CIRCULAR

GUIDING THE IMPLEMENTATION OF THE GOVERNMENT’S DECREE No. 42/2001/ND-CP OF AUGUST 1, 2001 DETAILING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE INSURANCE BUSINESS LAW

Pursuant to Insurance Business Law No. 24/2000/QH10 of December 9, 2000;
Pursuant to the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law;
Pursuant to the Government’s Decree No. 178/CP of October 28, 1994 defining the tasks, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance hereby provides the following detailed guidance:

I. ESTABLISHMENT AND OPERATION OF INSURANCE ENTERPRISES AND INSURANCE BROKERAGE ENTERPRISES

1. Dossiers of application for establishment and operation licenses (hereinafter called licenses for short)

1.1 Dossiers of application for licenses of insurance enterprises shall comply with the provisions of Article 64 of the Insurance Business Law. Dossiers of application for licenses of insurance brokerage enterprises shall comply with the provisions of Clauses 1, 2, 3 and 4, Article 64 of the Insurance Business Law.

1.2 Dossiers of application for licenses of insurance enterprises and insurance brokerage enterprises shall be made in three sets each, including one set of original documents and two sets of copies. Dossiers of application for licenses of foreign-invested insurance enterprises or insurance brokerage enterprises shall be made in three sets, each consisting of one Vietnamese version and one English version. Of these three sets one consists of original documents and two others consist of copies. Organizations and individuals applying for licenses (hereinafter called investors for short) shall be accountable for the accuracy of their application dossiers.

1.3 Applications for licenses shall be made according to a set form and signed by the representatives at law or by persons authorized by the investors;

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1.4.1 For State insurance enterprises and State insurance brokerage enterprises:

a/ Document of the agency that has decided on the establishment of the enterprise, approving the enterprise to conduct insurance business or insurance brokerage activities;

b/ Written explanation on the source of capital for establishment of the insurance enterprise or insurance brokerage enterprise, certified by the competent body.

1.4.2 For joint-stock insurance companies, joint-stock insurance brokerage companies, insurance brokerage limited liability companies, private insurance brokerage enterprises and insurance brokerage partnerships:

a/ Minutes of the investors meeting on the establishment of the joint-stock insurance company, joint-stock insurance brokerage company, insurance brokerage limited liability company, private insurance brokerage enterprise or insurance brokerage partnership;

b/ The competent body’s written certification of the legality of the source of capital for the company establishment.

1.4.3 For foreign-invested insurance enterprises and insurance brokerage enterprises:

a/ Charter of the foreign party to the joint venture or of the foreign investor (for insurance enterprises and insurance brokerage enterprises with 100% foreign capital);

b/ Operation license of the foreign party to the joint venture or of the foreign investor (for insurance enterprises and insurance brokerage enterprises with 100% foreign capital).

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d/ The joint venture insurance or insurance brokerage enterprise must have a document issued by the competent Vietnamese authority permitting it to participate in the joint venture;

e/ Written explanation on the source of capital contributed by the Vietnamese party, certified by the competent body.

2. Procedures for receiving and handling dossiers of application for licenses

2.1 License application dossiers shall be received and examined by the Ministry of Finance on the following basis:

2.1.1 The number of dossier sets required to be submitted and the titles of documents which must be included in the dossier as prescribed;

2.1.2 The validity of the license application dossier;

2.1.3 Written certification of the legal status and financial situation of the investors.

2.2 Right after receiving the complete and valid dossiers, the Ministry of Finance shall issue to the investors or their authorized representatives the receipts thereof.

2.3 Within 60 days after receiving from the investors the complete license application dossiers, the Ministry of Finance shall decide to grant or refuse to grant licenses. In case of refusal, the Ministry of Finance shall issue written replies clearly explaining the reason therefor.

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The time limit for the investors to send written supplements and/or amendments to the license application dossiers is working 30 days after they receive the written requests of the Ministry of Finance. Past this time limit, including the extension time, if the investors fail to finalize the dossiers as requested, their license application dossiers shall be no longer valid for consideration.

2.4 Licenses shall be granted according to a set form.

3. Appraisal of license application dossiers

3.1 License application dossiers shall be appraised on the following grounds:

3.1.1 The Insurance Business Law and documents guiding the implementation thereof;

3.1.2 Other relevant law provisions.

3.2 Contents of appraisal of license application dossiers:

3.2.1 The appraisal of the investors’ legal status and financial capabilities through:

a/ Document on the establishment of the enterprise and its organization and operation charter (for investors being enterprises) or document(s) proving the legal status (for investors being individuals);

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c/ Capital amount, deductions for professional reserves and reserve funds according to law provisions, investment activities and business plan of the to be-established insurance enterprise or insurance brokerage enterprise.

3.2.2 Appraisal of the compatibility of the establishment of the insurance enterprise or insurance brokerage enterprise with the socio-economic planning and benefits:

a/ The compatibility of the license application dossier with the planning, plan and orientations for the development of the insurance market and financial market in Vietnam;

b/ The compatibility of the enterprise’s establishment shall be examined in the following specific issues:

- Assurance of a healthy development of the insurance market;

- The national economy’s demands for the types of insurance products which the enterprise intends to deal in;

- Examination of the possibility to raise the capacity of tapping the domestic insurance potential and the capacity of retaining insurance premiums on the market; the possibility to create jobs for laborers;

- The process of integration and development of trade relations between Vietnam and other countries.

3.2.3 Professional appraisal of license application dossiers:

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b/ Encouraging the deployment of new insurance operations which the insurance enterprises currently operating on the market have not yet been able to carry out.

4. Licensing fee

Within 7 days after being granted the establishment and operation licenses, insurance enterprises and insurance brokerage enterprises must pay a licensing fee being equal to 0.1% of legal capital according to the provisions in Article 4 of the Government’s Decree No. 43/2001/ND-CP of August 1, 2001 on the financial regime applicable to insurance enterprises and insurance brokerage enterprises.

5. Amendment and supplementation of licenses

The procedures for approval of amendments according to the provisions in Article 69 of the Insurance Business Law are specified as follows:

5.1 Change of the enterprise’s name:

Insurance enterprises or insurance brokerage enterprises wishing to change their names must send to the Ministry of Finance applications for change of name, which are signed by the enterprises representatives at law or competent persons, together with the written certifications by the enterprises competent bodies or persons of the change of the enterprises names;

5.2 Increase or decrease of the charter capital level of the insurance enterprises or insurance brokerage enterprises:

Insurance enterprises or insurance brokerage enterprises wishing to change their charter capital levels must send to the Ministry of Finance:

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5.2.2 Written approval of the charter capital increase or decrease by the competent body or person of the enterprise;

5.2.3 Explanation on the financial source used for capital increase in case of increase of charter capital.

5.3 Opening, or termination of operation, of branches and/or representative offices

5.3.1 Dossiers of application for opening of branches and/or representative offices of insurance enterprises or insurance brokerage enterprises shall comply with the provisions in Articles 11 and 12 of the Governments Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

5.3.2 Dossiers of application for opening of overseas branches and/or representative offices of insurance enterprises or insurance brokerage enterprises shall comply with the law provisions on overseas investment.

5.3.3 A dossier of application for termination of operation of a branch or representative office of the insurance enterprise or insurance brokerage enterprise consists of:

- Application for termination of operation;

- Report on the situation of operation of the branch or representative office in the latest three years. Where the branch or representative office has operated for less than three years, the situation of operation from the starting time should be reported;

- Responsibilities and matters arising from the termination of operation.

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Insurance enterprises or insurance brokerage enterprises wishing to change the locations of their head offices, branches or representative offices must send to the Ministry of Finance the applications therefor, signed by their representatives at law or competent persons.

5.5 Change of the operation contents, scope and duration

The procedures and dossiers of application for change of the operation contents, scope and duration of insurance enterprises or insurance brokerage enterprises shall comply with the provisions of Article 13 of the Governments Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

5.6 Transfer of shares and contributed capital amounts

Dossiers of application for transfer of shares or contributed capital amounts accounting for 10% or more of charter capital must be made in one set and submitted to the Ministry of Finance, comprising the following documents:

5.6.1 Application for transfer of shares or contributed capital amounts accounting for 10% or more of charter capital, signed by the enterprises representative at law or competent persons, clearly stating the quantity and value of shares or percentage of the contributed capital to be transferred; the reason(s) for the transfer;

5.6.2 Information related to the organization(s) and/or individual(s) being transferees of the shares or contributed capital amounts;

5.6.3 Contract for transfer of shares or contributed capital amounts.

5.7 Change of the Managing Board chairmen or general directors (directors)

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5.7.2 A dossier of application for change of the Managing Board chairman or general director (directors) consists of:

a/ Written request for approval of the change;

b/ Proposed appointment or dismissal of personnel of the insurance enterprise or insurance brokerage enterprise;

c/ Curricula vitae of the proposed appointees, certified by the Managing Board or competent person of the insurance enterprise or insurance brokerage enterprise;

d/ Diplomas and certificates proving the qualifications and professional capabilities of the to be-appointed Managing Board chairman or general director (director);

e/ Minutes of the meeting on the appointment or dismissal of the Managing Board chairman or general director (director) of the insurance enterprise or insurance brokerage enterprise (if any).

5.8 Separation, split, merger, consolidation, dissolution and transformation of enterprises

The dossiers, procedures and time limit for settlement of requests for separation, split, merger, consolidation, dissolution and transformation of insurance enterprises or insurance brokerage enterprises shall comply with relevant law provisions.

5.9 Time limit for settlement of requests of amendment and/or supplementation of licenses

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II. INSURANCE EXPLOITATION

1. Registration of insurance rules, terms and premium rates of insurance products

1.1 The registration of insurance rules, terms and premium rates applicable to insurance products shall comply with the provisions at Clause 3, Article 18 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

1.2 Insurance enterprises may only register the insurance rules, terms and premium rates for insurance products of insurance operations permitted for business as prescribed in their establishment and operation licenses (or certificates of eligibility and satisfaction of insurance business conditions) granted by the Ministry of Finance to them.

1.3 Insurance enterprises shall take responsibility for the contents and lawfulness of the insurance rules, terms and premium rates of their insurance products already registered with the Ministry of Finance.

1.4 When registering the insurance rules, terms and premium rates of their insurance products, the insurance enterprises must send to the Ministry of Finance the following documents:

1.4.1 Document requesting registration of insurance products, made according to a set form;

1.4.2 Insurance rules, terms and premium rates of insurance products, expected to be applied;

1.4.3 Within seven days after receiving all documents for registration of insurance rules, terms and premium rates, the Ministry of Finance shall have to make certification of the enterprises completion of the procedures for registration of insurance rules, terms and premium rates.

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Within the first 15 days of each quarter, the Ministry of Finance shall publicize the lists of insurance products which the insurance enterprises have been offering on the market by the time of publicization. The publicization of lists of insurance products shall be made by the Ministry of Finance on the mass media and such lists shall be sent to Vietnam Insurance Association and insurance enterprises established and operating lawfully in Vietnam.

3. Insurance commissions

3.1 Insurance enterprises may only pay insurance commissions from the amounts of actually collected insurance premiums at the insurance commission rates prescribed by the Ministry of Finance for each insurance operation to the subjects specified in Article 20 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

3.2 Insurance commissions are amounts paid by insurance enterprises to insurance brokerage enterprises and insurance agents. Insurance enterprises may take initiative in using the insurance commissions for the following expenses:

3.2.1 Direct payment to insurance agents and insurance brokerage enterprises after these organizations and individuals bring about services for insurance enterprises to cover the following expenses:

- Initial exploitation expenses (exploration, persuasion and introduction of customers);

- Expenses for collection of insurance premiums;

- Expenses for monitoring insurance contracts and persuading customers to maintain their insurance contracts.

3.2.2 Payment of insurance commissions in service of the management of agents, including:

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- Payment to encourage agents to exploit in excess of the norms on turnover, quantity of insurance contracts and ensure a high percentage of continued insurance contracts;

- Expenses for implementing a number of welfare policies and creating conditions for stabilizing agents incomes.

3.3 The maximum rates of insurance commissions the insurance enterprises are permitted to pay to insurance agents shall accord with the tables of insurance commission rates applicable to each insurance operation in Appendix 4 - Table of maximum insurance commission rates applicable to non-life insurance operations and Appendix 5 - Table of maximum insurance commission rates applicable to life insurance operations, attached with this Circular.

Insurance enterprises may base themselves on the practical business activities to adjust the insurance commission rates applicable to insurance products of the same insurance operation but not the insurance commissions for different insurance operations.

3.4 The rates of insurance commissions paid to insurance brokerage enterprises shall be applied on the basis of the agreement between the insurance enterprises and insurance brokerage enterprises in accordance with the Vietnamese laws and international practices.

III. RE-INSURANCE ACTIVITIES

1. Insurance enterprises shall effect compulsory re-insurance according to the provisions of Article 22 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law. The list of operations subject to compulsory re-insurance includes:

1.1 Property insurance and damage insurance;

1.2 Insurance of cargoes transported by land, sea, river, rail and air;

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1.4 Fire and explosion insurance;

1.5 Ship hull insurance and ship owner’s civil liability insurance.

2. Compulsory re-insurance commissions payable by Vietnam National Re-insurance Company to enterprises which have transferred compulsory re-insurance shall comply with the provisions in Appendix 6 attached to this Circular.

3. Basing itself on the practical situation in each period, the Ministry of Finance may make addition to the lists of re-insurance operations and compulsory re-insurance commissions.

IV. INSURANCE AGENTS

1. Responsibilities of insurance enterprises, the Vietnam Insurance Association (hereinafter called insurance agent-training establishments) for the training of insurance agents

1.1 The insurance agent-training establishments which wish to train insurance agents must send written requests to the Ministry of Finance for approval of the insurance agent-training programs according to the provisions of Clause 3, Article 31 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

1.2 Granting of insurance agent training certificates

1.2.1 Only insurance agent training establishments whose operation is approved by the Ministry of Finance may grant insurance agent training certificates. Only those who have completed the insurance agent-training program and passed examinations shall be granted the insurance agent training certificates.

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1.3 Annually, not later than January 30 of the following year, the insurance agent training establishments must report to the Ministry of Finance the number of training courses they have organized, the number of trained insurance agents and the number of certificates already granted in the year (according to a set form). Quarterly, not later than the 15th of the first month of the following quarter, the insurance enterprises must report to the Ministry of Finance the lists of their insurance agents (according to a set form).

2. Rights and obligations of insurance enterprises and insurance agents

The rights and obligations of insurance enterprises in managing activities of their insurance agents, and the rights and obligations of insurance agents are prescribed in Articles 29 and 30 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

3. Insurance agents are strictly forbidden to commit the following acts:

3.1 Publicizing false information and advertisements on the contents and scope of operation of insurance enterprises, insurance conditions and terms, thus causing damage to the legitimate rights and interests of insurance buyers;

3.2 Obstructing the insurance buyers to supply information related to the insurance contracts or inciting them not to declare details related to the insurance contracts;

3.3 Competing over customers in the forms of obstructing, dragging, buying off and/or threatening employees or customers of other insurance enterprises, insurance agents or insurance brokerage enterprises;

3.4 Offering customers illegal forms of sale promotion such as promise of lower insurance premiums, refund of insurance premiums or other interests, which the insurance enterprises do not provide for their customers;

3.5 Inciting the insurance buyers to cancel existing insurance contracts to buy new ones.

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4.1 Insurance enterprises and Vietnam Insurance Association shall be accountable before law for all activities of training and employing insurance agents.

4.2 The Ministry of Finance may inspect the situation of insurance agent training and employment at insurance enterprises and Vietnam Insurance Association.

The above inspection must not affect the normal operation of the insurance enterprises and Vietnam Insurance Association.

V. INSURANCE BROKERAGE ENTERPRISES

1. Principles for insurance brokerage activities

Insurance brokerage enterprises may only counsel and introduce to the insurance buyers the insurance rules, terms and premium rate tables already promulgated, approved by the Ministry of Finance, or registered by the insurance enterprises with the Ministry of Finance.

2. Collection of insurance premiums and payment of insurance sums through insurance brokerage enterprises

2.1 Insurance enterprises may authorize insurance brokerage enterprises to collect insurance premiums, pay compensations or insurance sums.

2.2 Where insurance brokerage enterprises are authorized by insurance enterprises to collect insurance premiums, the insurance buyers responsibility to pay insurance premiums shall be fulfilled after they have paid the insurance premiums as agreed upon in the insurance contracts to the insurance brokerage enterprises.

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2.3 Where insurance brokerage enterprises are authorized by insurance enterprises to pay insurance sums or compensations, the insurance enterprises shall still be responsible to the insured or beneficiaries for the insurance sums they are obliged to pay to the insured or beneficiaries.

2.4 Where insurance brokerage enterprises are authorized by insurance enterprises to pay insurance sums or compensations, the insurance brokerage enterprises shall have to pay such insurance sums to the insured or beneficiaries immediately after receiving them from the insurance enterprises.

3. Insurance brokerage enterprises must not commit the following acts:

3.1 Obstructing the insurance buyers to supply information related to the insurance contracts or inciting them not to declare details related to the insurance contracts.

3.2 Offering customers sale promotion in the form of promise of unlawful interests to incite them to enter into insurance contracts;

3.3 Inciting the insurance buyers to cancel existing insurance contracts to buy new ones.

VI. VIETNAM-BASED REPRESENTATIVE OFFICES OF FOREIGN INSURANCE ENTERPRISES AND INSURANCE BROKERAGE ENTERPRISES

1. Dossiers of application for granting of licenses for opening of representative offices

1.1 If wishing to open representative offices in Vietnam, foreign insurance enterprises or insurance brokerage enterprises shall have to send to the Ministry of Finance a set of dossier of application for granting of licenses for opening of representative offices according to the provisions in Article 110 of the Insurance Business Law.

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1.3 Licenses for opening of representative offices of foreign insurance enterprises or insurance brokerage enterprises shall be issued in a set form.

1.4 Within 30 days after receiving complete dossiers of application for granting of licenses for opening of representative offices, the Ministry of Finance shall reply in writing whether it accepts or rejects the enterprises applications. In case of rejection, it must clearly state the reasons therefor. In case of acceptance, the Ministry of Finance shall grant the licenses for opening of representative offices of foreign insurance enterprises or insurance brokerage enterprises in Vietnam.

1.5 Within 7 days after being granted the licenses for opening of representative offices or operation extension, foreign insurance enterprises or insurance brokerage enterprises must pay a licensing fee; the licensing or operation extension fee is one million Vietnam dong as provided for in Article 43 of the Government’s Decree No. 42/2001/ND-CP of August 1, 2001 detailing the implementation of a number of articles of the Insurance Business Law.

2. Reporting on the operation of representative offices

2.1 Vietnam-based representative offices of foreign insurance enterprise or insurance brokerage enterprises must report on their activities every six months and annually to the Ministry of Finance and the People’s Committees of the provinces or cities where they are based.

The first six months’ reports must be sent before July 30 and the annual reports before March 1 of the following year.

2.2 Reporting contents:

2.2.1 Organizational structure of the representative office, staff, numbers of Vietnamese and foreign employees working at the representative office;

2.2.2 Major activities:

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b/ Relationships between the representative office and insurance enterprises, insurance brokerage enterprises as well as economic organizations in Vietnam;

c/ Counseling and training work;

d/ Other activities of the representative office.

2.2.3 Operation orientations in the coming time.

2.3 In case of necessity, the Ministry of Finance may request the representative offices to make extraordinary reports in addition to the above periodical reports, supply documents and explain matters related to their activities.

3. Change of license contents

3,1 When they need to change one of the following contents of the licenses for opening of representative offices, foreign insurance enterprises or insurance brokerage enterprises must send written requests to the Ministry of Finance to amend and/or supplement such licenses:

3.1.1 Change of the name or nationality of the foreign insurance enterprise or insurance brokerage enterprise or the name of the representative office;

3.1.2 Change in the operation contents of the representative office.

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3.2 Where there is an increase or decrease in the number of people coming from abroad to work at their representative offices or where their representative offices are relocated, the foreign insurance enterprises or insurance brokerage enterprises must immediately inform the Ministry of Finance thereof in writing.

VII. PROCEDURES AND DOSSIERS OF APPLICATION FOR TRANSFER OF INSURANCE CONTRACTS

1. Transfer of insurance contracts

1.1 In the course of operation, insurance enterprises may transfer all contracts of one or several insurance operations (hereinafter called transfer for short) to other insurance enterprises licensed to operate in Vietnam according to the provisions in Section, 3, Chapter III of the Insurance Business Law.

1.2 The transfer must ensure the principle of causing no damage to the interests of the insurance buyers after the transfer is effected.

2. Transfer procedures

2.1 For transferring insurance enterprises (hereinafter called transferor- enterprises for short): Transferor-enterprises must send to the Ministry of Finance the transfer applications clearly stating the reason(s) for the transfer and attach therewith the following documents:

a/ The transfer plan, clearly stating:

- The name and address of the enterprise that accepts the transfer (hereinafter called transferee-enterprise for short);

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- The mode of transfer of various funds, professional reserve and making of insurance complaints related to the transferred contracts;

- The estimated time for the transfer to be effected;

- Detailed explanation by the transferee-enterprise on its satisfaction of the financial requirements after the transfer is effected.

b/ A transfer contract between the transferor-enterprise and transferee-enterprise contains the following principal contents:

- The object of the transfer;

- The estimated time for the transfer to be effected;

- Rights and obligations of the parties to the transfer;

- Mode of dispute settlement.

c/ Commitments made by the transferee-enterprise to guaranteeing the interests of the insurance buyers under the transferred insurance contracts after the transfer takes effect.

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a/ Publish the announcement on the transfer on two central newspapers for five consecutive issues, with the following principal contents:

- The names and addresses of the transferor-enterprise and transferee-enterprise;

- Types of insurance operations and the number of contracts to be transferred;

- The estimated time for the transfer to be effected;

- The address for settlement of transfer-related complaints and questions of insurance buyers.

b/ The transferor-enterprises must send notices together with a summary of the transfer plan to every insurance buyer immediately after the Ministry of Finance ratifies the transfer applications. Such a notice must clearly state the time limit allowed for the insurance buyers to cancel their insurance contracts if they disagree with the transfer plan, and the date when the transfer plan officially takes effect.

c/ After receiving the notices on the transfer, the insurance buyers may opt to cancel the insurance contracts within 15 days counting from the postmarks printed on such notices. Where they cancel their insurance contracts, the transferor-enterprises must refund to the insurance buyers the parts of the insurance premiums they have received, which correspond to the remaining durations of the insurance contracts, after subtracting related reasonable expenses, for non-life insurance; or the insurance premium amounts the insurance buyers have paid after subtracting related reasonable expenses, for life insurance.

2.3 As from the date when the Ministry of Finance accepts the transfer applications, the transferor-enterprises must not continue to sign new insurance contracts of the already transferred insurance operations.

2.4 Within 60 days after the Ministry of Finance approves the transfer plans, the transferor-enterprises must hand over to the transferee enterprises:

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b/ Dossiers of unsettled complaints related to the transferred insurance operations;

c/ All assets, funds and professional reserves related to the transferred insurance contracts and dossiers of unsettled complaints related to the transferred insurance operations.

3. Approval of dossiers of application for transfer of insurance contracts

3.1 Within 30 days after receiving the complete dossiers of application for transfer, the Ministry of Finance shall reply in writing whether it accepts, rejects the dossiers, or requests amendments and/or supplements thereto. Where the Ministry of Finance requests some amendments and/or supplements, within 15 days after receiving such requests the transferor-enterprises must finalize the dossiers and send them to the Ministry of Finance. Past this time limit, the Ministry of Finance shall be entitled to reject such dossiers. In case of rejection of the dossiers, the Ministry of Finance shall clearly explain the reason(s) therefor in writing.

3.2 After accepting the dossiers of application for transfer, the Ministry of Finance shall grant adjusted licenses (made according to a set form) to the transferor-enterprises compatible with the insurance operations which they are allowed to continue.

4. Responsibilities of transferee-insurance enterprises

4.1 Transferee-insurance enterprises shall have to coordinate with the transferor-enterprises in elaborating the transfer plans, determining the value of assets related to funds and professional reserves of the transferred insurance contracts and reaching agreement on the date when the transfer plans take effect.

4.2 As from the date of accepting the transfer, the transferee-enterprises shall have to fulfill the obligations of the transferred insurance contracts according to the terms already signed between the transferor-enterprises and the insurance buyers, including the responsibility to settle complaints not yet reported. The transferee-enterprises shall be entitled to receive assets related to funds and professional reserves of the transferred insurance contracts and use such assets to fulfill the obligations under the transferred insurance contracts.

VIII. LOSS PREVENTION AND RESTRICTION

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2. The sums of money to be spent on loss prevention and restriction may only be deducted and used according to each insurance operation.

3. The spending on loss prevention and restriction shall comply with the current regulations on the enterprise finance management and relevant laws.

IX. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect as from August 16, 2001.

2. The following documents cease to be effective as from the effective date of this Circular:

2.1 Circular No. 144/1999/TT-BTC of December 13, 1999 of the Ministry of Finance prescribing the life insurance commission regime.

2.2 Circular No. 78/1998/TT-BTC of June 9, 1998 of the Ministry of Finance prescribing re-insurance business activities;

2.3 Circular No. 26/1998/TT-BTC of March 4, 1998 of the Ministry of Finance guiding the procedures for granting certificates of eligibility and satisfaction of conditions for insurance business activities;

2.4 Circular No. 27/1998/TT-BTC of March 4, 1998 of the Ministry of Finance guiding the insurance exploitation and insurance premium management;

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2.6 Circular No. 02/TC-TCNH of January 4, 1996 of the Ministry of Finance guiding the amendment and supplementation of the implementation of the insurance commission regime;

2.7 Circular No. 76/TC-TCNH of October 25, 1995 of the Ministry of Finance prescribing the insurance commission regime;

2.8 Decision No. 581a/TC-TCNH of July 1, 1996 of the Minister of Finance issuing the Provisional Regulation on the general terms of insurance contracts;

2.9 Decision No. 927/TC-QD-TCNH of August 18, 1995 of the Minister of Finance amending the scope of application of insurance rules, terms and premium rate table.

Any difficulties and problems arising in the course of implementation should be promptly reported to the Ministry of Finance for consideration and settlement.

FOR THE MINISTER OF FINANCE
VICE MINISTER




Le Thi Bang Tam

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1. The set form of the application for granting of establishment and operation licenses of insurance enterprises or insurance brokerage enterprises (*).

2. The set form of establishment and operation licenses of insurance enterprises or insurance brokerage enterprises (*).

3. The set form of adjusted licenses (*).

4. The Table of maximum insurance commission rates applicable to non-life insurance operations.

5. The Table of maximum insurance commission rates applicable to life insurance operations.

6. The list of compulsory re-insurance operations and compulsory re-insurance commission rates.

7. The set form of insurance agent training certificate (*).

8. The report on the list of insurance agents(*).

9. The report on the activities of training insurance agents(*).

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11. The set form of licenses to open the representative offices of foreign insurance enterprises or insurance brokerage enterprises in Vietnam(*).

12. The table of rates of expense for loss prevention and restriction.

13. The set form of the application for registration of insurance products (*).

(*) Not printed herein

APPENDIX 4

TABLE OF MAXIMUM INSURANCE COMMISSION
RATES APPLICABLE TO NON-LIFE INSURANCE OPERATIONS

(issued together with Circular No. 71/2001/TT-BTC of August 28, 2001
of the Ministry of Finance)

Ordinal number

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Commission rates (%)

1

Health insurance and human accident insurance

12

2

Property insurance and damage insurance

5

3

Construction and installation insurance

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4

Insurance of cargoes transported by land, sea, river, railway and air

2

5

Ship hull insurance and ship owner�s civil liability insurance, for sea-going ships and river- coastal ships

2

6

Ship hull insurance and ship owner�s civil liability insurance, for river ships and fishing ships

10

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Common liability insurance

4

8

Aviation insurance

0.5

9

Motorized vehicle insurance

5

10

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5

11

Credit and financial risk insurance

5

12

Business loss insurance

10

13

Agricultural insurance

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14

Compulsory insurance

a/ Car owner�s civil liability insurance

5

b/ Moped or motorcycle owner�s civil liability insurance

12

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c/ Insurance of air carriers� civil liability for passengers

3

d/ Insurance of professional liability for legal consultancy activities

3

e/ Insurance of professional liability of insurance brokerage enterprises

3

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3

APPENDIX 5

TABLE OF MAXIMUM INSURANCE COMMISSION RATES APPLICABLE TO LIFE INSURANCE OPERATIONS
(issued together with Circular No. 71/2001/TT-BTC of August 28, 2001 of the Ministry of Finance)

I. FOR INDIVIDUAL LIFE INSURANCE OPERATIONS:

A. FOR SEPARATE INSURANCE OPERATIONS, THE LIFE INSURANCE COMMISSIONS SHALL APPLY ACCORDING TO THE FOLLOWING TABLE:

Calculation unit: %

Life insurance operations

Maximum commission rates computed on the whole insurance premium

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Mode of lump-sum payment of premiums

First contractual year

Second contractual year

Subsequent contractual years

1. Term insurance

40

20

15

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2. Endowment insurance

- Insurance durations of 10 years or less

15

10

5

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- Insurance durations of more than 10 years

20

10

5

5

3. Combined insurance:

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- Insurance durations of 10 years or less

25

7

5

5

- Insurance durations of more than 10 years

40

10

10

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4. Whole life insurance

30

20

15

10

5. Annuity

15

10

7

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B. FOR COMBINATION OF SEPARATE INSURANCE OPERATIONS: LIFE INSURANCE COMMISSIONS SHALL BE COMPUTED ON THE BASIS OF THE TOTAL OF COMMISSIONS OF ABOVE-SAID SEPARATE INSURANCE OPERATIONS.

II. FOR GROUP LIFE INSURANCE OPERATIONS

The maximum commission rates shall be equal to 50% of the corresponding rates applicable to individual life insurance operations of the same types.

APPENDIX 6

COMPULSORY REINSURANCE COMMISSION RATES
(issued together with Circular No. 71/2001/TT-BTC of August 28, 2001 of the Ministry of Finance)

1. For fixed re-insurance contracts:

Compulsory re-insurance operations

Compulsory re-insurance commission rates (%)

...

...

...

- Group of construction, installation.. insurance products

26

- Group of oil and gas insurance products

15

- Group of other insurance products in service of investment projects

24

2. Insurance of goods transported by land, sea, river, railway and air

20

...

...

...

90% of re-insurance commission rates for the same service kinds on the international market

4. Fire and explosion insurance

27

5. Ship hull insurance and ship owner’s civil liability insurance

- Ship hull insurance products

22

- Products of ship owner’s civil liability insurance

15

...

...

...

2. For temporary re-insurance contracts: The compulsory re-insurance commission rates shall be equal to 90% of the re-insurance commission rates for the services of the same kinds on the international market.

APPENDIX 12

TABLE OF PERCENTAGES OF EXPENDITURE ON LOSS PREVENTION
AND RESTRICTION
(issued together with Circular No. 71/2001/TT-BTC of August 28, 2001 of the Ministry of Finance)

Ordinal number

Insurance operations

Maximum percentage of expenditure on loss prevention and restriction computed on the retained amount of insurance premiums of each insurance operation (%)

1

Health insurance and human accident insurance

...

...

...

2

Property insurance and damage insurance

5

3

Insurance of goods transported by land, sea, river, railway and air

2

4

Aviation insurance

2

...

...

...

Motorized vehicle insurance

5

6

Fire and explosion insurance

1

7

Insurance of ship body and civil liability of ship owners

2

8

...

...

...

5

9

Credit and financial risk insurance

5

10

Business loss insurance

5

11

Agricultural insurance

...

...

...