Necessary Reform of Insurance Business Law in Vietnam after Its Accession to the World Trade Organization: Prudential Regulatory Aspects

By Thang, Vu Nhu | Fordham Journal of Corporate & Financial Law, November 1, 2007 | Go to article overview

Necessary Reform of Insurance Business Law in Vietnam after Its Accession to the World Trade Organization: Prudential Regulatory Aspects


Thang, Vu Nhu, Fordham Journal of Corporate & Financial Law


I. INTRODUCTION

In 1986 during the Sixth Congress of the Communist Party, Vietnam launched a fundamental economic reform program, called doi moi (Renovation), a turning point that marked the country's transition from a centrally-planned economy to a market-driven economy with a socialist orientation. Key elements of this reform include (i) state-owned enterprise reform and private sector development, (ii) external trade and foreign investment, and (iii) liberalization of financial market. Along with the domestic economic reform, at the bilateral level, Vietnam has established and fostered economic relationships with other countries with a view to facilitating foreign trade relations and integration into the world economy. By 2003, Vietnam had entered into seventy-two bilateral trade agreements and set up trade relations with 165 countries.1 At the regional level, an important landmark in Vietnam's integration was joining the Association of Southeast Asian Nations in 1995 and the Asia-Pacific Economic Co-operation Forum in 1998. The road toward membership in the World Trade Organization (WTO) has been marked by observatory status in the General Agreement on Tariffs and Trade since June 1994. Vietnam became the 150th member of the WTO in 2007.

Concerning Vietnam's insurance services sector, commitments to liberalization of the domestic market under the market access and national treatment principles of the General Agreement on Trade in Services (GATS) require Vietnam to treat foreign insurance services and suppliers no less favorably than domestic counterparts.2 Consequently, equal treatment between domestic and foreign insurers in the provision of services will put domestic insurers under pressure to restructure and innovate corporate governance in order to enhance their efficiency. On the other hand, the national treatment probably makes it difficult for regulators to protect domestic insurance companies. This regulatory equity also restrains administrative intervention in the domestic insurance sector. In other words, it would eliminate regulatory discretion and arbitrariness.

Literature review shows that liberalization of services in general and insurance services in particular require regulation, including increasing the strength and quality of certain regulations, as well as introducing new rules that facilitate transition to a more open system.3 A more liberal insurance sector, therefore, will require a more complex and effective regulatory and supervisory framework. Under GATS, Vietnam, nevertheless, is not limited in introducing prudential measures for consumer protection and systemic concerns.4

Accordingly, this paper presents the necessity of enhancing prudential regulation and supervision on insurance business operations in Vietnam in order to protect the interests of consumers in the domestic insurance market. Comparative analysis provides an appropriate methodology. Experiences of the European Union (EU), the United States (US), and Japan are employed to analyze current solvency regulations in Vietnam because the US is the world largest insurance market.5 The EU and Japan are the second largest insurance markets in the world, just behind the US.6 In the case of the US, because the insurance industry is regulated at the state level but not at the federal level, model laws, which are developed by the National Association of Insurance Commissioners (NAIC)7 and can be adopted by states, shall be examined. Part II will provide a brief history of Vietnam's insurance services market and its regulations. Part III will present Vietnam's obligations and commitments in the field of insurance services under the multilateral framework. The review of compliance with commitments will be analyzed in Part IV. The necessity of future reforms of prudential regulations in the insurance sector is discussed in detail in Part V. Finally, with Part VI, this paper will conclude.

II. VIETNAM'S INSURANCE SECTORAND REGULATORY DEVELOPMENT

A.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Necessary Reform of Insurance Business Law in Vietnam after Its Accession to the World Trade Organization: Prudential Regulatory Aspects
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.