Tiếng Việt| INISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIETNAM |
| No. 98/2004/TT-BTC | Hanoi, October 19th, 2004 |
Pursuant to the Law on Insurance Business 24/2000/QH10 dated 9 December 2000;
Pursuant to Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business;
Pursuant to Decree 77/2003/ND-CP of the Government dated 1 July 2003 on functions, duties, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance provides the following specific guidelines:
I. ESTABLISHMENT AND OPERATION OF INSURERS AND INSURANCE BROKERS
1. Application file for issuance of licence for establishment and operation:
1.1 An application file in accordance with article 64 of the Law on Insurance Business shall comprise:
1.1.1 An application form for issuance of a licence prepared in the sample form in Appendix 1 to this Circular and signed by the legal representative of, or the person authorized by, the investor;
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1.1.3 List, curriculum vitae and notarised data about company managers and operators proving their ability, skills and professional qualifications;
1.1.4 Levels of capital contribution, list of organizations and individuals owning 10% or more of the charter capital, and financial and other information on such organizations and individuals;
1.1.5 Rules, terms and conditions, premium rates, and insurance commission scales for the insurance products proposed to be provided;
1.1.6 For an insurance broking enterprise, an application file for issuance of a licence shall not contain item 1.1.5 above, and the operational plan for the first five years of a broker shall not include methods of establishing professional reserves, a reinsurance program, investment capital nor [data proving] solvency of the enterprise.
1.2. In addition to the documents stipulated in clause 1.1 above and depending on the type of enterprise proposed to be established, the application for issuance of a licence must include the following data:
1.2.1 For a State owned insurer or insurance broker:
(a) Draft charter of the enterprise containing the principal items as stipulated in the Law on Enterprises and its implementing guidelines;
(b) Letter from the body which made the decision on establishment of the enterprise, agreeing to it conducting insurance business or insurance broking business;
(c) Explanatory statement of the capital sources funding the establishment of the insurance enterprise or insurance broking enterprise, certified by the competent body.
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(a) Draft charter of the enterprise containing the principal items as stipulated in the Law on Enterprises and its implementing guidelines;
(b) Minutes of meeting of the investors on the establishment of a shareholding insurance company, shareholding insurance broking company, limited liability insurance broking company, private insurance broking enterprise or insurance broking partnership;
(c) Certification by the competent body of the legal capacity of the investors and founding shareholders:
- If the investor is a legal entity, it must lodge a notarised copy of the decision on establishment of the enterprise, the business registration certificate, and the investment licence (if any);
- If the investor is an individual he must lodge his curriculum vita in the form stipulated by law.
(d) Certification of the legality of the funding sources for establishing the company:
- If the investor is a legal entity, it must lodge audited financial statements for the 3 most recent years;
- If the investor is an individual he must lodge bank certification of the balance in his deposit account, or a term deposit certificate with at least six months of the term remaining (from the date of lodging the application file), or a certificate of a deposit account in the investor's own name. Files and documents on land and housing shall not be used to prove an investor's financial capacity and ability to contribute capital;
(dd) Power of attorney to the investors' representative;
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1.2.3 For an insurance enterprise or insurance broking enterprise with 100% foreign owned capital:
(a) Draft charter of the insurer with 100% foreign owned capital containing the principal items stipulated in the Law on Foreign Investment in Vietnam and its implementing guidelines;
(b) Charter of the foreign investor;
(c) Operational licence of the foreign investor;
(d) Letter of confirmation from a competent foreign body:
- Permitting the foreign investor to establish an enterprise with 100% foreign owned capital in Vietnam; and if the regulations of the country where the foreign investor has its head office do not require such a letter of approval, then there must be evidence confirming this;
- Confirming the foreign investor is permitting to conduct the type of insurance business proposed to be conducted in Vietnam;
- Confirming the foreign investor is in a healthy financial state and satisfies the regulatory requirements of his own country.
1.2.4 For a joint venture insurance enterprise or insurance broking enterprise:
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(b) Charter of the joint venture enterprise containing the principal items stipulated in the Law on Foreign Investment in Vietnam and its implementing guidelines;
(c) Charter of the foreign party to the joint venture;
(d) Operational licence of the foreign party to the joint venture;
(dd) Letter of confirmation from the authorized foreign body:
- Permitting the foreign investor to establish a joint venture insurance enterprise in Vietnam; and if the regulations of the country where the foreign investor has its head office do not require such a letter of approval, then there must be evidence confirming this;
- Confirming the foreign investor is permitting to conduct the type of insurance business proposed to be conducted in Vietnam;
- Confirming the foreign investor is in a healthy financial state and satisfies the regulatory requirements of his own country.
(e) Letter from the authorized body permitting the Vietnamese party to contribute capital to the joint venture;
(g) Explanatory statement of the sources funding the Vietnamese party, certified by the competent body.
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2. Procedures for receiving and dealing with applications for a licence:
2.1. An application file for issuance of a licence shall be received and checked by the Ministry of Finance on the following bases:
2.1.1 The requisite number of sets and the requisite number of documents to be included in the file;
2.1.2 The validity of the application for the licence;
2.1.3 The documents certifying legal entity status and financial status of the investor.
2.2. Within a time-limit of sixty (60) days from the date of receipt of a complete application file for issuance of a licence from an investor, the Ministry of Finance shall make a decision to issue or to refuse to issue a licence. In the case of refusal, the Ministry of Finance shall provide a written explanation.
During evaluation of an application file for issuance of a licence, and within a time-limit of fifteen (15) working days from the date of receipt of a complete application file as stipulated in clause 2.1 above, the Ministry of Finance may send a notice to the investor to amend or add to the file where it considers it necessary.
The investor shall provide amendments or additions within a time-limit of thirty (30) working days from the date of receipt of such request from the Ministry of Finance. If the investor fails to complete the file as required within the time-limit for providing amendments and additions to the application file for issuance of a licence, including any extension thereof, the application file shall no longer be valid for consideration.
2.3. A licence shall be issued in the sample form in Appendix 2 (attached to this Circular).
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3.1. An application for issuance of a licence shall be evaluated on the following bases:
3.1.1 Law on Insurance Business and its implementing guidelines;
3.1.2 Other relevant laws.
3.2. An application for issuance of a licence shall be evaluated with respect to the following:
3.2.1 Evaluation of legal entity status and financial status of the investor by reference to:
(a). Document establishing the enterprise and the organizational and operational charter of the enterprise (where the investor is a legal entity) or the document proving legal entity status (where the investor is an individual);
(b). Audited financial statements for the preceding three consecutive years (where the investor is a currently operating legal entity), including revenue, asset value, and annual profit; the ability of the investor to raise capital, and evidence from banks of balances in deposit accounts of the investor (where the investor is an individual); assistance from the head company (if any);
(c). Capital levels, amount of deductions for insurance reserves and other reserve funds in accordance with regulations; investment activities, and business plan of the insurance enterprise or insurance broking enterprise proposed to be established.
3.2.2 Evaluation of consistency of establishing the insurance or insurance broking enterprise with socio-economic planning and interests:
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(b). Consistency shall be considered on the basis of the following specific items:
-. Ensuring the healthy development of the insurance market;
-. Requirements of the national economy for the types of insurance products proposed to be marketed;
-. Consideration of the ability to develop the potential of domestic insurance and the ability of the domestic market to retain premiums; the ability to create jobs;
-. Process of integration and development of commercial relationships between Vietnam and other countries.
3.2.3 Evaluation of insurance products in application for issuance of a licence:
(a). Whether the regulations, terms and conditions, and premium scales which have been drafted are consistent with the current provisions of the law, whether they are economically and technically feasible, and whether they are consistent with Vietnamese socio-economic conditions, customs and practices;
(b). Development of new insurance products which insurers currently operating in the market are unable to provide shall be encouraged.
4.. Fees for issuance of licence:
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5. Amendment of or addition to licence:
The procedures for approving changes under article 69 of the Law on Insurance Business shall be specifically implemented as follows:
5.1. Changing the name of an enterprise:
An insurer or insurance broker wishing to change the name of its enterprise shall forward to the Ministry of Finance an application for a change of name signed by the legal representative of, or person authorized by, the enterprise and the written confirmation of the change of name from the competent body or person having authority of the enterprise.
5.2. Increasing or decreasing charter capital of an insurer or insurance broker:
An insurer or insurance broker wishing to increase or decrease charter capital of the enterprise shall forward to the Ministry of Finance the following:
5.2.1 Explanatory statement of the increase or decrease in charter capital, bearing the signature of the legal representative of, or person authorized by, the enterprise and specifying the amount of the increase or decrease, the reasons for it, the plan for use of capital, and the period within which it is proposed to be implemented;
5.2.2 The written approval of the competent body or person having authority of the enterprise of the increase or decrease in the charter capital;
5.2.3 Explanatory statement of the financial sources used for increase in capital, in the case of increase in charter capital.
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5.3.1 An application file for the opening of a branch or representative office of an insurer or insurance broker shall be implemented in accordance with the provisions in articles 11 and 12 of Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business.
5.3.2 An application file for the opening of an overseas branch or representative office of an insurer or insurance broker shall be implemented in accordance with the provisions of the laws relating to investment overseas.
5.3.3 An application file for the termination of a branch or representative office of an insurer or insurance broker shall comprise:
-. Application requesting termination of operation;
- Report on status of operation of the branch or representative office in the preceding three years. Where the branch or representative office has not been operating for three years, a report on the status of operation from the time of commencement of operation shall be required;
- Responsibilities and matters arising out of the termination of operation.
5.4. Changing the location of a head office, branch or representative office of an insurer or insurance broker:
An insurer or insurance broker wishing to change the location of its head office, branch or representative office shall forward to the Ministry of Finance an application file for change of the location of its head office, branch or representative office signed by the legal representative of, or person authorized by, the enterprise.
5.5. Changing the area, scope or duration of operation:
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5.6. Transferring shares or capital contribution share:
An application for the transfer of shares or capital contribution share amounting to ten (10) per cent or more of the charter capital shall be prepared in one set and submitted to the Ministry of Finance, and shall comprise the following documents:
5.6.1 Application for the transfer of shares or capital contribution share amounting to ten (10) per cent or more of the charter capital, signed by the legal representative of, or person authorized by, the enterprise. The application shall specify the number and value of the shares, the proportion of capital contribution to be transferred, and the reasons for the transfer;
5.6.2 Information on the organization or individual being the transferee of the shares or capital contribution share;
5.6.3 Contract for transfer of the shares or capital contribution share.
5.7. Changing the chairman of the board of management or the general director (director):
5.7.1 No later than fifteen (15) days prior to the date of issuance of the written appointment or removal, either during a term or at the end of a term, of the chairman of the board of management or the general director (director) of an insurer or insurance broker, the chairman of the board of management or the person authorized by him shall forward to the Ministry of Finance a request for approval of the change.
5.7.2 An application file for change of the chairman of the board of management or the general director (director) shall comprise:
(a) Written request for approval of change;
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(c) Curriculum vita of the appointee, certified by the board of management or the person authorized by the insurer or insurance broker;
(d) Certificates and diplomas showing the professional qualifications and expertise of the new chairman of the board of management or the general director (director) who is to be appointed;
(dd) Minutes of the meeting which approved the appointment or removal of the chairman of the board of management or the general director (director) of the insurer or insurance broker, (if any).
5.8. Division, split, merger, consolidation, dissolution, or conversion of the form of an enterprise:
The application, the procedures and the time-limit for resolution of any request for division, split, merger, consolidation, dissolution, or conversion of the form of an enterprise shall be implemented in accordance with the provision of the relevant laws.
5.9. Time-limit for resolution of requests for amendment of or addition to licence:
Within a time-limit of thirty (30) days from the date of receipt by the Ministry of Finance of a complete file requesting amendment of or addition to the licence of an insurer or insurance broker as stipulated in clauses 5.1 to 5.8 of Part I of this Circular, the Ministry of Finance shall notify the enterprise of its approval or refusal to approve the request of the enterprise. In the case of refusal to approve, written reasons must be provided. In the case of approval, the Ministry of Finance shall provide an amended licence in the sample form in Appendix 3 (attached to this Circular). The amended licence shall be an integral part of the licence for establishment and operation of the insurance enterprise.
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1.2. An insurer may only register insurance rules, terms and conditions, and premium rates applicable to insurance products for the insurance business it is authorized to conduct in its licence for establishment and operation (or certificate of satisfaction of all standards and conditions for insurance business) issued to the insurer by the Ministry of Finance.
1.3. An insurer shall be responsible for the contents and legality of the insurance rules, terms and conditions, and premium rates applicable to insurance products which it registers with the Ministry of Finance.
1.4. At the time of registration of its rules, terms and conditions, and premium rates for insurance products, an insurer shall submit to the Ministry of Finance the following documents:
1.4.1 Written request for registration of an insurance product in the sample form in Appendix 12 to this Circular;
1.4.2 Rules, terms and conditions, and premium rates which the insurer proposes to apply (in Vietnamese). In the case of insurance products underwritten pursuant to international practice such as maritime and aviation insurance and so forth, then the rules, terms and conditions, and premium rates may be registered in English.
1.5. Within a time-limit of 3 working days from the date an insurer lodges complete documents for registration of insurance rules, terms and conditions, and premium rates, the Ministry of Finance shall certify that the insurer has finalised the procedures for registration of such insurance rules, terms and conditions, and premium rates.
1.6. If an insurer needs to change or amend the insurance rules, terms and conditions, and premium rates of its insurance products which have been registered with the Ministry of Finance, it must register such changes following the procedures set out in clause 1.4 above. In the case of special risks or risks not yet fully mentioned in the insurance rules, terms and conditions, and premium rates which have already been registered with the Ministry of Finance, then the insurer and the purchaser of insurance shall be permitted to agree the insurance conditions and the premium rates so that the risk will be insured, and then the procedures for registration of the product shall be conducted after the contract is signed.
2. Approval of insurance products:
2.1. Prior to underwriting life, health or personal accident insurance, an insurer must file an application for approval of the particular insurance product, comprising:
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2.1.2 Rules, terms and conditions, premium rates and commission applicable to the insurance product which the insurer proposes to underwrite;
2.1.3 Formula and methods for calculating premium and reserves, with an explanation of the bases for same, relevant to the insurance product which the insurer proposes to underwrite;
2.1.4 Relevant data comprising sample form for request for insurance cover, the insurer's explanatory material on its products and services, any sales literature the insurer uses, and sample forms of information which a client must disclose and sign when purchasing insurance.
In the case of life products which distribute dividends, the bases for calculating premium for the proposed product must include principles, methods and the percentage dividend distribution the insurer promises to clients which must not be less than 70% of the total revenue from the insurance contract following the method which has been agreed by the Ministry of Finance. This provision shall only apply to contracts for life products which distribute dividends and which are signed as from 1 January 2006.
2.2 The rules and conditions which an insurer submits to the Ministry of Finance for approval must ensure:
2.2.1 That purchase of subsidiary products or riders to the main product is not a mandatory condition for maintaining effectiveness of the main insurance product;
2.2.2 That there are no terms and expressions which are difficult to understand, vague or ambiguous; or if such terms must be used, then insurers must fully define them and provide a full explanation of them so as to avoid misunderstanding on the part of clients;
2.2.3 The application file for approval of a life product must be signed by the head of the enterprise or his legally appointed proxy, and must be certified by an appointed actuary approved in accordance with the provision in Part III below.
3. Provisions on underwriting life insurance:
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3.1.1 To ensure that their brochures use terms and expressions which are simple, clear and easy to understand, and do not include any information which will confuse clients;
3.1.2 When describing products, to distinguish clearly between benefits which the client is guaranteed to receive and benefits which are non-guaranteed, and to notify clients of the total insurance benefits receivable pursuant to any non-guaranteed contract when those benefits are variable;
3.1.3 At least once each year, insurers must check the assumptions used in the explanations in their brochures. If the assumptions are no longer consistent with the actual situation, insurers must amend their sales brochures accordingly;
3.1.4 To ensure that the brochures which introduce life insurance products and services do not contain information about insured interests which is contrary to the rules, terms and conditions already approved by the Ministry of Finance.
3.2. Sales literature:
3.2.1 An insurer must provide clients with sales literature giving illustrations or examples of its insurance products, either directly or via agents or brokers permitted to operate in Vietnam;
3.2.2 Assumptions used to make calculations in sales literature must be approved by an actuary appointed by the insurer before such sales literature is used in order to be provided to clients; and sales literature must be clear, complete and accurate so as to help clients make an appropriate choice;
3.2.3 Insurers shall be liable for the accuracy of the brochures which introduce their products and services and of all their sales literature, and insurers shall be liable to keep such material up-dated throughout the whole period of its use.
3.2.4 Insurers shall explain in their sales literature the conditions for receipt of surrender value together with the benefits and specific sum which the client will receive as surrender value, and must specify if such benefits are guaranteed or non-guaranteed.
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If an insurance policy does not contain specific provisions, then an insurer must provide a client with the following information in writing when the insurer issues the policy:
3.3.1 Method of paying premium and dates when periodical payments of premium are due;
3.3.2 Name of an individual or of a section within the enterprise to contact if the client requires assistance or if the client needs to have any contract issue resolved;
3.3.3 Responsibility of the client to notify the insurer of any change of address of the person participating in insurance.
Insurers must provide annual notice to policy owners of the status of their contracts.
3.4. Surrender value of life insurance contracts:
3.4.1 A life insurance contract shall only have a surrender value after it has been effective for twenty four (24) months or more in the case of insurance contracts with periodical payments of premium;
3.4.2 Insurers shall have the right to deduct unpaid debts prior to payment of surrender value to the insurance purchaser.
4.. Publication of list of insurance products:
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5.1. Insurers may only pay insurance commissions from that part of insurance premium actually collected in accordance with the rates of insurance commission stipulated by the Ministry of Finance for each type of insurance product to the entities specified in article 20 of Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business.
5.2. Insurance commissions shall be treated as a cost of the insurer payable to insurance brokers and insurance agents. An insurer may on its own initiative use insurance commissions for the following items of expenses:
5.2.1 Initial operating expenses (finding, persuading and introducing clients);
5.2.2 Expenses of collecting premiums;
5.2.3 Expenses of monitoring insurance contracts and persuading clients to maintain them.
5.3 The maximum permissible rates of insurance commission payable to insurance agents shall be as stipulated in Appendix 4 List of Maximum Rates of Insurance Commission Applicable to Non-Life Insurance Products and Appendix 5 List of Maximum Rates of Insurance Commission Applicable to Life Insurance Products attached to this Circular.
Insurance commission applicable to a package insurance contract shall be calculated as the total commission for each risk insured by the package contract.
5.4. Rates of insurance commission payable to an insurance broker shall be implemented in accordance with the agreement between the insurer and the broker, consistent with the laws of Vietnam and with international practice. Depending on the scope, level and contents of the insurance broking services which are provided, insurance commission may be paid to an insurance broker up to fifteen (15) per cent of the amount of premium actually collected.
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1. A life insurance enterprise must use an appointed actuary to fulfil the following duties:
1.1. To sign, together with the general director (director) of the life insurance enterprise, an application file for approval of an insurance product;
1.2. To establish mathematical reserves for life insurance contracts in accordance with law;
1.3. To approve distribution of any annual surplus of the policy owners' fund on a fair and reasonable basis and in compliance with law;
1.4. To assess the financial capacity of the life insurer by checking its solvency at the end of each accounting period;
1.5. To provide quarterly and annual reports to the board of management of the life insurer on the current financial status and future prospective financial status of such life insurer;
1.6. To promptly report in writing to the general director (director) and board of management of the life insurance company any irregular incidents which may prejudice the financial status of such life insurer, and to propose remedial measures;
1.7. If a life insurer fails to apply the appropriate remedial measures within a reasonable time- limit as proposed by the appointed actuary to overcome financial difficulties, then the appointed actuary shall be responsible to pass onto the Ministry of Finance a copy of the above-mentioned report so that the Ministry of Finance may deal with the matter.
2. An appointed actuary must satisfy the following standards:
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2.2. Have good professional ethics, not have committed any breach of professional conduct of actuaries, and not be subject to criminal prosecution for any crime relating to his profession;
2.3. Be a staff member of the insurance enterprise or of a company providing actuarial consultancy, or practise independently as an individual actuary.
3. An appointed actuary may not concurrently hold one of the following positions:
3.1. General director;
3.2. Chief accountant;
3.3. Member of the board of management.
4. Procedures for approval of appointed actuaries:
4.1. The board of management of a life insurance enterprise, or the general director (director) where there is no board of management, shall be responsible to assign an appointed actuary to carry out the work stipulated in clause 1 above. The Ministry of Finance must provide prior approval in writing of an appointed actuary.
4.2. An application file for approval of an appointed actuary shall comprise:
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4.2.2 Evidence, curriculum vita and data about the proposed appointed actuary proving his ability and professional qualifications;
4.2.3 Notarised copy of a certificate proving membership of a recognised Association of Actuaries.
5. Procedures for approval of a change in the appointed actuary:
If an insurance company changes its appointed actuary, it must forward the Ministry of Finance an application file for approval of the change, comprising:
5.1. Written request to the Ministry of Finance to relieve the current appointed actuary and to approve a new appointed actuary, signed by the chairman of the board of management or by the general director (director) where there is no board of management;
5.2. Evidence, curriculum vita and data about the proposed new appointed actuary proving his ability and professional qualifications;
5.3. Notarised copy of a certificate proving the proposed new appointee's membership of a recognised Association of Actuaries.
6. Cessation of status as appointed actuary:
The status of a person as appointed actuary shall automatically cease in the following circumstances:
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6.2. Written request from the insurance enterprise for a change in the appointed actuary;
6.3. Within a time-limit of fifteen (15) days from the date of receipt of a complete file as prescribed above, the Ministry of Finance shall provide written approval. In the case of refusal, the Ministry of Finance shall provide a written explanation.
7. The provisions on appointed actuaries shall apply as from 1 January 2006.
1. Insurers shall arrange compulsory reinsurance as provided in article 22 of Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business.
The list of products which must be reinsured shall comprise:
1.1. Property insurance and damage insurance;
1.2. Insurance for goods in transit by road, sea, river, rail and air;
1.3. Aviation insurance;
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1.5. Hull insurance and ship owner's civil liability insurance.
2. Insurance commissions shall be paid by Vinare to insurers which compulsorily cede part of their liability, in accordance with Appendix 6 to this Circular.
3. Reinsurance business activities:
3.1. When insurers arrange reinsurance overseas, they may only arrange reinsurance with a reinsurance company which satisfies the following conditions:
3.1.1 The company has financial capacity and operational experience in the market;
3.1.2 At the time of arranging reinsurance overseas, the company is classified at least "BBB" by Standard & Poor's, "B++" by A. M. Best, "Baa" by Moody's or achieves an equivalent classification result.
If reinsurance is arranged with the parent company overseas or with another company in the group which does not have the credit rating prescribed in this clause, then the insurer must report this to the Ministry of Finance.
3.2. Insurers may only retain the maximum liability for each risk or each loss up to 10% of owner's equity, and liability in excess of such 10% must be reinsured.
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1.1. Any insurance agent training establishment wishing to organize insurance agency training must forward a written request to the Ministry of Finance for approval of the program for insurance agency training in accordance with the provisions of article 31.3 of Decree 42/2001/ND-CP.
1.2. Issuance of certificates of training as insurance agent:
1.2.1 Only insurance agent training establishments which have been permitted to operate by the Ministry of Finance shall have the right to issue certificates of training as an insurance agent. People issued with a certificate must have completed a program for training insurance agents and must have passed an exam for the issuance of such certificates.
1.2.2 Certificates of training as insurance agent shall be issued in the uniform sample form (Appendix 7 to this Circular).
1.3. Annually, at the latest by 30 January of the following year, insurance agent training establishments shall forward to the Ministry of Finance reports (in the sample form in Appendix 8) on the number of training courses held, the number of agents trained, and the number of certificates of training as insurance agent issued in the year. Quarterly, no later than the fifteenth day of the first month of the following quarter, insurers shall forward to the Ministry of Finance lists of insurance agents of the insurer (in the sample form in Appendix 9 to this Circular).
2. Rights and obligations of insurers and insurance agents:
2.1. The rights and obligations of insurers in administration of insurance activities, and the rights and obligations of insurance agents shall be as stipulated in articles 29 and 30 of Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business.
2.2. Insurers shall be prohibited from signing an insurance agency contract with an individual with whom another insurer has compulsorily terminated his agency contract for a serious breach of the law and of the agency contract, for three years from the date of such termination.
When an insurer compulsorily terminates an agency contract for the above-mentioned reason, such insurer shall notify the Vietnam Insurance Association so that the Association may in turn notify all other insurers.
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3.1. To provide false information or false advertising about contents, scope of operation of the insurer, and insurance conditions and terms, thereby harming the legal rights and interests of purchasers of insurance;
3.2. To prevent purchasers of insurance providing information or incite them not to declare all details, as relevant to insurance contracts;
3.3. To compete for clients by obstruction, coercion, enticement or threats to staff or clients of other insurers, insurance agents or brokers;
3.4. To promote clients by unlawful means by promising to provide them with a reduction or refund of premiums or other benefits which are not provided by the insurer;
3.5. To incite purchasers of insurance to rescind current insurance contracts in order to purchase new ones.
4.1. Insurers and the Vietnam Insurance Association shall be responsible before the law for all of their activities in training and employing insurance agents;
4.2. The Ministry of Finance may conduct periodical or one-off inspections of insurers or of the Vietnam Insurance Association of their recruitment, training, management and use of insurance agents.
The above inspections must not interfere with the normal activities of insurers or the Vietnam Insurance Association.
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1. Principles in insurance broking activities:
Insurance brokers shall only be permitted to advise on, or to offer to parties purchasing insurance, the insurance regulations, terms and conditions, and premium scales which have been issued or approved by the Ministry of Finance, or which an insurer has registered with the Ministry of Finance.
2. Payment of premiums and payment of insurance indemnity through insurance brokers:
2.1. An insurer may authorize an insurance broker to collect premiums or to pay indemnity or insurance proceeds.
2.2. Where an insurer authorizes an insurance broker to collect premiums, the responsibility of the purchaser of insurance to pay the premium shall be fully discharged when the purchaser pays the premium in accordance with the agreement in the insurance contract to the insurance broker.
Where an insurer authorizes an insurance broker to collect premiums and the purchaser of insurance pays the premium in accordance with the agreement in the insurance contract, the broker shall be responsible to pay the above premium to the insurer within the period agreed by the insurer and the insurance broker. Where no agreement on period for payment is made, the broker shall be responsible to pay the above premium to the insurer at the earliest time, but within seven days of receipt at the latest.
2.3. Where an insurer authorizes an insurance broker to pay insurance proceeds or indemnity, the insurer shall remain liable to the insured person or to the beneficiary for the amount that the insurer is liable to pay to such insured person or beneficiary.
2.4. Where an insurer authorizes an insurance broker to pay insurance proceeds or indemnity, the insurance broker shall be responsible to pay such sum to the insured person or to the beneficiary immediately upon receipt of such sum by the broker from the insurer.
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3.1. To prevent purchasers of insurance providing information or incite them not to declare all details, as relevant to insurance contracts;
3.2. To promote clients by promising to provide them with unlawful benefits in order to induce them to enter into an insurance contract;
3.3. To induce purchasers of insurance to rescind current insurance contracts in order to purchase new ones.
VII. REPRESENTATIVE OFFICES OF FOREIGN INSURERS AND FOREIGN INSURANCE BROKERS IN VIETNAM
1. Application file for issuance of licence for establishment of representative office:
1.1. A foreign insurer or a foreign insurance broker wishing to establish a representative office in Vietnam shall forward to the Ministry of Finance a file as stipulated in article 110 of the Law on Insurance Business.
1.2. An application to establish a representative office in Vietnam shall bear the signature of the chairman of the board of management or person authorized by the foreign insurer or foreign insurance broker and shall be in the sample form in Appendix 10 to this Circular.
1.3. Licences for establishment of a representative office of a foreign insurer or broker in Vietnam shall be issued in the sample form in Appendix 11 to this Circular.
1.4. Within a time-limit of thirty (30) days from the date of receipt of a complete application file for issuance of a licence for establishment of a representative office, the Ministry of Finance shall notify the enterprise of its approval or refusal of approval of the request of the enterprise. In case of non-approval, written reasons must be provided. In case of approval, the Ministry of Finance shall issue a licence for establishment of a representative office of a foreign insurer or insurance broker in Vietnam.
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2. Reports on operations by representative offices:
2.1. Representative offices of foreign insurers or foreign insurance brokers in Vietnam shall provide six-monthly and annual reports on their operations to the Ministry of Finance and to the people's committee of the province or city where they have opened their offices.
Reports for the first six months of the year must be forwarded prior to 30 July, and annual reports prior to 1 March of the following year.
2.2. Contents of reports:
2.2.1 Organizational structure of the representative office, its personnel, and the number of Vietnamese and foreigners respectively working in the office;
2.2.2 Main activities:
(a) Marketing activities;
(b) Relationship between the representative office and Vietnamese insurers, brokers and economic organizations;
(c) Consultancy activities, training activities;
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2.2.3 Direction of activities to be taken in the immediate future.
2.3 In necessary cases, the Ministry of Finance may require a representative office to provide a random report in addition to the above periodical reports, or to provide information or to explain issues relating to its activities.
3. Change in contents of a licence:
3.1. If a representative office wishes to change any of the following listed details in its licence for establishment, the foreign insurer or broker shall forward a request to the Ministry of Finance for an amendment to its licence:
3.1.1 A change of name or a change of nationality of the foreign insurer or insurance broker, or a change of name of the representative office;
3.1.2 A change in the operational items of the representative office.
Within a time-limit of seven days from the date of receipt of a written request from a foreign insurer or broker, the Ministry of Finance shall notify the enterprise of its approval or refusal of approval of the request of the enterprise. In case of non-approval, written reasons must be provided.
3.2. In the case of an increase or decrease in the number of foreigners working in a representative office or change of address of a representative office, the foreign insurer or insurance broker must provide immediate written notification thereof to the Ministry of Finance.
4. Extension of operation of a representative office:
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4.1.1 An application for extension of the representative office signed by the chairman of the board of management of, or the person authorized by the foreign insurer or foreign insurance broker;
4.1.2 Licence for establishment and operation of the foreign insurer or foreign insurance broker;
4.1.3 Copy licence for establishment of the representative office plus any previous decision on extension of operation;
4.1.4 Summarised report on operation of the representative office in the preceding three years;
4.1.5 Financial statements for the two most recent years of the foreign insurer or foreign insurance broker;
4.1.6 Name and curriculum vita of the proposed new head of the representative office if there is to be a change of head.
4.2 Within a time-limit of thirty (30) days from the date of receipt by the Ministry of Finance of a complete file requesting extension of operation a representative office, the Ministry of Finance shall notify the foreign enterprise of its approval or refusal to approve the request of the enterprise. In the case of refusal to approve, written reasons must be provided.
5. Termination of operation of a representative office:
5.1. The operation of a representative office shall be terminated in the following circumstances:
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5.1.2 When the operation of the foreign insurer or foreign insurance broker is terminated;
5.1.3 When there is a decision revoking or rescinding the licence by the competent State body in accordance with the law of Vietnam.
5.2 In the cases prescribed in clauses 5.1.1 and 5.1.2 above, the foreign insurer or foreign insurance broker shall notify the Ministry of Finance thirty (30) days prior to the date of termination of operation of the representative office, and shall hand in the original licence for establishment of the representative office plus any other licences and decisions relating to operation of the representative office.
Within a time-limit of seven (7) days, the Ministry of Finance shall approve termination of operation of the representative office, and notify the agencies which were sent a copy of the licence for establishment of the representative office.
5.3. In the cases prescribed in clauses 5.1.3 above, the Ministry of Finance shall send the foreign insurer or foreign insurance broker the decision revoking or rescinding the licence at least thirty (30) days prior to the date operations must be terminated, and shall also notify the agencies which were sent a copy of the licence for establishment of the representative office.
VIII. PROCEDURES AND APPLICATION FILES FOR ASSIGNMENT OF INSURANCE CONTRACTS
1. Assignment of insurance contracts:
1.1. During the process of its operation, an insurer may assign all insurance contracts within one or a number of insurance products (hereinafter abbreviated as an assignment) to another insurer licensed to operate in Vietnam in accordance with Section 3 of Chapter III of the Law on Insurance Business.
1.2. An assignment must comply with the principle that it shall not adversely affect the interests of purchasers of insurance after the assignment has been carried out.
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2.1. For an insurance enterprise which is assigning (hereinafter referred to as assignor enterprise): the assignor enterprise shall forward to the Ministry of Finance an application, specifying the reasons for assignment, and enclosing the following documents:
2.1.1 Assignment plan, specifying:
(a) Name and address of the insurance enterprise to which the assignment will be made (hereinafter referred to as assignee enterprise);
(b) Type of insurance product and number of insurance contracts to be assigned;
(c) Method of assigning the funds, insurance reserves and claims relating to the insurance contracts being assigned;
(d) Estimated period for carrying out the assignment;
(dd) Detailed explanation from the assignee enterprise on how it proposes to satisfy financial requirements after the assignment;
(e) Contract of assignment between the assignor enterprise and the assignee enterprise, with the following major items:
(g) Object being assigned;
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(i) Rights and obligations of the assignor and the assignee;
(k) Dispute resolution.
2.1.2 Undertakings from the assignee ensuring the interests of purchasers of insurance under the assigned insurance contracts after the assignment take effect.
2.2. Within a time-limit of fifteen (15) days from the date of approval by the Ministry of Finance of an application for assignment, the assignor enterprise shall:
2.2.1 Publish a notice of assignment in five consecutive issues of two central newspapers with the following main items:
(a) Names and addresses of the assignor enterprise and the assignee enterprise;
(b) Type of insurance product and number of insurance contracts to be assigned;
(c) Estimated period for carrying out the assignment;
(d) Address for resolving claims and problems of purchasers of insurance related to the assignment.
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2.2.3 A purchaser of insurance shall be entitled to rescind its insurance contract within a time- limit of fifteen (15) days from the date of receipt of the notice of assignment, with the time- limit to be calculated from the date of the stamp of the post office. If a purchaser of insurance rescinds its insurance contract, the assignor enterprise must refund to it, in the case of non-life insurance, the proportion of premium received which is equivalent to the remaining period of the insurance contract, after deducting reasonable related expenses; or in the case of life insurance, insurance premiums already paid by the purchaser of insurance, after deducting reasonable related expenses.
2.3. As from the date of written approval by the Ministry of Finance of the application for assignment, the assignor enterprise shall not continue to enter into new insurance contracts for the type of insurance product which is being assigned.
2.4. Within sixty (60) days from the date of approval by the Ministry of Finance of the assignment plan, the assignor enterprise shall transfer to the assignee enterprise:
2.4.1 All of the insurance contracts which are currently effective and are included in the assignment plan approved by the Ministry of Finance;
2.4.2 All of the unresolved claims files relating to the insurance product which is being assigned;
2.4.3 All of the assets, funds and insurance reserves for the insurance contracts being assigned and all of the unresolved claims files relating to the insurance product which is being assigned.
3. Approval of application for assignment of insurance contracts:
3.1. Within a time-limit of thirty (30) days from the date of receipt of a complete application, the Ministry of Finance shall notify the enterprise in writing of its approval or non-approval of the assignment, or request amendments of or additions to the application file. In the latter case, the assignor enterprise must submit an amended file to the Ministry of Finance within a time-limit of fifteen (15) days from the date of receipt of the request, and upon expiry of this period the Ministry of Finance shall have the right to refuse to approve the assignment application, and if the Ministry of Finance refuses it shall provide a written explanation of its reasons.
3.2. If the Ministry of Finance approves the assignment, it shall issue to the assignor enterprise an amended licence (in the sample form in Appendix 3 to this Circular), consistent with the insurance products in which it continues to conduct business.
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4.1. An assignee enterprise shall be responsible to co-ordinate with the assignor in drafting the assignment plan, in valuing the assets relating to the funds and insurance reserves for the insurance contracts being assigned, and in reaching agreement on the date for the assignment plan to take effect.
4.2. As from the date on which the assignment plan officially takes effect, the assignee enterprise shall be liable to discharge all obligations in the insurance contracts which have been assigned, strictly in accordance with the terms and conditions which were entered into between the assignor and purchasers of insurance, including liability to resolve claims made which remain unresolved. The assignee enterprise shall have the right to receive all assets relating to the funds and insurance reserves for the assigned insurance contracts and to use them to discharge all obligations arising from the assigned insurance contracts.
IX. PREVENTION AND LIMITATION OF LOSS
1. Insurers shall deduct no more than two per cent of insurance premiums actually retained in a fiscal year in order to expend on measures to prevent and limit loss as stipulated in article 25.2 of Decree 42/2001/ND-CP.
2. Expenses for measures to prevent and limit loss shall be made in accordance with currently applicable regulations on financial management of enterprises and other relevant laws.
X. ORGANIZATION OF IMPLEMENTATION
1. This Circular shall be of full force and effect fifteen days after the date of its publication in the Official Gazette.
2. This Circular shall replace Circular 71-2001-TT-BTC of the Ministry of Finance dated 28 August 2001 implementing Decree 42/2001/ND-CP of the Government dated 1 August 2001 providing detailed regulations for implementation of a number of articles of the Law on Insurance Business.
3. Any problems or difficulties during implementation should be reported promptly to the Ministry of Finance for its consideration and resolution.
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FOR THE MINISTER OF FINANCE
DEPUTY MINISTER
Le Thi Bang Tam
1. Sample form: Application for Issuance of Licence for Establishment and Operation of Insurer or Insurance Broker.
2. Sample form: Licence for Establishment and Operation of Insurer or Insurance Broker.
3. Sample form: Amended Licence.
4. List of Maximum Rates of Insurance Commission Applicable to Non-Life Insurance Products.
5. List of Maximum Rates of Insurance Commission Applicable to Life Insurance Products.
6. List of Compulsory Reinsurance Products and Rates of Commission for Compulsory Reinsurance.
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8. Report and List of Insurance Agents.
9. Report on Activity of Training of Insurance Agents.
10. Sample form: Application for Issuance of Licence for Establishment of Representative Office of Foreign Insurer or Insurance Broker.
11. Sample form: Licence for Establishment of Representative Office of Foreign Insurer or Insurance Broker.
12. Sample form: Application for Registration of Insurance Product.
APPENDIX 4
LIST OF MAXIMUM RATES OF INSURANCE COMMISSION APPLICABLE TO NON-LIFE INSURANCE PRODUCTS
No.
Product
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1
Personal accident and health care insurance
12
2
Property insurance and damage insurance
5
3
Construction and installation insurance
5
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Insurance for goods in transit by road, sea, river, rail and air
6
5
Hull insurance and shipowner's civil liability insurance for seagoing and river-sea vessels
5
6
Hull insurance and shipowner's civil liability insurance for river vessels and fishing vessels
10
7
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4
8
Aviation insurance
0.5
9
Motor vehicle insurance
5
10
Voluntary fire and explosion insurance
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11
Credit and financial risks insurance
5
12
Business damage insurance
10
13
Agriculture insurance
10
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Compulsory insurance products:
(a) Car owner's civil liability insurance
5
(b) Motorcycle owner's civil liability insurance
12
(c) Air carrier's civil liability insurance with respect to passengers
3
(d) Professional indemnity insurance for legal consultancy activities
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(e) Professional indemnity insurance for insurance brokers
3
(f) Fire and explosion insurance
8
APPENDIX 5
LIST OF MAXIMUM RATES OF INSURANCE COMMISSION APPLICABLE TO LIFE INSURANCE PRODUCTS
I. FOR INDIVIDUAL LIFE INSURANCE PRODUCTS:
A. Where each insurance product is separate: Life insurance commission shall be applicable in accordance with the following table:
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Life insurance product
Maximum commission rate calculated on total premium
Method of paying premium periodically
Method of paying total premium in lump
First year of contract
Second year of contract
Following years of contract
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1. Death benefit insurance
40
20
15
15
2. Endowment insurance
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- Insured term up to 10 years
15
5
5
5
- Insured term over 10 years
20
5
5
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3. Combined insurance:
- Insured term up to 10 years
25
7
5
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- Insured term over 10 years
40
10
10
7
4. Whole of life insurance
30
20
15
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5. Periodical payments insurance
15
10
7
7
B. Where insurance products are combined: Life insurance commission shall be calculated on the basis of the total amounts of commission for the separate insurance products listed above.
II. FOR GROUP LIFE INSURANCE PRODUCTS: THE MAXIMUM RATE OF COMMISSION SHALL BE 50% OF THE EQUIVALENT RATE APPLICABLE TO THE INDIVIDUAL LIFE INSURANCE PRODUCT OF THE SAME TYPE.
APPENDIX 6
RATES OF COMMISSION FOR COMPULSORY REINSURANCE
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Compulsory reinsurance product
Rate of commission for compulsory reinsurance (%)
1. Property insurance and damage insurance:
- Group of insurance products of construction and installation, etc
26
- Group of petroleum insurance products
15
- Group of other insurance products servicing investment projects
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2. Insurance for goods in transit by road, sea, river, rail and air
20
3. Aviation insurance
90% of rate of reinsurance commission for service of same kind on international market
4. Fire and explosion insurance
27
5. Hull insurance and shipowner's civil liability insurance:
- Hull cargo insurance
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- Shipowner's civil liability insurance
15
With respect to fire and explosion insurance products and the group of insurance products for construction and installation, etc, the Vietnam National Reinsurance Company and insurers shall agree on rates of commission on net profits calculated for the fiscal year.
2. For contracts temporarily reinsured:
The commission rate for compulsory reinsurance shall be 90% of the rate of reinsurance commission for the service of the same kind on the international market.
APPENDIX 12
SAMPLE FORM: APPLICATION FOR REGISTRATION OF INSURANCE PRODUCT
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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To: The Ministry of Finance
Pursuant to the Law on Insurance Business and its implementing guidelines, (name of insurer) hereby applies for registration of an insurance product(name of insurance product) containing these principal items:
1. Name of insurance product (commercial name plus any product symbols).
2. Type of insurance (specify) as prescribed in paragraph of the licence for establishment and operation (or certificate of satisfaction of all standards and conditions for insurance business) Number issued to the insurer by the Ministry of Finance.
3. Main contents of the insurance product (summarise the main contents):
- Object insured;
- Scope of insurance; terms and conditions;
- Conditions on exclusion of liability;
- Duration of insurance, time when liability arises, time when liability terminates.
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OPINION OF MINISTRY OF FINANCE
GENERAL DIRECTOR (DIRECTOR)
Signature and seal
- 1 Circular No. 71/2001/TT-BTC of August 28, 2001, 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.
- 2 Circular No. 155/2007/TT-BTC of December 20, 2007 guiding the implementation of The Government’s Decree No. 45/2007/ND-CP dated March 27, 2007, detailing the implementation of a number of articles of the lawon insurance business
- 3 Circular No. 155/2007/TT-BTC of December 20, 2007 guiding the implementation of The Government’s Decree No. 45/2007/ND-CP dated March 27, 2007, detailing the implementation of a number of articles of the lawon insurance business
- 1 Decree No. 77/2003/ND-CP of July 01st, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry.
- 2 Decree no. 42/2001/ND-CP of August 01, 2001 detailing the implementation of a number of articles of the law on insurance business
- 3 Law No.24/2000/QH10 of December 09, 2000 on insurance business