Complete legal framework on IT application in insurance business and management

Insurance companies meet requirements on network and data center infrastructures. Photo: Internet.

Meeting technology infrastructure

The Ministry of Finance has promoted the application of IT in the management and control in insurance business operation. For example, the ministry has used database software on compulsory insurance of civil liability of motor vehicle owners; launched a website of the insurance market; built the public service system at level 3 for the amendment and supplementation of establishment and operation licenses of insurance enterprises and insurance brokers; and built the project “Information system for management and supervision of insurance business”.

Through a survey of the Ministry of Finance, insurance businesses have basically met the requirements of network and data center infrastructure, and applied data warehousing solutions and software in operations and arranged officers to take charge of professional work.

However, there are some limitations in insurance companies, especially in domestic-invested insurance enterprises. The ministry said that many insurance companies have transformed traditional transaction processes using digital technology. The revenue from online insurance is still low (less than 5% of total premium revenue). Some local enterprises cannot afford to invest in technology; they only focus on short-term goals rather than long-term strategies.

Currently, all insurance companies operate their own websites. Some companies have used applications on websites or mobile phones for business at different levels; developed applications on smartphones to support insurance brokers to improve the efficiency of operation and customers in payment of insurance premiums.

Some companies have coordinated with third parties to sell insurance products such as digital banks, electronic ecommerce platforms (Tiki, Shopee), or technology companies such as Insurtech Startup: BCAinsurance, Ebaohiem, Bolttech Vietnam.

In addition, some insurance companies have initially formed a closed digital ecosystem to serve customers to shorten complicated processes and improve customer experience.

Encouraging insurance companies to boost IT application

According to the Ministry of Finance, the completion of a legal framework to regulate the application of IT in insurance management and business is necessary to meet requirements and the trend of digital transformation of insurance businesses in fourth industrial revolution.

Currently, the law does not provide for the IT application of insurance business and management. Therefore, the draft revised Law on Insurance Business will stipulate that the State encourages IT application.

Specifically, the draft law supplements regulations on IT application in management and supervision for the operation of insurance enterprises.

Accordingly, the draft law stipulates that the IT application will refer to regulations of the specialized laws on information security and network information security.

The Draft Law also provides the Government to regulate on newly arising issues related to information technology application; stipulates the process for providing insurance products and services in the network environment under the guidance of the Ministry of Finance.

Accordingly, the State invests in building and creating a centralized database of the entire insurance industry, which is connected to the national database system and other specialized database systems to establish insurance premium rates corresponding to insurance benefits, ensure the legitimate rights and interests of insurance buyers and insurers, and prevent insurance fraud.

The digital transformation shows strong development, but the digital transformation of the insurance market is only at an initial stage. Many new IT developments will appear in the near future so the draft law should provide regulations on technology that will be guided in the sub-legal documents.