop in healthy and safe market in line with integration requirements while ensuring the autonomy and self-responsibility of insurance enterprises It is necessary to have a suitable policy to encourage the participation of insurers, individuals, the expansion of the market, the scope of activities of insurance companies First of all, the State will have policies to encourage people to participate in life insurance such as using tax incentives such as deducting part of premium to be paid by the insured out of the taxable income The tax incentives may also apply to the face amount received by the insured person by waiving part or all of the taxes to be paid In addition, the State encourages insurance companies by offering preferential policies when providing insurance services in the fields of high socio-economic significance such as life insurance services of long term investment significance especially incentives for insurance enterprises to expand the scope of activities to remote areas Insurance enterprises may set up investment funds, trust funds and fund management companies according to law provisions The State can also prioritize life insurance companies to invest in projects that have high capital safety and high return on investment In addition, the insurers should be encouraged to modernize business management technology, train qualified staffs according to international standards and hire domestic and foreign specialists to manage a number of operational domains strictly according to the provisions of law 57 4.5.1.2 Set up a complete and consistent legal document system and continue to improve the legal framework to manage the investment- linked activities in the life insurance market The Law on Insurance Business was issued in late 2000, came into effect on April 1, 2000 and was amended on November 24, 2010, providing the basic legal basis for the insurance enterprises in Vietnam Along with the Law, there are many of the sub-law documents guiding the detailed implementation of the law, creating a lot of advantages for the participants in insurance activities However, the practice in recent years shows that the Law and many legal documents are not consistent, incomplete, or not suitable to the specific conditions of our country In the coming time, the State should continue to perfect the legal framework to manage investment- linked activities in the life insurance market, promote equal and healthy competition among enterprises, help protect and raise the benefits for policy holders in order to maintain the market in a stable, safe and effective manner Accordingly, it is necessary to study and develop a life insurance business law system that is more suitable to Vietnam's realities and international standards, minimizing administrative procedures and creating maximum business conditions for enterprises such as shortening the time of insurance product approval and other changes In fact, the life insurance market has always developed in terms of scale as well as types of insurance products Life insurance products are always improved by insurance enterprises to meet the diverse needs of the policy owner Therefore, the introduction of new investment- linked insurance products requires regulatory provisions to ensure a healthy life insurance market Over the past decades, the world has witnessed a multi-sector link in insurance business, typically between life insurance business and banking business in distributing life insurance products, or between insurance businesses with securities business in investment activities Multi-sector linkage has greatly influenced regulatory requirements, such as the need for multi-sector supervision in the financial sector to ensure that the State authorities can monitor in many different areas at the same time In addition, there are increasingly high public demands for transparency of the financial market in general, including the insurance market, to ensure the interests of participants This has positively influenced regulatory requirements whereby national laws increasingly require more transparency about insurance enterprise's performance in response to public demands 4.5.1.3 Strengthen inspection and supervision of investment- linked activities in the life insurance market In the coming time, the State should strengthen inspection and supervision of investment- linked activities in the life insurance market Particularly, attention should be paid to the issues such as the payment of insurance benefits as agreed upon in the policy, the observance of the regulations on the separation of the profit-sharing fund, the sharing of dividends for the policy owner, the accounting of turnover and expenses The inspection and 58 examination activities also help to detect shortcomings in the mechanism and propose the policies to amend and supplement the more complete legal environment At present, there are many shortcomings in the law on investment activities of life insurance companies, which should be amended and supplemented the following contents: Firstly, the law should stipulate in more detail insurance enterprise‟s investment limits for each type of investment asset From the writer's point of view, except for government bonds invested without restriction, other investment assets (deposits, corporate bonds, shares, etc.) require specific guidance on investment limit At present, the credit institution system is faced with many risks to be restructured, especially the bad debt risk Therefore, the limitation of investment through the deposit channel is a measure to limit the ability to influence the financial market between credit institutions and insurance enterprises Specific limits need to be carefully studied based on actual survey data and technical assessments, but in order to follow the principle of risk spreading, the following principles should be ensured: - Distinguishing between corporate bonds guaranteed by the Government and corporate bonds guaranteed by credit institutions or guaranteed by other organizations other than credit institutions In theory, the limit for government-guaranteed bonds should be the highest and the lowest is the bonds guaranteed by non-credit institutions - Distinguishing between the securities of the enterprises listed on Stock Exchange and the securities of unlisted companies In general, the information transparency requirements as well as financial capacity of listed companies are higher, so the investment limit will be larger - Do not allow insurance enterprises to invest too much in one type of investment, such as investing only in stocks of an enterprise or a group of affiliated companies, or simply depositing money into a credit organization There are regulations that require insurance enterprise to disperse investments by insurance enterprise's investment restrictions on each of the recipients - In addition to setting maximum limits as above, the author said that it is also necessary to set minimum limits to ensure the State‟s direction of the development of the capital market For example, insurance enterprises must ensure a certain percentage of its investment in stocks or real estate because at present, almost the capital of insurance life companies does not invest in real estate and the ratio of investment in stocks, corporate bonds is still relatively low while the real estate market and stock market are in need of investment capital in the current period The law has given the provision on the maximum and minimum investment limits, so it will ensure the diversified portfolio and the direction to develop a healthy and balanced capital market, and ensure the transparent and reliable information in the financial market Secondly, the law should specify the method of insurance enterprise's trusted investment to ensure the compliance with investment limits 59 At present, there is no specific law on insurance enterprise's trusted investment, while this method of investment accounts for a significant proportion Therefore, the Ministry of Finance should soon issue a circular guiding the method of trusted investment specifically in the following direction: - Agree that the trusted investment is a method of investment, not a field of investment Therefore, it is necessary to stipulate that the investment limits for each investment field and asset include both cases of direct investment and entrusted investment Such a regulation will ensure transparency of investment limits, avoiding insurance enterprises‟ dodging investment limit through trusted investment, thereby enabling the insurance regulators to be able to give more accurate assessment on the financial situation of insurance enterprise - From the above point of view, it is necessary to stipulate the conditions for the trustee organizations to ensure the safety of entrusted investments These conditions include the type, financial capacity and experience in the area of entrusted investment In addition, the law also requires the trustee organization of insurance enterprises to be transparent by reporting to the supervisory authority on the performance of trusted investment 4.5.2 Recommendations to the Insurance Association Vietnam Insurance Association was established under Decision No 23/1999/QĐ/BTCCBCP dated July 9, 1999 As a professional social organization, it acts as a bridge among enterprises representing before State management agencies, helps to strengthen the close cooperation among IEs operating in the market, promoting the market in accordance with the policies of the State of Vietnam To support life insurance companies in promoting business performance of investment- linked insurance products in the near future, the Vietnam Insurance Association should have the following solutions: Firstly, encourage and support businesses to develop and diversify insurance products Accordingly, the Insurance Association should study and propose mechanisms to encourage insurance companies to develop investment- linked life insurance products The association should build up a common database for the insurance market, create floor premium, and contribute to healthy competitive environment in the market The Association should propose ways to expand the scope of cooperation between insurance enterprises in terms of training staffs and agents, exchange of information, business cooperation, risk assessment, determining premiums in life insurance business activities among insurance enterprises; On that basis, encourage insurance enterprises to join the association, attach their interests and responsibilities to the Association Secondly: The Association should be the bridge between insurance enterprises and state management agencies in enforcing the law in the insurance business sector Accordingly, the Association should give recommendations to amend the Law on Insurance Business No 24/2000/QH10 and the Law amending and supplementing a number 60 of articles of the Law on Insurance Business No.61/2000/QH12 together with the guiding documents The new system of legal documents will provide a broader and more consistent scope for insurance business in connection with the financial service market, suitable for insurance enterprises‟ operation The Association should establish a mechanism for coordination between the State management agencies in charge of insurance business and the Association in order to inspect and supervise the implementation of agreements and commitments in business activities in the insurance market among member insurance companies; promptly prevent and handle cases of non-observance of the cooperative regulation and acts of violation of the insurance business management Thirdly: Orient and support insurance enterprises in diversifying and professionalizing distribution channels The Association should study and propose to the State management agencies to promulgate policies to encourage insurance enterprises to develop other distribution channels in line with international practices and practical conditions of Vietnam such as distribution channels through banks, internet, to create a legal corridor to help insurance companies diversify their distribution channels Fourthly: Hold seminars on sharing and orienting insurance enterprises in life insurance business Besides, the Association should regularly grasp difficulties of insurance enterprises in observing regulations of the State management agencies on insurance business activities, especially for life insurance products as an investment- linked product, then, recommend to the management agencies in improving their institutions and policies In order to implement the above solutions, the Vietnam Insurance Association will play its role in promoting the development of Vietnam's life insurance market 61 CONCLUSION For the purpose of this research, by systematically studying the basic theoretical issues of investment- linked life insurance and its business performance at Baoviet Life Corporation in the period 2013-2016, the thesis has achieved the following results: Firstly: Clarify the role of life insurance in the socio-economic life of each country, systematize and clarify the theoretical foundation for the implementation of the investmentlinked life insurance products business Secondly: Assess the implementation status of investment- linked insurance products at Baoviet Life Corporation, analyze the achievements, point out the limitations and their causes in business of investment- linked insurance products Thirdly: The thesis provides an analysis and forecast of the development trend of the life insurance market in Vietnam in the coming time At the same time, on the basis of the shortcomings in Baoviet Life's investment- linked life business, Baoviet Life has proposed the solutions to develop the business of this product in the future It is hoped that the proposed solutions will be studied and applied in practice, contributing to the development of Baoviet Life, creating conditions for Baoviet Life to promote business performance of investment- linked insurance product in Vietnam, encouraging and attracting more and more people to participate in insurance, contributing to ensuring social security, promoting the industrialization and modernization of the country 62 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) REFERENCES Decision No.193/QD-TTg dated 15 February 2012 of the Prime Minister on Vietnam Insurance Market Development Strategy for 2011-2020 KOZLOWSKI, L.M., SKEMP, E., 2017, LOMA, Principles of Insurance, LL Global, 301 pages Etti G.BARANOFF, E US 2004, Risk Management and Insurance, Wiley and Sons Inc, 672 pages Law on insurance business 2010 and Law amending and supplementing the Law on insurance business 2010 Decree No 45/2007/NĐ-CP dated 27/3/2007 of the Government defining the detailed implementation of some articles of Law on insurance business Decree No 46/2007/NĐ-CP dated 27/3/2007 of the Government defining the financial mechanism of the insurance companies Decree No 73/2016/NĐ-CP dated 01/7/2016 stipulating the details of implementing the Law on insurance business and the law amending and supplementing some articles of the law on insurance business Circular No 52/2016/TT-BTC dated 21/3/2016 of Ministry of Finance guiding the implementation of universal life products Ministry of Finance (2017), Overview of the insurance market in 2016; Thao Ha (2016), Variable universal life insurance - New trends in the life insurance market; Pham Hong Nhung (2017), Developing Variable Universal Life insurance in the life insurance market - Financial magazine No 8/2017 http://tapchitaichinh.vn/thi-truong-tai-chinh/vang-tien-te/phat-trien-bao-hiem-lien-ketdau- tu-tren-thi-truong-bao-hiem-nhan-tho-118899.html Vo Dinh Tri (2008), Promote variable universal life policies- Economic Development magazine in July 2008; https://luattaichinh.wordpress.com/2009/03/26/phát-triển-bảo-hiểm-nhân-thọ-liên-kếtdầu-tư https://luatduonggia.vn/khai-quat-ve-san-pham-bao-hiem-nhan-tho-lien-ket-dau-tu https://thebank.vn/posts/12689-quyen-loi-va-cac-loai-phi-cua-san-pham-bao-hiem-lienket-chung http://thoibaotaichinhvietnam.vn/pages/tien-te-bao-hiem/2017-02-22/bao-hiem-lien-ketdau-tu-ngay-cang-soi-dong-va-hut-khach-40953.aspx http://research.lienvietpostbank.com.vn/dien-bien-lai-suat-tu-nam-2009-den-nay Databases reporting on insurance market in the period 2013-2016 of Vietnam Insurance Association through website http://www.iav.vn/ 18) Website of Baoviet Life Corporation https://www.baovietnhantho.com.vn/ 63 ... "Business Performance of Investment- linked Insurance Products at Baoviet Life Corporation" will focus on analyzing the business performance of investment- linked products in the perspective of. .. satisfaction 3.3 Business Performance of Investment- Linked Insurance Products of Bao Viet Life 3.3.1 Investment- Linked Insurance Products of Bao Viet Life Launching the line of investment- linked. .. 3.2.3 Business operation 29 iv 3.3 Business Performance of Investment- linked Insurance Products of Bao Viet Life 31 3.3.1 Investment- linked Insurance Products of Bao Viet Life