Right after the academic year 2010-2011 finished, representatives of 12 insurance companies in Khanh Hoa province, including the big names such as Bao Viet, Bao Minh, Bao Long, Pjico, and AAA, signed an agreement with the commitments on insurance premiums, liabilities, insurance benefits and the commission policies which will be applied to the 2011-2012 academic year.
Insurance premiums increases raise anger
Under the agreement, the insurance premiums will be raised to 80,000 dong per student per year. Hien Thuc, a parent living in Nha Trang City, said that she cannot understand why the insurance premiums have been raised so dramatically.
“The newly applied insurance premiums are overly high. At the parents’ meeting recently, the teacher could not explain why the student insurance premiums have increased so sharply,” she said.
Pham Van Tu, a senior executive of PTI Insurance, one of the 12 insurers that signed the agreement, explained that with the higher insurance premiums, the liabilities will also increase.
“In previous years, when the premiums were low, parents complained that they only got small sums of money for compensation. Therefore, by raising the insurance premiums, we aim to ensure the students’ benefits,” he said.
Meanwhile, other insurers said that they need to raise the insurance premiums because of the high inflation. As the healthcare service fee and the medicine prices have increased, if the previous insurance premiums keep unchanged, in case of accidents, students will only get small sums of money for compensation.
Phung Dac Loc, Secretary General of the Vietnam Insurance Association, believes that insurers have the right to set up insurance premiums, and insurance liabilities of the services they are providing. However, he said that insurers are now allowed to discuss and get united in applying the same insurance premiums.
Insurance premiums up, commissions higher
Insurers explain that they need to raise the insurance premiums in order to be able to pay higher for compensation. However, in fact, part of the money will go to the schools’ coffers.
A director of an insurance company has revealed that under the current laws, the commissions must not be higher than 20 percent. However, in fact, insurers have to offer the commissions of 35-40 percent to schools. Besides, insurers are always asked to spend additional money to sponsor the important events of the schools.
In general, insurers and schools signs the agreements which stipulate that 10 percent of the commissions will be paid to insurance agents, while the other 10 percent will be paid to the schools for taking necessary measures to minimize risks. So, a question has been raised that where the remaining 15-20 percent of commissions will go?
Vo Thi Thanh, a parent, whose child is going to the Phuoc Dong Primary School in Nha Trang City, said that she does not want to take insurance polices when she knows that 40 percent of the sum of money is not the real value of the products.
A behavior of competition law violation
Bach Van Mung, Director of the Competition Administration Department (CAD), an arm of the Ministry of Trade and Industry, has affirmed that the 12 insurers that signed an agreement on raising insurance premiums have violated the current competition law.
Some years ago, CAD once released a decision to punish 19 insurance companies that joined hands to increase the vehicle insurance premiums.
Source: NLD
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