Demand for life insurance increases

The domestic life insurance market has been sparked into life by a story that received wide media coverage about a businesswoman who paid an annual premium of 1.2 billion VND (61,000 USD).

The policy was reported to cover her for 39 billion VND (2 million USD).

The story is clear evidence that the Vietnamese attitude towards life insurance is changing.

Instead of purchasing life insurance to support friends and family in the industry, Vietnamese people are now looking at the actual benefits of taking out a policy and many of them are willing to part with large sums of money for the privilege.

"In recent years, my company has sold more and more policies," said Lam Hai Tuan, General Director of ACE Life Viet Nam , one of the country's leading life insurance provider.

Tuan said that up to the end of August, his company had sold nearly 8,400 policies with premiums from 1 billion VND (51,000 USD) each.

"We currently have 15 policies that provide cover of over 10 billion VND (510,000 USD), the largest of which is worth 50 billion VND (2.5 million USD)," Tuan added.

Other companies such as AIA Viet Nam, Korea Life and Dai-ichi Vietnam have also witnessed an increase in customers.

The Association of Vietnamese Insurers reported that the market had grown in the first half of the year.

"Up to the end of H1, more than 4 million policies had been taken out, worth VND323.6 billion USD, an increase of 33 percent over the same period last year," said head of the life insurance division under the association Nguyen Viet Hai.

Better economic conditions were cited as the main reason.

"Living conditions have improved and demand has increased for services such as healthcare and life insurance," said Hai.

Hai added that many people were planning for the future.

"This happens in many countries, not just in Vietnam ," he said.

Agreeing with Hai, Tuan said, "Vietnamese people now realise that life insurance is a means of planning for the future and providing financial protection for their families."

According to an association report, Vietnamese life insurance has witnessed high growth this year, but still lags behind other countries in terms of value and the number of insurance companies./.

Related Articles

• Greenback firmer on signs of rising demand
• New programme promises export credit guarantees
• Minimum wage to increase
• Dollar bounces back again
• Wood exports likely to exceed 4bln USD in 2011

Firms ignore social insurance obligations

An employee of the Vinatex Group is examined and treated under insurance at the group's Textile and Garment Hospital. A number of enterprises are choosing profits over paying worker benefits. — VNA/VNS Photo Tran Viet

THANH HOA — Most enterprises in the central province of Thanh Hoa have failed to pay various types of insurance for their workers, according to the provincial Social Insurance Agency.

As many as 79 per cent of the province's enterprises had failed to make insurance payments for workers since the beginning of the year, said Do Hoa, manager of the collection division at Thanh Hoa Social Insurance.

Hoa said both small and large companies had been neglecting workers insurance payments, with big businesses such as Thanh Hoa Shipping Industry Company owing nearly VND2 billion (US$105,260) in workers insurance payments.

Other insurance laggards included the Viglacera Bim Son Joint-stock Company, which owes VND1.5 billion ($78,940), and the K2 Joint-stock Company, owing VND2.5 billion ($131,570), Hoa said.

Workers at enterprises that do not pay social insurance risk being not able to get sick pay, maternity and paternity leave or compensation after suffering workplace accidents.

Director of the K2 Joint-stock Company Pham Van Luc said the company had fallen behind on workers insurance payments due to a lack of funds to complete major projects.

"When the company begins any big project, it has to complete a number of procedures to borrow capital from banks," said Luc.

"We do not have enough time to carry out all these procedures because projects must be completed on time, so we temporarily use insurance money for the projects."

Luc added that his company would pay workers insurance as soon as possible, right after it receives profits from completed projects.

Thanh Hoa Social Insurance's Do Hoa said that by September, enterprises in the provinces had owed insurance worth a total of VND147 billion ($7.7 million).

"Every year the provincial Labour, Invalids and Social Affairs Department fines hundreds of enterprises that violate labour regulations, however, the punishment is not strong enough," he said.

According to regulations, enterprises owing insurance can only be fined for the offence once a year, and the fine cannot exceed VND20 million (US$1,052).

In addition, many employers do not draft clear labour contracts and fail to provide accurate payrolls for their workers, making collection of insurance extremely difficult.

Last year the provincial Department of Labour, Invalids and Social Affairs fined more than 50 enterprises, with the fines totalling VND117 million ($6,150), Hoa said.

"This year Thanh Hoa Social Insurance will sue enterprises that owe too much social insurance," he said.

However, Hoa said suing enterprises was the last resort as many cities and provinces, including Ha Noi, Hai Phong, Binh Duong and HCM City, found that launching legal action against firms committing these violations met many obstacles.

"Procedures to sue a firm are too complicated and include many stages, such as checking, inspection, administrative fines and launching a lawsuit is the last stage," he said.

When all these procedures are completed, courts may still take a long time to resolve lawsuits, especially if the enterprises involved in lawsuits risk becoming bankrupt.

Deputy chairman of the Thanh Hoa Labour Federation Nguyen Quoc Huy said that the provincial Social Insurance agency should focus more on raising awareness about social insurance among both employers and employees.

"They should hold talks between workers and enterprise leaders to clear up any misunderstandings about insurance," he said.

Huy said authorities managing social insurance should also strengthen inspections to discover violations in a timely manner and prevent enterprises from leaving their insurance debt for a long time.

The federation will also strengthen the work of enterprise trade unions and join hands with related bodies to report violations to relevant authorities.

"Judicial bodies should increase the level of punishment, or withdraw work permits from enterprises that violate regulations in order to ensure workers' rights," said Huy. — VNS

Related Articles

• AIPA meeting aims to enhance role of women
• ASEAN's socio-cultural issues promoted at Da Nang meeting
• PM lauds police for keeping public order
• Vietnam contributes positively to AIPA’s growth
• Vietnam contributes positively to AIPA’s growth

Technology helps improve efficiency

HA NOI — Investment in technology to develop a complete electronic payment system to control social insurance payments was key to improving the efficiency of payment collection.

That was the general agreement made by participants at the 26th ASEAN Social Security Association (ASSA) board meeting held in Ha Noi yesterday.

Hiroshi Yamabana from the Social Security Department of the International Labour Organisation, with over ten years of experience in the sector, said that investing in technology was expensive but more efficient than investing in human related elements.

Technology also helped insurance offices to keep track of employers and employee registration, which is an essential part of efficiently collecting insurance fees, said Juergen Meierkord from the German State Pensions Association, while presenting a successful model that his organisation had applied.

The need for social security planning has become crucial as socio-economic forces constantly reshape the environment, and the collection of social insurance contributions has become an urgent topic. Issues arising from the collection process and how to improve collection efficiency were therefore the main theme addressed at the meeting.

"The development of information systems by the Central Provident Fund of Singapore via e-submissions and the replacement of ID cards with smart cards in Thailand not only made the task more efficient, but also gave us models of successful collection systems," said the ASSA chairman, Winai Sawasdivorn.

Thai participant Variya Wongprecha from the Government Pension Fund said that the meeting was a great opportunity for her to build a network and exchange information with others in the field. "I like the German model very much as they use a paperless system. It is challenging to apply an electronic payment and registration system. However, Thailand has started to implement the process and we hope to have a 100 per cent computerised system in the near future," she said.

Vietnamese Deputy Minister of Labour, Invalid and Social Affairs and Director General of the Viet Nam Social Security Le Bach Hong yesterday was officially appointed as the new chair of ASSA for the 2010-11 term. — VNS

Related Articles

• Lack of credit hampers SMEs
• Workshop calls for longer-term plans to audit State entities
• IFC: Vietnam needs to increase PPP to support economy
• Liquidity hits one-month low
• Prime Minister Dung sets construction sector agenda

Welfare system failing jobless

Jobless workers register for unemployment insurance in Ha Noi. Many workers who have unemployment insurance have failed to receive assistance after being laid off. — VNA/VNS Photo Huu Viet

HCM CITY — Many workers covered by unemployment insurance failed to receive allowances or assistance for vocational training after being laid-off, the Ministry of Labour, Invalids and Social Affairs admitted.

Only 50,057 out of nearly 87,000 filing for unemployment benefits in the first half of the year got them, it said.

While all received allowances, only 108 got vocational training and nearly 35,000 were introduced to new jobs.

Under the insurance scheme, a laid-off worker gets a dole of 60 per cent of the last six months' average salary starting a year after the worker joins the scheme.

The ministry's Employment Department said more than 2,500 laid-off workers had their benefits temporarily cut because they failed to report their unemployment status once a month.

HCM City had the highest number of people filing for benefits in the first six months – 27,700.

By the end of July it had risen to 33,000 though only 24,000 are eligible for benefits, according to a report by the city Department of Labour, Invalids and Social Affairs.

Some 4,000 laid-off workers were introduced to new jobs while only 32 opted for vocational training courses, it said.

Provincial and city labour departments' job service centres could not get funds released for providing vocational training and introducing jobs because it was not clearly stipulated in the unemployment insurance policy, the ministry's Employment Department said.

So the ministry was drafting a supplementary circular for the purpose, it added.

Almost 6.4 million workers pay unemployment insurance in nearly 50 provinces and cities that have joined the scheme. — VNS

Related Articles

• Cashew traders yet to embrace trading center system
• ASEAN's socio-cultural issues promoted at Da Nang meeting
• Hai Phong needs to become modern industrial city
• Most ice is unhygienic
• Intel to fund high-tech computer lab at RMIT

Higher fines for social-insurance shirkers

Enterprises who ignore to pay social insurance for their employees will face a fine of up to US$1,530. — VNA/VNS Photo Anh Tuan

HA NOI — Businesses that do not pay social insurance for their employees face a maximum fine of VND30 million (US$1,530) - 10 million ($510) higher than previously.

Government Decree 86/2010/ND-CP, which sets the penalty, to become effective on October 1, also requires the payment of all outstanding social insurance.

The decree will also have individuals and businesses that fail to keep compulsory social-insurance and unemployment-insurance records within 30 days of the signing of labour contracts fined between VND300,000-700,000 ($15.7-36.8).

And businesses will be fined up to VND500,000 ($26.3) if they dawdle in making insurance-company-approved social-insurance payments to their employees.

But Labour, Invalids and Social Affairs Ministry Social Insurance department director Tran Thi Thuy Nga complains the fines are not heavy enough to deter delinquent employers.

Employers avoided making the insurance payments because they were indifferent to the sanctions, she said.

"The lack of awareness among workers also encourages businesses to avoid social-insurance payments."

Thousands in debt

The Ha Noi Social Insurance Department reports that more than 11,400 of the city's businesses owed about VND455 billion ($23.6 million) in social insurance premiums last year.

The figure had risen to VND768 billion ($39.3 million) for social and health insurance premiums as of June 30.

Director Nga said regular inspections were needed to identify offending enterprises and workers provided with more information to help them defend themselves.

The new decree will have workers who fake documents to receive social insurance benefits fined up to VND5 million ($255) and the implements used for the forgery seized. Workers who agree with their employees not buy compulsory social insurance will be fined up to VND300,000 ($15.7).

Social insurance organisations and agencies which violate the regulations for the management and use of money for compulsory and volunteer social and unemployment insurance will be fined up to VND15 million ($765).

The decree was signed last Monday. — VNS

Related Articles

• ‘Hold us to higher standards’
• Timber-product exporters sign $3b deals
• Assoc insists on power price hike despite protests
• Greenback firmer on signs of rising demand
• Ministry proposes increasing poverty line nationwide