Differential Premium System Calculation Method: International Experience and Policy Implications for Vietnam

Abstract

The differential premium system is one of the measures to limit moral hazard and increase fairness and market discipline when high-risk credit institutions have to pay high premiums. When most countries first established deposit insurance organizations, they applied a flat-rate premium system and switched to a risk-based deposit insurance premium system. In general, after applying the risk-based deposit insurance premium system, countries have achieved the goal of helping insurance participants manage risks better. This study was conducted to review the experiences of countries worldwide in implementing differential premium systems, thereby proposing policy implications for Vietnam.