Circular 67/2023/TT-BTC guiding Law on Insurance Business and Decree 46/2023/ND-CP

CIRCULAR

Guiding a number of articles of the Law on Insurance Business and the Government’s Decree No. 46/2023/ND-CP dated July 1, 2023, detailing the implementation of a number of articles of the Law on Insurance Business

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Pursuant to the Law on Insurance Business dated June 16, 2022;

Pursuant to of the Government’s Decree No. 46/2023/ND-CP dated July 1, 2023, detailing the implementation of a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 14/2023/ND-CP dated April 20, 2023, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of Director of the Insurance Supervisory Authority,

The Minister of Finance hereby promulgates the Circular guiding a number of articles of the Law on Insurance Business and the Government’s Decree No. 46/2023/ND-CP dated July 1, 2023, detailing the implementation of a number of articles of the Law on Insurance Business

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Circular stipulates Clause 3, Article 14; Clause 2, Article 17; Clause 4, Article 76; Clause 4, Article 82; Clause 6, Article 87; Clause 5, Article 89; Clause 4, Article 101; Clause 4, Article 105; Clause 3, Article 106; Clause 2, Article 117; Clause 2, Article 120; Point c, Clause 1 and Points dd, k of Clause 2, Article 128; Clause 4, Article 129; Point a, Clause 1 and Point c, Clause 2, Article 137; Clause 5, Article 138; and Clause 4, Article 145 of the Law on Insurance Business.

2. The Circular guides Clause 6, Article 7; Point c, Clause 2, Article 32; Article 44; Clause 7, Article 49 of the Government’s Decree No. 46/2023/ND-CP dated July 1, 2023, detailing the implementation of a number of articles of the Law on Insurance Business (hereinafter referred to as Decree No. 46/2023/ND-CP), including information templates for the insurance business database; templates of explanatory documents for the rate-making methodology and considerations; guidelines and illustrations for technical reserving methods, formulas, and considerations; the time of recognizing insurance revenue for each type of insurance.

Article 2. Subjects of application

1. Non-life insurers, life insurers, health insurers (hereinafter referred to as insurers), reinsurers, insurance agents, insurance brokers, organizations and individuals providing insurance auxiliary services, mutual organizations providing microinsurance.

2. Branches of foreign non-life insurers and branches of foreign reinsurers (hereinafter collectively referred to as Vietnam-based foreign branches).

3. Representative offices of foreign insurers, foreign reinsurers, foreign insurance brokerage enterprises, and foreign finance/insurance groups in Vietnam (below collectively referred to as Vietnam-based foreign representative offices).

4. Policyholders, insured persons and beneficiaries.

5. State regulatory authorities in charge of managing insurance business.

6. Organizations and individuals involved in insurance business.

Article 3. Provision and update of information

1. The information specified at Point c, Clause 1, Article 7 of Decree No. 46/2023/ND-CP is specified in Form 1-CSDL provided in Appendix I to this Circular

2. The information specified in Clause 2, Article 7 of Decree No. 46/2023/ND-CP is specified as follows:

a) For life insurance: Form No. 2-CSDL provided in Appendix I to the Circular;

b) For health insurance: Form No. 3-CSDL provided in Appendix I to this Circular;

c) For non-life insurance (other than compulsory insurance for civil liability of motor vehicle owners, compulsory fire and explosion insurance, compulsory insurance in construction investment activities, and agricultural insurance): Form No. 4-CSDL provided in Appendix I to this Circular;

- For compulsory insurance for civil liability of motor vehicle owners, compulsory fire and explosion insurance, compulsory insurance in construction investment activities: Form No. 1, Form No. 2, Form No. 3 provided in Appendix X to the Government’s Decree 67/2023/ND-CP dated September 06, 2023, on compulsory insurance for civil liability of motor vehicle owners, compulsory fire and explosion insurance, compulsory insurance in construction investment activities.

For agricultural insurance: Form No. 10 provided in the Appendix to the Government’s Decree No. 58/2018/ND-CP dated April 18, 2018, on agricultural insurance and its amendments, supplements, or replacements (if any).

d) For microinsurance (provided by mutual organizations providing microinsurance): Form No. 07 provided in Appendix to the Government’s Decree No. 21/2023/ND-CP dated May 05, 2023, on microinsurance.

Chapter II

ONLINE DISTRIBUTION OF INSURANCE SERVICES AND PRODUCTS

Article 4. Online distribution of insurance services and products

1. Insurers, branches of foreign non-life insurers, mutual organizations providing microinsurance, insurance brokers, and insurance agents may conduct end-to-end or partial distribution of insurance services or products on devices connected to the Internet, mobile networks or other open networks in order to provide insurance services or products online.

2. End-to-end online distribution of insurance products and services as specified in Clause 1 of this Article means the completely online performance of the processes including introducing, consulting, providing services or advising, introducing and selling insurance products, verifying requested information, appraising and confirming requests to enter into insurance contracts, arranging for conclusion of insurance policies, making payments, and issuing insurance policies or certificates.

3. Any insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance may conduct end-to-end online distribution of any or many of the following insurance products:

a) Microinsurance, health insurance, term life insurance products with the term of more than 01 year and other insurance products with the term of 01 year or less that do not require appraisal and direct risk assessment before entering into policies under the processes of the insurer/branch/mutual organization providing microinsurance, and are provided by the means of providing specified in Clause 1, Article 5 of this Circular.

b) Health insurance, term life insurance with the term of 1 year or less, motor insurance, insurance for trips or travel insurance provided by the means of providing specified in Article 5 of this Circular.

4. Partial online distribution of insurance services and products means that an insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker/insurance agent only applies any or many of the operations specified in Clause 2 of this Article performs on the internet environment by the means of providing specified in Article 5 of this Circular.

In cases where part of the online distribution of insurance services and products involves products not specified in Clause 3 of this Article, insurance advice shall be given in person or via recorded audio calls between the insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker/insurance agent and the policyholder.

Article 5. Means of providing insurance services and products online

Means of providing insurance services and products online include:

1. Web portals/websites with domain names registered in accordance with the applicable law regulations, e-commerce websites or application programs installable on Internet-connected devices that allow service users or policyholders to access the web portals/websites or e-commerce websites or application programs installable on the web portals/websites or e-commerce websites or e-commerce applications developed by insurers, foreign non-life insurer branches, mutual insurance organizations providing microinsurance for the purposes of online distribution of services and insurance products.

2. Web portals/websites with domain names registered in accordance with the applicable law regulations, e-commerce websites, online marketplace websites or application programs installable on Internet-connected devices that allow service users or policyholders to access the web portals/websites or e-commerce websites or online marketplace websites developed by the insurance brokers, or insurance agents or the purposes of online distribution of services and insurance products. Online marketplace websites include:

a) E-commerce platforms;

b) Other websites specified by the Ministry of Industry and Trade.

Article 6. Notification of providing insurance services and products online

1. Any insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker must send to the Ministry of Finance a notice on the online distribution of any insurance service or product within a period of 07 working days starting from the date such service/product is provide online. Such notice shall contain the information about the provider, the services and products to be provided, the means of providing them and other information related to the online distribution of such insurance service/product, made using the form provided in Appendix II to this Circular.

2. Within a period of 90 days from the effective date of this Circular, insurers/branches of foreign non-life insurers/mutual organizations providing microinsurance shall send to the Ministry of Finance notices containing the information as specified in Appendix II about the insurance services and products that they have been provided online before the effective date of this Circular.

Article 7. Requirements of services, technology, confidentiality and data retention

Any insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker/insurance agent that provides insurance services and products online must satisfy the requirements in terms of services, technology, confidentiality and data retention as specified in the law regulations on e-transactions, network information security, and cybersecurity as well as shall:

1. Formulate and issue its internal regulations stipulating the distribution of insurance services and products online, which shall mainly describe the processes of transaction; risk control, information security; and mention the rights and obligations of related parties; complaint/dispute settlement mechanisms; privacy policies; incident response plans and backup systems; data retention and punitive actions against non-compliance with the internal regulations.

2. Provide online any insurance service/product in a public, impartial, and transparent manner, which shall be as secure and efficient for service users/policyholders of such service/product as the same otherwise provided.

3. Upload its application program or any means otherwise used to provide insurance services or products online onto its website with a domain name registered for providing insurance services or products online in accordance with the applicable law regulations.

4. The website and any system used for online distribution of insurance services and products of the insurer or foreign non-life insurer’s branch shall be authenticated in accordance with the law regulations on electronic transactions.

5. Online distribution of insurance products as specified in Clause 2, Article 4 of this Circular must be indicated in the policy entered into by each policyholder and the insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance, which specify the type of online transactions, the potential risks of purchasing/selling insurance products online, the indemnification by each party upon occurrence of risk, and other information related to the online distribution of insurance products. This regulation is applicable to policies signed from January 1, 2024.

6. Retain data related to the online distribution of insurance services and products as specified in the applicable law regulations on cybersecurity.

7. Classify and take measures to secure the respective information system as specified in the law regulations on cybersecurity and security of information systems by classification and electronic transactions in financial activities.

Article 8. Responsibilities of insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker

1. Send notices to the Ministry of Finance as specified in Article 6 of this Circular.

2. Make and send the reports using Form No. 4-MGBH (Annual report on online distribution of insurance services); Form No. 20-NT (Quarterly/annual report on the number of policies underwritten and canceled online); Form No. 3-PNT (Annual/quarterly report on revenue and claims by distribution channels) as specified in this Circular

3. Develop and publicize the following information on its website:

a) List of insurance services, products and online distribution methods;

b) A description of the (end-to-end/partial) online distribution of insurance services and products through the website/e-commerce website; the (partial) online distribution of insurance products and services through the e-commerce platform; the (end-to-end/partial) online distribution of insurance products and services on the application installable on Internet-connected devices; the privacy and dispute resolution policies.

4. Ensure technical infrastructure and human resources therefor.

5. Ensure compliance with regulations on insurance business, regulations on e-transactions, and related law regulations.

6. An insurer/foreign non-life insurer’s branch/mutual organization providing microinsurance/insurance broker shall manage the online distribution of insurance services and products by the insurance agents with whom it has signed the insurance agency agreements.

7. Adequately and promptly provide information, data, and others documents related to the provision of insurance services and products online upon request of competent authorities.

8. Sign a contract with the technical infrastructure lessor and coordinate with it in fulfilling the responsibilities specified in this Circular and law regulations on e-transactions in financial activities and other related law regulations, in case of outsourcing IT infrastructure services for online distribution of insurance services and products.

Chapter III

LIFE INSURANCE POLICIES, HEALTH INSURANCE POLICIES

Article 9. Policyholders, insured persons, beneficiaries of life insurance policies, health insurance policies

1. The policyholder of a life insurance policy or a health insurance policy must satisfy the following requirements:

a) Be an organization legally established and operating in Vietnam, or a Vietnamese individual from 18 years of age living in Vietnam and having full civil act capacity at the time of entering into the policy;

b) Satisfy the conditions to purchase insurance according to insurance rules, terms and conditions.

2. The insured person of a life insurance policy or a health insurance policy is the person whose life, health, or age is insured under such insurance policy.

3. The policyholder must have insurable benefits with the insured person as specified in Article 34 of the Law on Insurance Business.

4. The beneficiary of a life insurance policy or health insurance policy is the person designated by the policyholder to receive the insurance payout as agreed in the individual insurance policy or the person designated by the insured persons under a group policy to receive the insurance payout as agreed in the group insurance policy. The designated change of beneficiaries in life insurance policies, health insurance policies must comply with provisions in Article 41 and Article 42 of the Law on Insurance Business.

Article 10. Sums insured

1. The sum insured or the method of determining the sum insured shall be agreed upon by the policyholder and the insurer in the insurance policy.

2. The sum insured of any investment-linked insurance policy must satisfy the requirements specified in Clause 2, Article 102 of Decree No. 46/2023/ND-CP

Article 11. Insurance benefits and insurance coverage

1. Insurance benefits, insurance coverage and exclusions must be clearly stated in the insurance product terms and conditions. In cases where the insurer/branch of the foreign non-life insurer conditionally provide insurance (in cases where the insured person's conditions are unsatisfactory to its standards for purchasing insurance), such fact should be explicitly included in the insurance policy.

2. Guaranteed and non-guaranteed benefits (if any) must be explicitly indicated in the insurance policy.

3. Insurance coverage, methods for determining investment components, and minimum guaranteed interest rates (for universal life products, pension products) must be clearly stated in investment-linked insurance and pension policies.

Article 12. Insurance terms and conditions

Insurance terms and conditions constitute an integral part of an insurance policy. Insurance terms and conditions must satisfy the requirements specified in Clause 2, Article 87 of the Law on Insurance Business and those mentioned below:

1. In cases where insurance terms and conditions include provisions on permanent and total disability benefit, it must be ensured that:

a) Total and permanent disability benefit shall be considered and paid out in any of the following cases:

- The insured person suffers complete loss or complete, non-rehabilitable paralysis of two arms; or two legs; or either arm and leg; or two eyes; or either hand and eye; or either leg or eye. In this case, complete loss or complete, non-rehabilitable paralysis of the arm counts from the wrist upward; complete loss or complete, non-rehabilitable paralysis of the leg counts from the ankle upward; complete loss and non-rehabilitation of the eye is understood as complete loss or total blindness.

- The insured person suffers a bodily injury of 81% or more as confirmed by a provincial/municipal health agency/medical review council or a lawful medical service provider acceptable by the insurer/the foreign non-life insurer's branch.

b) The insured person's amputation (of an arm, leg or eye) may be certified immediately after the insured event occurs or after the treatment is completed.

Complete paralysis and non-rehabilitation of a body part or total blindness or bodily injury of 81% or more shall be certified no earlier than 180 days after the insured event occurs or the condition is diagnosed.

c) The insurer/the foreign non-life insurer’s branch may provide for cases other than those specified at Points a and b of this Clause in order to increase the total and permanent disability benefits for the insured person.

2. In cases where the insurance terms and conditions include waiting period provisions (the period of time during which an insured event occurred but some health insurance benefits for such event will not be paid out by the insurer/foreign non-life insurer’s branch), the following requirements must be satisfied:

a) The waiting period is calculated from the first date of the insurance period or the most recent date of policy reinstatement;

b) No waiting period applies in the event of accidents;

c) In case of illness, the maximum waiting period must not exceed 90 days. In cases where insurers agree to insure pre-existing conditions, the maximum waiting period is 1 year;

d) For maternity benefits, the maximum waiting period is 270 days;

dd) In case of providing products with waiting periods other than the foregoing at Points c and d of this Clause, the insurer/foreign non-life insurer's branch must clearly explain this in its explanatory document for the insurance rate-making methodology and considerations.

3. In cases where the insurance terms and conditions include provisions on pre-existing conditions, the following requirements must be satisfied:

a) Pre-existing condition refers to the insured person's illness or injury that was diagnosed or treated by a doctor prior to the effective date or the (most recent) reinstatement date of the insurance policy. In cases where the insurer/the foreign non-life insurer's branch includes more specific signs and symptoms, only those that occur within 36 months before the effective date or the (most recent) reinstatement date of the insurance policy can be taken into consideration provided that such signs or symptoms, if known to the insurer/the foreign non-life insurer's branch, can make the insurer/the foreign non-life insurer's branch choose not to underwrite the insurance or decline the policy reinstatement, or conditionally underwrite the insurance or reinstate the insurance policy;

b) The identification of pre-existing conditions must be based on medical records stored at legally-established hospitals/medical facilities, medical materials published by the Ministry of Health or competent authorities, or information self-declared by the policyholder/insured person on the insurance application documentation or additional information declarations.

4. In cases where the life insurance policy terms and conditions include provisions on policy loan from surrender value, the policy loan from surrender value must satisfy the following requirements:

a) The interest rate charged on the policy loan from surrender value must not exceed the accumulated interest rate announced by the insurance company to customers plus 2%. In cases where the accumulated interest rate is not announced, the policy loan interest rate must not exceed the investment interest of the non-participating policyholders’ funds in the immediately preceding fiscal year plus 2%.

 b) The provisions, if included in the insurance terms and conditions, allowing the policyholder to stop paying premiums and use the surrender value to maintain the policy in force must be consistent with Clause 4 Article 37 of the Law on Insurance Business.

c) Policy loan from surrender value is not applicable to investment-linked and pension products.

5. The terms and conditions of investment-linked and pension insurance policies must explicitly indicate the following:

a) Investment policy; investment objectives; asset allocation of the universal life fund (if it is a universal life insurance product) or the voluntary pension fund (if it is a pension product); investment limits in each investment asset portfolio of each unit-linked fund (if it is a unit-linked insurance product);

b) Unit purchase and sale transactions of the unit-linked fund and unit valuation period of the unit-linked fund (if it is a unit-linked insurance product);

c) Provisions related to the conversion between unit-linked funds (if it is a unit-linked insurance product);

d) Cases where insurers may apply measures to protect and increase the benefits of the policyholder, including: closing the unit-linked fund to convert assets into another new unit-linked fund with the same investment objectives; changing the name of the unit-linked fund; splitting or merging existing unit-linked fund units; stopping valuing unit-linked fund units and transactions related to the insurance policy in the case where the Stock Exchange in which the unit-linked fund is investing is temporarily suspended from trading; other measures required by the competent authorities and the law.

Insurers shall notify customers before applying such measures.

6. In cases where the terms and conditions of investment-linked insurance and pension policies include reinstatement provisions, the following requirements must be satisfied:

a) The terms and conditions must explicitly define the policy reinstatement conditions, the duration, documents, timing for reinstating the insurance policy;

b) Life insurance policies shall be reinstated in compliance with Clause 3, Article 37 of the Law on Insurance Business.

7. Insurers shall be responsible for reviewing and revising the terms and conditions of their insurance products if specified at Point a, Clause 6, Article 32 of Decree No. 46/2023/ND-CP to satisfy the requirements specified in this Article from July 1, 2025.

Article 13. Rights and obligations of policyholders of life insurance policies, health insurance policies

1. Provisions on rights and obligations of the policyholder must be consistent with Article 21 of the Law on Insurance Business.

2. For any investment-linked insurance policy, in addition to the rights and obligations specified in Clause 1 of this Article, the policyholder also has the following rights and obligations:

a) The policyholder has the right to flexibly pay premiums throughout the term of the insurance policy in addition to the compulsory premium payment period (if any); withdraw part or all of the cash value of the policy; convert fund units of the unit-linked fund; change the percentages of investment in the unit-linked funds; change the sum insured; and change the premiums.

b) The policyholder is obligated to sign off the documents provided by the insurer as specified in Articles 29 and 30 of this Circular.

3. For any pension insurance policy, in addition to the rights and obligations specified in Clause 1 of this Article, the policyholder also has the following rights:

a) The right to choose and change the sum insured during the in-force period of the insurance policy.

b) Temporarily suspend the pension pot in cases where the policyholder is unable to pay insurance premiums as specified in Article 121 of Decree No. 46/2023/ND-CP.

Article 14. Rights and obligations of insurers and branches of foreign non-life insurers

1. Provisions on rights and obligations of the insurer/the foreign non-life insurer’s branch must be consistent with Article 20 of the Law on Insurance Business.

2. For investment-linked insurance and pension policies, in addition to the rights and obligations specified in Clause 1 of this Article, life insurers also have the following rights and obligations:

a) The right to collect fees charged to policyholders as agreed in the insurance policies;

b) The obligation to notify the policyholder about the insurance policy status when the cash value is insufficient to pay for cost of insurance or policy administration fees for the succeeding month which may lead to policy lapse; to provide advice and information to new policyholders about the risks of unit-linked insurance policies in case of policy transfer.

c) The obligation to give written notices to the policyholders of the insurance policy status and performance of the investment-linked fund (if it is an investment-linked insurance product) or the voluntary pension fund (if it is a pension product) within the period of 90 days from the end of the fiscal year or policy year.

Article 15. Insurance period

1. The insurance period is calculated from the time the insurer/the foreign non-life insurer’s branch starts underwriting the insurance until the insurance is over. The insurance period must be specified in the insurance policy.

2. Pension insurance policies must explicitly indicate the accrued premium payment term, and the payout phase of pensions.

Article 16. Effective date of the insurance policy

1. The insurer/the foreign non-life insurer’s branch and the policyholder shall agree on the effective date of the insurance policy in accordance with Clause 2 of this Article.

2. The effective date of the insurance policy may be one of the following dates:

a) The date on which the policyholder fully files the insurance application form and pays the (provisional) premium for the insurance policy, if the policyholder and the insured person are alive by the time the insurance application is approved by the life insurer;

b) The date on which the life insurer issues the certificate of insurance and the policyholder has fully paid the insurance premium, if the policyholder and the insured person are alive by the time the insurer issues such certificate.

c) The date on which the insurance policy is concluded between the non-life insurer/the foreign non-life insurer’s branch and the policyholder.

Article 17. Premium rate and mode of premium payment

1. The insurance policy must explicitly indicate the insurance premium rate, premium payment term, premium payment frequency, premium payment method, premium payment due date, grace period and stoppage of premium payment (if any), compulsory premium payment term (if any).

2. In addition to satisfying the requirements specified in Clause 1 of this Article, investment-linked insurance policies and pension policies must also explicitly indicate how insurance premiums and fees/charges levied on the policyholder are allocated. The charges/fees levied on the policyholder must be consistent with Article 99 of Decree 46/2023/ND-CP. In case of adjusting the charges/fees levied on the policyholder, the insurer shall notify the policyholder within 03 months before the new charges/fees are applicable.

Article 18. Insurance payouts

1. The time limit for submitting claims documents and time limit for claims payment must comply with Article 30 and Article 31 of the Law on Insurance Business. In cases where the insurer/the foreign non-life insurer’s branch refuses to pay insurance benefits, it must give a clear reason for such refusal in writing to the person who claims the insurance benefits.

2. Any insurance policy must explicitly indicate documents that the policyholder/the foreign non-life insurer should provide upon submission of insurance benefit claims. Insurers may not request evidence of the insured event that cannot be accessed to or obtained by the policyholder in accordance with relevant law regulations.

3. In cases where the insurer/the foreign non-life insurer’s branch needs to obtain documents other than those specified in Clause 2 of this Article for the purpose of settlement of insurance benefit claims, the costs incurred shall be borne by the insurer/the foreign non-life insurer’s branch.

Article 19. Dispute resolution methods

Provisions on dispute resolution must be consistent with Article 32 of the Law on Insurance Business.

Chapter IV

ISURERS, REINSURERS, VIETNAM-BASED FOREIGN BRANCHES, MUTUAL ORGANIZATIONS PROVIDING MICROINSURANCE

Section 1

APPOINTED ACTUARY

Article 20. Tasks of an Appointed Actuary of an insurer/reinsurer/Vietnam-based foreign branch

1. In order to ensure its financial security, any insurer/reinsurer/Vietnam-based foreign branch must appoint an actuary who satisfies the conditions and standards specified in Articles 29 and 30 of Decree No. 46 /2023/ND-CP to:

a) Calculate insurance rates and engage in the formulation of the terms and conditions of insurance/reinsurance products; confirm that premiums and charges/fees levied on the policyholders (for investment-linked insurance and pension products) are determined based on statistical data, guarantee the economic and technical feasibility of the products, comply with the law and ensure the solvency of the insurer/reinsurer/Vietnam-based foreign branch; annually evaluate the difference between the actuarial assumption and the actuality of each product;

b) Calculate operational provisions as required by the law;

c) On a monthly (as for any life/health insurer) or quarterly/yearly (as for non-life insurer/reinsurer/Vietnam-based foreign branch) basis, evaluate the solvency of such insurer/reinsurer/Vietnam-based foreign branch and confirm on the solvency report sent to the Ministry of Finance in accordance with the law regulations;

d) Promptly send a written report to the General Director (Director) and the Board of Directors (Members' Council) on any abnormality that may adversely affect the financial situation of the insurer/branch, including remedial proposals. In the case where the solvency of the insurer/reinsurer/Vietnam-based foreign branch may be materially affected, within 05 working days from the date on which he/she detects the case, the Appointed Actuary must send a written report directly to the Ministry of Finance.

dd) Evaluate reinsurance programs before submitting them to the General Director (Director) or the Board of Directors (Members' Council) for approval;

e) Confirm on the cession of significant insured risks in reinsurance contracts.

g) Promptly report the case to the Board of Directors (Members’ Council) of the insurer/reinsurer or the Director of the Vietnam-based foreign branch in the case where he/she detects risks that may materially affect the financial security;

h) Coordinate with the risk management department to identify risk assessment and measurement models, and prepare reports on tolerance tests and reports on the risk management of the insurer/reinsurer/Vietnam-based foreign branch;

i) Other responsibilities for ensuring financial security of the insurer/branch.

2. In addition to the responsibilities specified in Clause 1 of this Article, the Appointed Actuaries of life insurance companies must carry out the following tasks:

a) At least on an annual basis, re-assessing the illustrated interest rates used in sales illustrations or insurance product brochures and making adjustments thereof, if necessary;

b) Participating in segregating the shareholders equity from the premiums, calculating annual surplus distribution of policyholders' funds on a fair,’ reasonable basis and in compliance with the law. At the end of the fiscal year, the Appointed Actuary shall prepare a written report on insurance business outcomes, which includes a separate section about the segregation of the shareholders’ equity from the premiums, about the surplus distribution, and proposes the profits to be distributed to each policyholder, and send it to the authorized person of the insurer for decision.

c) On an annual basis, assessing the compliance with the law regulations related to the investment-linked insurance and pension products provided by the insurer.

d) On a quarterly and annual basis, sending a written report to the Board of Directors (Members' Council), General Director (Director) on the current financial situation and financial forecast of the insurer/branch; current investments of the insurer/branch, including risks arising therefrom, and proposals on the investment assets and the investment period of each type of assets so that it is commensurate with the liabilities committed in each policy.

3. In addition to the responsibilities specified in Clause 1 of this Article, the Appointed Actuaries of non-life insurance companies, health insurance companies, reinsurance companies, foreign branches in Vietnam must carry out the following tasks:

a) Engaging in segregating the shareholders' equity from the insurance premiums in accordance with the law;

b) Assessing the indemnities and insurance payouts by the insurer/reinsurer/Vietnam-based foreign branch.

e) On a quarterly and annual basis, sending a written report to the Board of Directors (Members' Council), General Director (Director) on the current financial situation and financial forecast of the insurer/branch; current investments of the insurer/branch, including risks arising therefrom, and proposals on the investment assets and the investment period of each type of assets so that it is commensurate with the liabilities committed in each policy; the current and projected losses, operational provisions, and operational efficiency.

4. On an annual basis, within a period of no more than 90 days after the end of the fiscal year, the Appointed Actuary shall send reports to the Ministry of Finance on issues falling within his/her ambit, using Form No. 13-NT provided in Appendix VIII (as for any life insurer), Form 10-SK provided in Appendix IX (as for any health insurer), and Form No. 14-PNT provided in Appendix VI (as for any non-life insurer/reinsurer/Vietnam-based foreign branch) to this Circular.

Section 2

PROFESSIONAL OPERATIONS

Article 21. Rate-making methodology for life/health insurance products (including microinsurance products) of an insurer/a foreign non-life insurer’s branch

1. Any insurer/foreign non-life insurer’s branch may, at its discretion, employ any rate-making methodology for its insurance products provided that the following requirements are satisfied:

a) The calculation of insurance premiums and fees/charges levies on policyholders of investment-linked insurance and pension products must be based on statistical data, comply with the law regulations, ensure the financial security and solvency of the insurer/foreign non-life insurer’s branch, and be commensurate with the insurance conditions and coverage; thereby ensuring the delivery of the benefits promised to the policyholders.

b) Insurance premiums and fees/charges levies on policyholders shall be reasonably and fairly calculated for policyholders;

c) Insurance premium must be determined based on the age, gender, health, and other characteristics of each insured person according to the characteristics of each product. If an insurance rate is commonly applicable to all policyholders in a customer group or to group policies, the insurer/foreign non-life insurer’s branch must explicitly indicate the rules and methodology for calculating such common;

d) In the case where the insurance rate is reduced based on the size of the group or the sum insured, or where changes in the rate-making considerations result in the reduction of the covered risks: the rate-making methodology and considerations must explicitly indicate the rules and considerations for the increase or decrease of insurance premiums. The reduced insurance rate must not be lower than the pure premium of such insurance product. In case of premium reduction in insurance premiums due to direct distribution where the insurer does not pay insurance commissions to any insurance agent or insurance broker, the maximum reduction must not exceed the commission rate of the insurance products specified in Article 51 and Clause 3, Article 55 of this Circular;

dd) For any group health insurance policy with the annually renewable term of 01 year, in case of adjusting the premium based on the actual claims ratio of the previous year, the adjustment shall not be 50% greater than the premium of the previous year.

2. Within 6 months from the date of signing of this Decree, the insurer/foreign non-life insurer’s branch shall build internal processes for product development and rate-making, which expressly indicates the criteria for launching each product line, the risk assessment process and risk mitigation strategies for each product line, and the product discontinuation and product re-pricing process. The internal processes for product development and rate-making must be approved by the Board of Directors (Members' Council) or the General Director (Director). The compliance with the internal processes for product development and rate-making must be reviewed annually by the internal audit.

3. The explanatory document for insurance rate-making methodologies and considerations shall be made using the form provide in Appendix III to this Circular (as for any life/health insurer) and Appendix IV to this Circular (as for any non-life insurer/reinsurer/foreign non-life insurer’s branch).

Article 22. Rate-making considerations for life/health insurance products (including microinsurance products) of an insurer/foreign non-life insurer’s branch

Rate-making considerations for life/health insurance products (including microinsurance products) include:

1. Probability factors:

a) The insurer/foreign non-life insurer’s branch may use the death probability sourced from any of the following:

- 1980 CSO Mortality Table specified in Appendix V to this Circular; other probability factors based on this 1980 CSO Mortality Tables;

- Mortality tables developed on the statistical data collected by the insurer/foreign non-life insurer’s branch in at least 10 years of bona fide product distribution.

- Mortality tables provided by the holding company of the insurer/foreign non-life insurer’s branch or by reinsurers and organizations accepting inward reinsurance;

If the death probability used by the insurer/foreign non-life insurer’s branch is 75% higher than that of the 1980 CSO Mortality Table, such insurer/foreign non-life insurer’s branch must explain the reasonableness thereof and the characteristics of the customer category to which such higher rate is expected to be applicable.

b) The insurer/foreign non-life insurer’s branch may use probability factors (such as hospitalization, disability, accident, medical expense, fatality, etc.) other than the death probability that are sourced from any of the following:

- Probability factors published by competent authorities and organizations;

- Probability factors developed on the statistical data collected by the insurer/foreign non-life insurer’s branch in at least 05 consecutive years of bona fide product distribution;

- Probability factors provided by the holding company of the insurer/foreign non-life insurer’s branch or by any reinsurer/organization accepting inward reinsurance which must satisfy the requirements of rating as specified in Clause 2, Article 33 of Decree 46/2023/ND-CP in the fiscal year nearest to the time the reinsurance contract is concluded, and have experience in reinsurance of this type of risk in Vietnam or Asia.

In case of adjusting the probability factors, the insurer/foreign non-life insurer’s branch must give reasons therefor. Probability factors provided by any reinsurer/organization accepting inward reinsurance must be used in line with the insurance benefits under the terms and conditions of the insurance product.

2. Assumptions about expenses and profits of the insurer/foreign non-life insurer's branch:

a) Assumptions about expenses for providing the insurance product (fixed expenses and variable expenses), which shall be determined based on the statistical data and business plans of the insurer/foreign non-life insurer’s branch;

b) For insurance policies with the term of 01 year or less (including insurance policies with yearly renewable term): the insurer/foreign non-life insurer’s branch must ensure that assumptions about expenses and profits included in the premium shall not exceed 60% of the total gross premium.

c) For health insurance products with the term of more than 01 year, the insurer must ensure that the present value of the assumptions about expenses and profits used to calculate the premium shall not exceed 55% of the total premium.

3. Charges/fees levied on policyholders of investment-linked insurance and pension products:

a) Premium load of investment-linked insurance products shall not exceed the following percentages:

Premium load of regular premium investment-linked insurance products:

Premium load of single premium investment-linked insurance products: 10% of the on-time premium.

Premium load of top-up premiums: 1.5% of the top-up premium in each policy year within the first 10 policy years.

b) Premium load of pension products shall not exceed 5% of the total premium collected in the fiscal year. Premium load of top-up premiums shall not exceed 1.5% of the top-up premium in each policy year within the first 10 policy years;

c) Cost of insurance for death and total and permanent disability benefits of investment-linked insurance and pension products shall not exceed 80% of the probability of dying in the 1980 CSO Mortality Table provided in Appendix V to this Circular multiplied by the sum assured. In cases where an insurer applies a mortality higher than 80% of the CSO 1980 Mortality Table, it must explain the reasonableness thereof and characteristics of the customer category to which such higher rate shall be applicable;

d) Fund management charge of universal life insurance funds and voluntary pension funds shall not exceed 2%/year. For unit-linked funds, the maximum fund management charge shall be based on the investment policy of each unit-linked fund and shall not exceed 2.5%/year for funds wholly of which 70% or more is invested in stocks, or 1.5%/year for funds wholly of which 70% or more is invested in stocks invested in bonds, or 1%/year for funds wholly of which 70% or more is invested in stocks invested in deposits and other fixed income assets. For unit-linked funds otherwise invested, the maximum fund management charge shall be calculated as the weighted average between the investment assets of the fund and the maximum amount of the above-mentioned funds.

4. In the case where the insurer/foreign non-life insurer’s branch modifies or adds the rate-making considerations for any life/health insurance product, which have been registered with the Ministry of Finance in accordance with this Article, it must prove the appropriateness of such modification/addition based on its statistical data during the distribution of such product, which shall be confirmed by the Appointed Actuary.

5. In case of modifying/adding the rate-making considerations for any life/health product that have been approved by the Ministry of Finance before the effective date of this Circular, the modification/addition requested by such insurer must comply with this Circular.

Article 23. Rate-making methodology and considerations for microinsurance provided by mutual organizations

1. Any mutual organization providing microinsurance may, at its discretion, employ any methodology to calculate premiums for its members provided that the following requirements are satisfied:

a) The calculation of insurance premiums must be based on statistical data, comply with the law regulations, ensure the financial security of the mutual organizations providing microinsurance, and be commensurate with the insurance conditions and benefits provided for members;

b) Insurance premiums shall be reasonably and fairly calculated for members;

c) For life and health insurance benefits, insurance premium must be determined based on the age, gender, health, and other characteristics of each member according to the characteristics of each product. If an insurance rate is commonly applicable to all members, the mutual organization providing microinsurance must explicitly indicate the rules and methodology for calculating such common rate;

d) The mutual organization providing microinsurance must register with the Ministry of Finance the rules of increasing/decreasing premiums for members based on results of microinsurance and in accordance with the organization's charter.

2. The pure premium of a microinsurance product shall be determined based on the probability factors sourced from any of the following:

a) 1980 CSO Mortality Table provided in Appendix V to this Circular or other death probabilities in line with the characteristics of the product;

b) The statistical data collected by the mutual organization providing microinsurance in at least 05 consecutive years of bona fide product distribution or during the actual existence of the mutual organization providing microinsurance if it exists in less than 05 years.

c) Data and statistics published by competent authorities and organizations;

d) Obtained with reference to other sources, including: probability factors of markets similar to Vietnam’s insurance market; probability factors provided by reinsurers/organizations accepting inward reinsurance; probability factors adjusted from those provided by reinsurers/organizations accepting inward reinsurance to suit the Vietnamese market. In this case, the mutual organizations providing microinsurance shall prove the appropriateness and reasonableness of such probability factors.

3. The mutual organization providing microinsurance shall, based on statistical data on the expenses for providing microinsurance and the plan to launch the product, determine the expenses for the product included in the gross premium. In the case where such statistical data is not available, the mutual organization providing microinsurance may, at its discretion, include the operating expenses which shall not be more than 60% of the gross premium.

4. In the case where the mutual organization providing microinsurance modifies/adds the rate-making considerations for any microinsurance product, which have been registered with the Ministry of Finance, it must prove the appropriateness of such modification/addition based on its statistical data during the distribution of such product, which shall be confirmed by the Appointed Actuary.

Article 24. Rate-making methodology and considerations for microinsurance products covering asset-related risks provided by insurers/branches of foreign non-life insurers

1. Any non-life insurer/foreign non-life insurer’s branch may, at its discretion, employ an appropriate rate-making methodology for microinsurance products covering asset-related risks provided that at least the following requirements are satisfied:

a) Insurance premiums shall be calculated in compliance with Point d, Clause 2, Article 87; Clause 3 Article 144 of the Law on Insurance Business and Clause 3, Article 3 of the Government’s Decree No. 21/2023/ND-CP dated May 5, 2023, on microinsurance, and shall align with the affordability and basic needs for coverage of the policyholders;

b) The premium includes pure premium, production expenses, and expected profits. The pure premium, the production expenses, and the expected profits shall be calculated in accordance with Clause 2 and Clause 3 of this Article;

c) The rate-making methodologies and considerations shall be registered for the respective benefits to meet the policyholders’ basic needs for coverage over asset-related risks and must be specifically registered for cases and considerations for premium increase/reduction. The increase in premium must be based on factors that increase the covered risks. If the insurance premium is reduced, in any case, the reduced premium shall not be lower than the pure premium and shall be based on any or many of the factors that may reduce, spread or share the risks or reduce the production expenses. In the case where the premium is reduced due to direct distribution, the maximum reduction shall not exceed the agent commission rate as specified in Article 51 of this Circular;

2. The pure premium is portion of the insurance premium needed to cover the obligations committed to the policyholder, which is commensurate with the insurance conditions and coverage. Any non-life insurer/foreign non-life insurer’s branch shall calculate the pure premium for 01-year insurance period of microinsurance products covering asset-related risks provided that the following requirements are satisfied:

a) The pure premium shall be determined based on the statistical data collected by the non-life insurer/foreign non-life insurer’s branch with the scalability and continuity in a time series of at least 3 consecutive years.

b) In cases where the statistical data does not ensure the scalability and continuity as specified at Point a of this Clause, the non-life insurer/foreign non-life insurer’s branch may:

- Use the pure premium announced by the competent authority/organization;

- Determine the pure premium based on the official and public statistical data published by domestic competent organizations;

- Use the pure premium provided by the holding company, or any reinsurer/foreign insurance organization accepting outward reinsurance which must be rated at least “BBB” by the Standards & Poor’s or Fitch Ratings, “B++” by A.M. Best, “Baal” by Moody’s or otherwise equally rated by another accredited rating agency in the fiscal year nearest to the time the application dossier for registration of its rate-making methodology and considerations is submitted, and have experience in reinsurance of this type of risk in Vietnam or Asia. In case of adjusting (increasing or decreasing) the pure premium provided by the foreign reinsurer, the insurer/foreign non-life insurer’s branch must give reasons therefor. Pure premium provided by any reinsurer/foreign insurance organization accepting inward reinsurance must be used in line with the insurance benefits that the insurer/foreign non-life insurer’s branch expects to provide under the terms and conditions of the insurance product.

3. The short-term (less than 01 year) or long-term (over 01 year and no more than 05 years) pure premium shall be determined based on the pure premium for the 01-year insurance period and there must be explanations of the risk allocation assumptions for the respective insurance period.

4. Non-life insurers/Vietnam-based branches of foreign non-life insurers must explicitly explain the considerations and methodology for developing assumptions on costs and profits included in insurance premiums.

5. Explanatory documents for the rate-making methodology and considerations shall be made using the form provided in Appendix IV to this Article.

Article 25. Rate-making methodology and considerations for motor insurance

1. Any non-life insurer/foreign non-life insurer’s branch may, at its discretion, employ an appropriate rate-making methodology for motor insurance provided that at least the following requirements are satisfied:

a) Insurance premiums shall be calculated in compliance with Point d, Clause 2, Article 87 of Law on Insurance Business;

b) The premium includes pure premium, production expenses, and expected profits. The pure premium, the production expenses, and the expected profits shall be calculated in accordance with Clauses 2, 3 and 4 of this Article;

c) The following risk-related factors shall be taken into consideration to calculate the insurance premium, including: Type of motor vehicle in accordance with the law regulations on road traffic; Commerciality (commercial or non-commercial vehicles); Use of the motor vehicle (passenger cars, freight vehicles, special use vehicles); Year of manufacture of the motor vehicle. In case of applying additional risk-related factors other than the foregoing, the non-life insurer/foreign non-life insurer’s branch must obtain the data as specified at Point a, Clause 2 of this Article;

d) Specific cases and considerations for premium increase/reduction shall be registered.

The increase in premium must be based on factors that increase the covered risks.

If the insurance premium is reduced, in any case, the reduced premium shall not be lower than the pure premium and shall be based on any or many of the factors that may reduce, spread or share the risks or reduce the operating expenses, including the quantity of insured vehicles, the excess/deductible selected, the claims history, the product distribution channel, and other factors (if any). In the case where the premium is reduced due to direct distribution, the maximum reduction shall not exceed the commission as specified in Article 51 of this Circular;

dd) The insurance premiums for riders must be commensurate with the insurance conditions and liabilities. In the case where the riders expand the insurance coverage, the insurance premium must be increased. In the case where the riders narrow the insurance coverage, the insurance premium must be reduced but, in all cases, not lower than the pure premium.

2. The pure premium is portion of the insurance premium needed to cover the obligations committed to the policyholder, which is commensurate with the insurance conditions and coverage. Any non-life insurer/foreign non-life insurer’s branch shall calculate the pure premium for 01-year insurance period of motor insurance products provided that the following requirements are satisfied:

a) The pure premium shall be determined based on the statistical data collected by the non-life insurer/foreign non-life insurer’s branch with the scalability and continuity in a time series of at least 5 consecutive years.

In cases where the statistical data does not ensure the scalability and continuity, the non-life insurer/foreign non-life insurer’s branch may:

- Use the pure premium announced by the competent authority/organization;

- Determine the pure premium based on the official and public statistical data published by domestic competent organizations;

- Use the pure premium provided by the holding company, or any reinsurer/foreign insurance organization accepting outward reinsurance which must be rated at least “BBB” by the Standards & Poor’s or Fitch Ratings, “B++” by A.M. Best, “Baal” by Moody’s or otherwise equally rated by another accredited rating agency in the fiscal year nearest to the time the application dossier for registration of its rate-making methodology and considerations is submitted, and have experience in reinsurance of this type of risk in Vietnam or Asia. In case of adjusting (increasing or decreasing) the pure premium provided by the foreign reinsurer, the insurer/foreign non-life insurer’s branch must give reasons therefor. Pure premium provided by any reinsurer/foreign insurance organization accepting inward reinsurance must be used in line with the insurance benefits that the insurer/foreign non-life insurer’s branch expects to provide under the terms and conditions of the insurance product.

c) The pure premium shall be specifically determined for each peril or for some of the following perils: vehicular crash and collision (including collision with other objects); overturn, rollover, submersion, fall; falling objects; fire and explosion; natural disasters; theft; and other perils (if any).

3. The short-term (less than 01 year) or long-term (over 01 year) pure premium shall be determined based on the pure premium for the 01-year insurance period and there must be explanations of the risk allocation assumptions for the respective insurance period.

4. Non-life insurance companies, foreign non-life insurance companies' Vietnam branches must ensure that assumptions on costs and profits included in insurance premiums do not exceed 50% of the insurance premium.

5. Explanatory documents for the rate-making methodology and considerations shall be made using the form provided in Appendix IV to this Article.

Article 26. Payment of premiums to non-life insurers and branches of foreign non-life insurers:

1. The policyholder pays the insurance premium when entering into an insurance policy with a non-life insurer or branch of a foreign non-life insurer.

2. In the case where the non-life insurer/foreign non-life insurer’s branch has agreed with the policyholder on the premium due date (including the grace period), the following requirements shall be satisfied:

a) In case of single premium: The premium due date shall not be later than 30 days from the first day of the insurance period. If the insurance period is less than 30 days, the premium due date shall not be later than the insurance period expiration date.

b) In case of regular premium: The first premium due date shall not be later than 30 days from the first date of the insurance period under the insurance policy. The subsequent premium due dates may be agreed in the insurance policy by the insurer/foreign non-life insurer’s branch and the policyholder upon entering into the policy. The insurer/foreign non-life insurer’s branch and the policyholder may not agree on changing the premium due date during the policy term. In any case, the premium due date shall not be later than the insurance period expiration date under the insurance policy.

c) In case of insurance covering multiple consignments or trips of a customer within a year, if the non-life insurer/foreign non-life insurer’s branch and the policyholder have entered into an open cargo policy (also known as an open cover) on the insurance purchase method and mode of premium payment, the premium due dates of the policies with the insurance periods starting in one month shall not be later than the 25^th day of the succeeding month.

3. If the insurance policy has been concluded and the non-life insurer/foreign non-life insurer’s branch has agreed on a grace period for the policyholder, such period must be specified in the insurance policy and only applicable when the policyholder provides a collateral or premium payment guarantee.

Article 27. Distribution of insurance products

1. An insurer or a foreign non-life insurer's branch may only distribute insurance products in accordance with the operations and within the operational scope stated in its license.

2. The distribution of insurance products through bidding must comply with the law regulations on insurance business and on bidding.

3. When concluding an insurance policy, the insurer/foreign non-life insurer’s branch shall provide the policyholder with the following documents:

a) The insurance product terms and conditions;

b) Summary of the insurance product terms and conditions;

c) Sales illustration of the life insurance product;

d) Certificate of insurance or insurance binder or others as specified by the law;

dd) Insurance application form and questionnaires related to the insured risks and the insured entities/persons.

4. The documents specified in Clause 3 of this Article constitutes a part of the insurance policy. Insurers and foreign branches shall ensure the consistency of the information stated in the documents specified at Points a, b, c and d, Clause 3 of this Article.

5. For investment-linked insurance, endowment, pure endowment, annuity, and pension products:

a) The life insurer shall be responsible for providing paper printouts of the documents specified at Points b, c and d, Clause 3 of this Article to the policyholder. The free-look period starts from the date the policyholder confirms receipt of the paper printouts of the above-mentioned documents.

b) The documents specified at Points a and dd, Clause 3 of this Article shall be provided in the manners agreed upon in the insurance policy. The insurer shall provide the paper printouts to the policyholder upon the request of the policyholder.

6. For life insurance and health insurance products other than those specified in Clause 5 of this Article, the documents specified in Clause 3 shall be provided in the manners agreed upon in the insurance policy. The insurer shall provide the paper printouts to the policyholder upon the request of the policyholder.

7. Insurers and branches of foreign non-life insurers must satisfy the requirements specified at Point b, Clause 3 and Clause 5 of this Article from July 1, 2024.

Article 28. Summary of life/health insurance product terms and conditions

A summary of the terms and conditions of an insurance product must contain at least the following information:

1. Benefits of the product and the requirements for claiming such benefits (if any);

2. Insurance exclusions;

3. Policy term and premium payment term;

4. Explicitly expressed obligations to declare truthful information and the legal consequences in case of failure;

5. Free-look period (for policies with the term of more than 01 year);

6. Charges/fees levied on policyholders (For investment-linked insurance and pension products);

7. Investment benefits and risks profits and risks that may face the policyholder as he/she purchases the investment-linked insurance product;

8. The benefits he/she may be entitled to in case of policy surrender and the surrender fee (if any);

9. The link and instructions to access, view and download the policy in case of online insurance distribution (if any);

10. Other noteworthy points of the insurance product terms and conditions (if any).

Article 29. Sales illustrations for life insurance products

1. Any sales illustration prepared by an insurer for its life insurance product must satisfy the following requirements:

a) Actuarial assumptions used therein must be approved by an Appointed Actuary before it is provided for the policyholder. Such assumptions must be reviewed by the Appointed Actuary at least on an annual basis to reflect the actual changes in interest rates, investments of the insurer, and macroeconomic fluctuations.

b) For any product with surrender value, the sales illustration must explicitly indicate requirements for receiving the surrender value under the insurance product terms and conditions and the benefits along with the specific amount that the policyholder is entitled in proportion to such surrender value, and whether such benefits are guaranteed or not.

c) The font used in sales illustration materials must be Times New Roman with a minimum font size of 12 or another font with equivalent font size;

d) Notes that the policyholder should comply with the provisions of the insurance policy in order to ensure the rights and interests upon purchase of insurance, especially the obligations to pay premiums and provide accurate information, shall be included therein. For any insurance policy with the term of more than 01 year, the sales illustration shall explicitly inform the policyholder that such policy is a long-term commitment, and that cancellation of such policy by the policyholder may result in partial refund of the insurance premiums paid;

dd) It must be explicitly and intelligibly presented to avoid misleading the policyholder to unrealistic expectations of the receivable amount.

2. The sales illustrations of investment-linked insurance products shall be made using Form No. 22-NT (for universal life insurance products), or Form No. 23-NT (for unit-linked insurance products) provided in Appendix VIII to this Circular. The sales illustrations of pension products shall be made using Form No. 24-NT provided in Appendix VIII to this Circular.

3. If an insurer distributes its insurance products through a corporate agent, the sales illustrations thereof must contain at least the following information:

a) Name and address of the corporate agent;

b) Agent operations authorized under the insurance agency agreement;

c) For any corporate agent that performs all agent operations as specified in Clause 5, Article 4 of the Law on Insurance Business: The sales illustration must indicate the name of its employee who directly performs the agent operations and the reference number of his/her insurance agent certification.

d) For any corporate agent that performs any or several agent operations as specified in Clause 5, Article 4 of the Law on Insurance Business, and the insurer has signed an individual insurance agency agreement to perform agent operations for the same insurance policy: The sales illustration must indicate the name of the corporate agent’s employee who directly performs the agent operations and the reference number of his/her insurance agent certification as well as the insurance agent certifications of the individual agents of the insurer.

4. The sales illustration shall be signed off by the policyholder to confirm that he/she is adequately advised on and comprehend details of such sales illustration.

Article 30. Insurance application form and questionnaires related to insured risks, insured entities/persons of life insurance products or health insurance products

1. An insurance application form shall include a section for the policyholder to confirm that he/she has been expressly explained about the benefits of the product and is aware of the specific characteristics of the product he/she has chosen. In the case where the insurance product is distributed by a corporate agent being a credit institution or foreign bank branch, the confirmation section must indicate that the policyholder purchases insurance on a voluntary basis, without being so coerced.

2. Questionnaires related to the insured risks and the insured entity/person include:

a) Health declaration of the insured person (for any insurance product that requires health declaration), which shall be filled and signed off by the policyholder;

b) Financial needs analysis of the policyholder (for endowment insurance, investment-linked insurance and pension products); Investment risk tolerance questionnaire (for unit-linked insurance products). Such documents shall be assessed and filled by the insurance agent based on information provided by the policyholder, and must be signed off by the policyholder.

3. The health questionnaire of the insured person must ensure that:

a) Questions about health and medical terms contained therein must be ambiguous so that the policyholder or the insured person can thoroughly understand and fill in it fully and accurately. In the case where the insurer/foreign non-life insurer’s branch includes unambiguous questions or does not determine the timeline or period of time during which related information is required, the failure of the policyholder to answer such questions correctly shall not be deemed a breach of the obligation to provide information;

b) Declaration of medical history, information on signs and symptoms related to illness does not exceed 03 years. In cases where the questionnaire requires information in a period of more than 03 years, the insurer must explicitly specify conditions that should be declared and explicitly guide the policyholder or the insured person on the information to be declared.

4. A financial needs analysis of the policyholder must:

a) Contain at least the following information: total income (applicable to the individual policyholder), expected premium and expected payment term;

b) Contain questions that include specific criteria and limits to enable the comparison of the affordability of the insurance product the customer expects to purchase with his/her financial capacity. The insurance agent is only allowed to advise on insurance products that are affordable for the policyholder within the limits determined by the insurer.

5. An investment risk tolerance questionnaire must:

a) Contain at least the following information: risk appetite assessment and investment experience of the policyholder;

b) Contain explicit, specific questions to identify the customer's risk tolerance, categorized into at least five (05) groups: Conservative; Moderately Conservative; Moderate; Moderately Aggressive; and Aggressive.

6. Insurers and branches of foreign non-life insurers shall examine the reasonableness and consistency between the information in the insurance application form and the questionnaires related to the covered risks and the insured entities/persons before issuing the policies. In case of inconsistencies, the insurers or branches of foreign non-life insurers shall examine and verify the advice given by insurance agents.

7. Insurers and branches of foreign non-life insurers must satisfy the requirements specified in this Article from July 1, 2024.

Article 31. Product brochures of life insurance products, health insurance products

1. A product brochure shall satisfy the following requirements:

a) It must introduce basic characteristics of the insurance product;

b) It honestly provides basic information in the conditions and terms of the insurance product, explicitly includes insurance benefits and exclusions, and does not provide unambiguous information misleading the policyholder about the respective product’s benefits;

c) In the case where the product is distributed by a corporate agent/insurance broker, the brochure shall expressly indicate that this is an insurance product provided by an insurer/foreign non-life insurer’s branch, not a product developed by the respective corporate agent/insurance broker, and the purchase of such insurance product is not a mandatory requirement for performance of or entitlement to any other service of such corporate agent/insurance broker;

d) The font used in product introduction documents is Times New Roman, minimum font size 12, or other fonts of equivalent size.

2. Product brochures of investment-linked insurance products must satisfy the requirements specified in Clause 1 of this Article and contain the following information:

a) Investment policy, investment objectives, asset allocation, the minimum committed investment interest rate of the universal life fund (if it is a universal life insurance product); the existing types of unit-linked funds, investment policy, types of investment assets, and asset allocation ratios of each fund (if it is a unit-linked insurance product);

b) Rate and maximum amount of fees/charges levied on the policyholder;

c) Explicit information about that: The policyholder is entitled to the entire investment results and will bear all investment risks from the unit-linked fund he/she has chosen (as for any unit-linked insurance product), the investment-linked insurance policy is a long-term commitment and the policyholder should not cancel the policy because he/she may be levied considerably high fees/charges during the initial period of the policy;

d) Performance of existing unit-linked funds in the latest 05 fiscal years, or the entire period during which the fund has been established and operated if such period is shorter than 05 years (for any unit-linked insurance product). The insurer must explicitly state that the above-mentioned information is the historical performance for reference only and does not assure the future performance of such unit-linked funds. Historical performance for reference must be consistent with the unit-linked insurance product and the unit-linked funds being introduced.

3. Product brochures of pension products must satisfy the requirements specified in Clause 1 of this Article and contain the following information:

a) Investment policy, objectives and asset investment structure of the voluntary pension fund, the minimum investment interest rate committed to the policyholder for the premium allocated to the insurance pension account;

b) Rates and maximum amount of fees/charges levied on the policyholder;

c) Explicit information to the policyholder that the pension policy is a long-term commitment and the pension pot cannot be withdrawn premature, unless otherwise specified in Article 119 of Decree No. 46/2023/ND-CP;

d) For insurance products that are not of pension type as specified in Section 3, Chapter VII of Decree No. 43/2023/ND-CP, in the product brochures, the commercial names thereof shall not contain the phrase “pension/retirement” or other phrases misleading policyholders that such products provide pension income for the insured beyond their retirement age.

Article 32. Information and advertisement of insurance products

1. Information and advertisement of insurance products must comply with the law regulations. Insurers shall take accountability for information and advertisement of their insurance products.

2. Advertising materials shall satisfy the following requirements:

a) They must be expressed in Vietnamese, be intelligible, unambiguous, and non-deceptive; be truthful, unbiased, accurate and up-to-date. Definitions and technical terms must be fully annotated;

b) Insurers are not allowed to use the name, information, logo, image, position, reputation, correspondence of the State regulatory authorities, or officials and civil servants of the State regulatory authorities to advertise, introduce and solicit people to buy life insurance products.

3. Advertising materials about unit-linked insurance products shall:

a) Comply with Clause 2 of this Article;

b) Be explicitly expressed and not mislead the unit-linked funds as financial instruments with fixed income or guaranteed profits;

c) Not include statements misleading customers that the value of an investment always increases or its results are guaranteed; not commit or guarantee that the investment results of the unit-linked fund are always positive in the future;

d) When using third-party evaluations and comments or the results of voting and ranking of performance to advertise and introduce unit-linked insurance products, the insurers, relevant organizations and individuals must use reliable, unbiased information based on comparisons, data and real events; which is publicly disclosed or made publicly available by accredited statistical and financial information service providers; clearly state the reference sources including the name of the documents, the name of the publishers and the date of publication;

dd) Not imply that the State regulatory authorities guarantee the information, advertisement, investment strategy, investment objectives of the unit-linked fund or guarantee about the assets of the unit-linked fund, unit price, profitability and risk level of the unit-linked fund;

e) Not contain information leading to customers’ incorrect understanding of the profitability of unit-linked funds and benefits of unit-linked insurance products;

g) Information and advertising materials about unit-linked insurance products must be present in bold and clear fonts, with a font size not smaller than that of other information in the advertising publications, and shall contain the following warnings:

- Customers need to carefully read the product brochures, sales illustrations, summary of the noteworthy product terms and conditions before purchasing unit-linked insurance products as well as pay attention to the product's premiums, fees and charges;

- A unit-linked insurance product is different from other traditional insurance products, so that the customer must bear all investment risks corresponding to the premium paid according to the risk type of the unit-linked fund he/she has chosen;

- The cash value of the customer's insurance policy may change depending on the market situation and the customer may suffer a loss in the premiums paid in case of investment loss;

- The information on the historical performance of the unit-linked funds (if any) is for reference only and does not mean that these funds will be profitable for the customer in the future;

- The illustrative interest rate of the unit-linked fund is for reference only, may increase or decrease depending on the actual investment results of the unit-linked fund, and will not be guaranteed for the policyholder in the future.

4. On an annual basis, the insurer shall inform the policyholders about the status of the participating endowment insurance policies, investment-linked insurance policies and pension policies. Information about investment-linked insurance and pension policies shall be provided using Form No. 25-NT (for universal life insurance policies), Form No. 26-NT (for unit-linked insurance policies), Form No. 27-NT (for pension policies) provided in Appendix VIII to this Circular. The insurers must send to the policyholders reports on the performance of universal life insurance funds, unit-linked funds or voluntary pension funds made using Form No. 14-NT, Form No. 15-NT, and Form No. 16-NT provided in Appendix VIII to this Circular, respectively.

Article 33. Reinsurance and retrocession

1. Any insurer/reinsurer/Vietnam-based foreign branch may cede a portion, but not all, of the risks it has insured/reinsured to any or many insurers/reinsurers, domestic and foreign, or foreign insurance organization accepting inward reinsurance, or Vietnam-based foreign branches under one reinsurance/retrocession contract.

2. Any insurer/reinsurer/Vietnam-based foreign branch must calculate the retention for each type of insurance and for each type of risk; the per loss or per risk retention. The retention of an insurer/reinsurer/Vietnam-based foreign branch must satisfy the requirements specified in Clause 4 and Clause 5 of this Article.

3. When calculating the retention, the insurer/reinsurer/Vietnam-based foreign branch must consider the following factors:

a) Law regulations on solvency;

b) Underwriting capacity;

c) Financial capacity;

d) Risk tolerance of the insurer/reinsurer/Vietnam-based foreign branch;

dd) Protection arrangement of large-scale and catastrophic risks;

e) Balance of business results;

g) Constituents of the insurance policy portfolio;

h) Developments of the domestic and global reinsurance market.

4. The maximum retention of each separate risk or loss must not exceed 10% of the shareholders’ equity.

5. Maximally 90% of the insurance liability shall be ceded in the case where the insurer/Vietnam-based foreign branch accepts inward reinsurance as designated by the insured person. Reinsurance as designated by the insured person occurs in the following cases:

a) The insured person may designate specific reinsurer(s)/foreign insurance organization(s) accepting inward reinsurance and request the insurer/reinsurer/Vietnam-based foreign branch to cede the insurance liability to any or many of such designated reinsurer(s)/foreign insurance organization(s) accepting inward reinsurance.

b) The insured person may designate specific insurance broker(s) and request the insurer/reinsurer/Vietnam-based foreign branch to arrange the reinsurance through any or many of such designated insurance brokers.

In any case, the reinsurers/foreign insurance organizations accepting inward reinsurance designated by the insured person must satisfy the requirements specified in Article 33 of Decree No. 46/2023/ND-CP.

6. Any insurer/reinsurer/Vietnam-based foreign branch may accept inward reinsurance of the risks that another insurer/reinsurer/Vietnam-based foreign branch has insured. When accepting inward reinsurance, the insurer/reinsurer/Vietnam-based foreign branch shall assess the risks in order to ensure they suit its solvency and may not accept inward reinsurance of the risks that were already reinsured.

7. For finite reinsurance, within 07 days from the date of signing the reinsurance contract, the insurer/reinsurer/Vietnam-based foreign branch shall send a written notice signed by its legal representative to the Ministry of Finance. The notice shall contain key contents of the reinsurance contract, the purpose of signing the contract, commitment to comply with legal regulations on insurance business and the accounting regime applicable to the insurer/reinsurer/Vietnam-based foreign branch.

Article 34. Management of reinsurance and retrocession programs.

1. Approval of reinsurance and retrocession programs:

a) In order to ensure the safety and efficiency of reinsurance, the Board of Directors (Members' Council) or the General Director (Director) of the insurer/reinsurer or the Director of the Vietnam-based foreign branch shall approve a reinsurance/retrocession program that is suitable to the financial capacity and business scale of such insurer/reinsurer/branch and in accordance with the applicable law regulations; review, evaluate, and revise such program on an annual basis or upon the changes of the market.

b) A reinsurance or retrocession program shall mention the following:

- The risk tolerance of the insurer/reinsurer/Vietnam-based foreign;

- The retention, commensurate with the tolerable risks, the per risk retention, and the maximum coverage by the reinsurer/foreign insurance organization accepting inward reinsurance;

- The form and method of reinsurance most suitable for managing the insurance ceded;

- The methods, standards, and procedures for selecting reinsurers/foreign insurance organizations accepting inward reinsurance, including methods of evaluating the risk and financial security of the reinsurers/foreign insurance organizations accepting inward reinsurance;

- The list of potential reinsurers/foreign insurance organizations accepting inward reinsurance, taking into account the diversity and ratings of the reinsurers;

- The method of using the deposits received from the reinsurers/foreign insurance organizations accepting inward reinsurance (if any);

- The management of cumulative risks of specific industries, geographical areas, and products;

- The solutions for controlling the reinsurance/retrocession program, including the internal reporting and control systems.

2. Implementation of the reinsurance or retrocession program:

Under the approved reinsurance/retrocession program, the General Director (Director) of the insurer/reinsurer or the Director of the Vietnam-based foreign branch shall develop internal procedures and guidelines on reinsurance, including those for:

a) Limiting the insurance liability to be automatically reinsured under treaty reinsurance contracts of each type of insurance;

b) Developing standards for facultative reinsurance contracts;

c) Comparing the terms, conditions, and provisions of the primary insurance policy with those of the reinsurance contract to ensure that every risk is reinsured.

3. Any insurer/reinsurer/Vietnam-based foreign branch shall regularly update its list of reinsurers/foreign insurance organizations accepting inward reinsurance as well as information about the risk level and the claim-paying ability and readiness corresponding to the reinsured liability; the deposit required according to the risk level and credit rating of each reinsurer/foreign insurance organization accepting inward reinsurance (if any).

Section 3

OPERATIONAL PROVISIONS

Article 35. Unearned premium reserving methods, formulas, and considerations for health insurance and life insurance with the term of 01 year or less, and non-life insurance

1. Fixed percentage method: For any insurance policy/reinsurance contract with the term of 01 year or less, the operational provision shall be:

a) Equal to 25% of the total collected premium of the respective type of insurance in the fiscal year for the insurance of cargoes transported by road, sea, inland waterway, rail and air, regardless of whether the policy is in force or not.

b) Equal to 50% of the total collected premium of the respective type of insurance in the fiscal year for other types of insurance, regardless of whether the policy is in force or not.

2. Time apportionment methods:

a) 1/8^th method: This method assumes that insurance premiums of insurance policies and reinsurance contracts issued within a quarter by an insurer/foreign non-life insurer’s branch/reinsurer are uniformly spread over the respective quarter, or in other words, the assumption is that all insurance policies and reinsurance contracts within a certain quarter come into force amid such quarter. The unearned premium provision is calculated by the following formula:

For example: The unearned premium provision as of December 31, 2023 may be calculated as follows:

For insurance policies and reinsurance contracts with the term of 01 year and still in force by December 31, 2023:

For insurance policies and reinsurance contracts with the term of more than 1 year: The unearned premium fraction calculated by the above formula will have its denominator equal to the duration of the insurance policy (expressed as years) multiplied by (x) 08. The unearned premium provision as of December 31, 2023 of insurance policies with the term of 2 years and still in force by December 31, 2023, shall be calculated as follows:

b) 1/24^th method: This method assumes that insurance premiums of insurance policies and reinsurance contracts issued within a month by an insurer/Vietnam-based foreign branch/reinsurer are uniformly spread over the respective month, or in other words, the assumption is that all insurance policies and reinsurance contracts within a certain month come into force amid such month. The unearned premium provision is calculated by the following formula:

For example: The unearned premium provision as of December 31, 2023 may be calculated as follows:

For insurance policies and reinsurance contracts with the term of 01 year and still in force by December 31, 2023:

For insurance policies and reinsurance contracts with the term of more than 1 year: The unearned premium fraction calculated by the above formula will have its denominator equal to the duration of the insurance policy (expressed as years) multiplied by (x) 24. The unearned premium provision as of December 31, 2023 of insurance policies and reinsurance contracts with the term of 2 years and still in force by December 31, 2023, shall be calculated as follows:

c) 1/365^th (daily) method: This method can be applied to calculate the unearned premium provision for insurance policies and reinsurance contracts of any term using the following general formula:

Article 36. Claims reserving methods, formulas and considerations

1. Stochastic claims reserving method: Using this method, an insurer/foreign non-life insurer’s branch/reinsurer must set aside 02 types of reserves:

a) RBNS reserve to cover the costs of claims within the insurance coverage that have been reported but not settled (RBNS) by the end of fiscal year:

For non-life insurance policies: Set aside for each type of insurance by individually estimating the claim for each loss within the insurance coverage that has been reported but not settled by the end of the fiscal year.

For life/health insurance: to be calculated by the per case reserving method using data on potential payouts for each claim reported but not settled by the end of the fiscal year.

b) IBNR reserve to cover the costs of claims within the insurance coverage that have been incurred but not reported (IBNR), set aside for each type of insurance using the following formula:

Where:

Claims incurred in a fiscal year include those actually paid out in such year plus the increase/decrease in claims reserve to cover the costs of claims within the insurance coverage that have been reported but not settled by the end of fiscal year.

Average delay in reporting claims refers to the average period of time that starts from the claims occurrence until the insurer/foreign non-life insurer’s branch/reinsurer receives the report/claim (valued in days).

In the case where the insurer/Vietnam-based foreign branch/reinsurer does not have sufficient statistics to calculate the incurred but not reported claims reserve as required for the statutory formula, it must set aside a claims reserve equal to between 3% and 5% of the insurance premium for each type of insurance.

This Point is not applicable to life insurance with the term of more than 01 year.

2. Deterministic claims reserving method:

This method is applied for claims reserving of each type of insurance, based on historical claims data to calculate development factors in order to estimate the future payment obligations of the insurer/foreign non-life insurer’s branch/reinsurer. To calculate the claims reserve using this method, an insurer/foreign non-life insurer’s branch/reinsurer must analyze historical claims data to ensure that the development of claims over years is stable in a pattern.

For example: Calculating the claims reserve based on development factors of a type of insurance by December 31, 2023.

- Step 1: Collecting data of all incurred claims by December 31, 2023 and organizing it into the following table with the first column representing years of claim occurrence and the first row presenting years of development (for illustration purposes only):

Unit: VND million

In the above table (2016 row):

The sum of payouts incurred in 2016 (the first development year) related to claims occurring in 2016 was VND 5,445 million.

The sum of payouts incurred in 2017 (the second development year) related to claims occurring in 2016 was VND 3,157 million.

The sum of payouts incurred in 2018 (the third development year) related to claims occurring in 2016 was VND 2,450 million.

……

The data on payouts in subsequent years related to claims occurring in 2016 shall be collected in the same manner as above until there are no payout. In this example, after 2023 (the 8th development year), there is no payout related to claims occurring in 2016.

Data on the payouts related to claims occurring from 2017 to 2023 is collected in the same manner as in 2016. The number of historical development years in which data on payouts shall be collected will depend on the length of time from the claims occurrence until there is no payout related to them. Normally, liability insurance lines require more historical development years than other types of insurance.

- Step 2: Converting the above table into a table of cumulative incurred claims data, of which the data of each year is the sum of payouts in such year and the years preceding it.

Unit: VND million

In the above table (2016 row):

The cumulative sum of payouts to 2016 (the first development year) related to claims occurring in 2016 was VND 5,445 million.

The cumulative sum of payouts to 2017 (the second development year) related to claims occurring in 2016 was VND 3,157 million + 5,445 million = 8,602 million.

The cumulative sum of payouts to 2018 (the third development year) related to claims occurring in 2016 was VND 2,450 million + 8,602 million = 11,052 million.

………………………….

- Step 3: Calculating the cumulative development factors for each year by dividing the next year's cumulative incurred claims by that of the previous year.

Then, calculating year-to-year (first year to second year, second year to third year, third year to fourth year, etc.) average development factors. The average development factor for a particular column is the mean of the cumulative development factors for that column.

- Step 4: Applying the average development factors calculated in Step 3 to estimate the outstanding claims in subsequent periods from 2016 to 2023 (bold text in the table below):

Unit: VND million

In the above table (2023 row):

The cumulative sum of payouts to 2024 (the second development year) related to claims occurring in 2023 is VND 15,162 million x 1.625 = 24,638 million (1.625 is the first year to second year average development factor)

The cumulative sum of payouts to 2025 (the third development year) related to claims occurring in 2023 is VND 24,638 million x 1.236= 30,453 million (1.236 is the second year to third year average development factor)

The cumulative sum of payouts to 2026 (the fourth development year) related to claims occurring in 2023 is VND 30,453 million x 1.163= 35,417 million (1.163 is the third year to fourth year average development factor)

………………………

The cumulative sum of payouts to each year related to claims occurring in 2022, 2021,..., 2016 are calculated similarly to that of 2023.

- Step 5: Calculating the claims reserve:

The claims reserve by December 31, 2023 is equal to the estimated ultimate sum of payouts related to claims occurring in each year from 2016 to 2023 minus the respective sum or payouts incurred by December 31, 2023, where:

The estimated ultimate sum of payouts related to claims occurring in each year from 2016 to 2023 is the cumulative sum of payouts to the eighth development year in above table.

The sum of payouts related to claims occurring in 2016, 2017,..., 2023 by December 31, 2023 is the respective cell along a diagonal as showed the above table.

Unit: VND million

From the above statistics, the estimated claims reserve of this type of insurance by December 31, 2023 is VND 58,469 million.

Article 37. Catastrophe reserving for non-life insurance

1. Setting aside of catastrophe reserve:

a) Annually, a non-life insurer/Vietnam-based foreign branch/non-life reinsurer must set aside a catastrophe reserve regardless of whether it is used or not to pay claims for catastrophic events in the fiscal year.

b) The annual reserve may be maximally set aside as a percentage of retained premium of each type of insurance, ranging from 1% to 3%.

c) Annual reserving cannot be stopped until the total reserve is equal to 100% of the retained premium of the non-life insurer/foreign non-life insurer’s branch/non-life reinsurer.

2. Use of the catastrophe reserve:

a) The catastrophe reserve is used for catastrophe insurance.

A type of insurance is deemed catastrophe insurance when the total retained premium in a fiscal year, after accounting for the unearned premium provision and outstanding claims reserve, is not sufficient to cover the payment of claims for the retained liability of the insurer/foreign branch for such type of insurance.

b) The maximum amount that can be reimbursed from the catastrophe reserve is calculated for each type of insurance using the following formula:

Article 38. Actuarial reserving methods, formulas, and considerations for health insurance with the term of more than 01 year and several types of life insurance

1. For health insurance with the term of more than 01 year, the life/health insurer may, at its discretion, chose a reserving method, such as: gross premium method, pure premium method, gross premium-based time apportionment method, or other methods according to international best practices.

In all cases, life/health insurers must ensure that the reserve is not lower than that calculated by the 1/8^th method specified at Point a, Clause 2, Article 35 of this Circular based on the gross premium.

2. For term life insurance, pure endowment, endowment, whole life insurance, or annuity, the life insurer/reinsurer may, at its discretion, choose a reserving method to set aside the actuarial reserve for insurance policies with the term of more than 01 year in order to ensure future insurance liabilities, such as: gross premium method, pure premium method, Zillmer’s method, or other methods according to international best practices.

In any case, the reserving method chosen shall set aside the actuarial reserve that is not lower than that calculated using the following methodology and considerations:

a) Reserving methods:

For insurance policies with the term of 05 year or less: Pure premium method.

For pure endowment, whole life, endowment, and annuity insurance policies with the term of more than 05 years: Pure premium method applying a Zillmer adjustment equal to 3% of premium. The respective pure premium used to calculate the reserve shall not exceed 100% of the bone fide premiums collected.

For term life insurance policies with the term of more than 05 years: Pure premium method with a 12-month FPT adjustment.

b) Reserving considerations:

- 100% of the 1980 CSO 1980 Mortality Table and other technical considerations, which shall be consistent with the insurance benefits that the insurer commit to the customers in the insurance product terms and conditions. In any case, the mortality and probability factors used for reserving must not be lower than those used by the insurers for rate-making.

- The maximum technical interest rate, which shall not exceed 80% of the average interest rate of Government bonds with the maturities of 10 years or more issued in the last 24 months prior to the time of reserving. The technical interest rate used to calculate the reserve must not exceed the insurer’s average return on investment ratio of the latest 04 (four) quarters and the rate-making interest rate of each insurance product.

The actuarial reserve is deemed equal to zero (0) in the case where the calculation of the actuarial reserve is negative.

For example: In the latest 24 months prior to the time of reserving, if the winning Government bonds (GB) with the maturities of 10 years or more includes 10-year, 15-year, 20-year, and 30-year maturities, the maximum technical interest rate (TIR) is calculated as follows:

Where:

n: the maturities of Government bonds (n = 10, 15, 20, 30);

IR(x̄)_n: The average interest rate of Government bonds with maturity of n years issued in the last 24 months prior to the time of reserving, determined as follows:

IR(i): The interest rate winning the (i)^th Government bond auction;

k: the number of times winning auctions of Government bonds with the maturity of n years.

3. The cost of insurance reserve for any universal life insurance, unit-linked insurance, or pension product is either the reserve calculated by the unearned premium method or the reserve calculated by the cash flow method, whichever is greater, covering all future insurance claims and related expenses during the policy term.

The reserve calculated by the unearned premium method shall be equal to 100% of the cost of insurance collected during the term of the universal life, unit-linked insurance, or pension policy.

Article 39. Dividend reserving methods, formulas, and considerations for participating life insurance products

1. Declared dividend reserve:

-         Regarding policies with cash profits:

-         Regarding policies with cumulative dividends:

Reserving considerations for dividend reserves are the same as those for actuarial reserves He Appointed Actuary must undertake that dividend reserving satisfies the obligations committed in the insurance policies and the law regulations.

2. Undeclared dividend reserve:

Undeclared dividend reserve is equal to the value of future additional profits distributed to the policyholders in order to comply with Clause 1, Article 48 of this Circular, which is calculated by the assets of the participating policyholders’ fund minus the fund’s debts, the support capital from the shareholders’ fund, and the profits allocated in the current year. The reserving must follow the principles below:

The annual reserve shall not exceed 10% of total surplus of the participating policyholders’ fund in the respective year;

The total value of the undeclared dividend reserve at any time shall not exceed 0.5% multiplied by the average remaining term of participating policies and the total liability of participating policyholders’ fund at the respective time.

Article 40. Equalization reserving methods, formulas and considerations for life insurance and health insurance

1. For health/life insurers: Each insurer must set aside 1% of its profit before tax annually until the reserve is equal to 5% of premiums collected in the fiscal year.

2. For insurers or branches of life reinsurers: Each reinsurer must set aside 1% of its profit before tax annually until the reserve is equal to 5% of life reinsurance ceded in the fiscal year.

3. For non-life insurers, branches of foreign non-life insurers, or health reinsurers: The amount to be set aside annually shall comply with Point b, Clause 1, Article 37 of this Circular. This reserve is used to pay claims when catastrophic events occur and the total retained premium collected in a fiscal year, after accounting for the unearned premium provision and outstanding claims reserve, is not sufficient to cover the payment of claims for the retained liability of the non-life insurer/Vietnam-based foreign branch/reinsurer. The maximum amount to be reimbursed from this reserve is calculated using the following formula:

Section 4

TIME OF RECOGNIZING REVENUES

Article 41. Timing of recognizing non-life, life and health insurance revenues

1. Any insurer/any Vietnam-based branch of any foreign non-life insurer shall record the direct insurance premiums into the insurance business revenue account when:

a) The premium of the insurance policy concluded between the insurer/foreign non-life insurer’s branch and the policyholder has been fully paid;

b) There are evidence indicating that the insurance policy has been concluded and the policyholder has fully paid the premium;

c) When the insurance policy has been concluded and the non-life insurer/foreign non-life insurer’s branch has agreed with the policyholder on the insurance premium payment term as specified at Points a and c, Clause 2, Article 26 of this Circular, the non-life insurer/foreign non-life insurer’s branch shall record into its revenue the insurance premiums payable by the policyholder as agreed in the insurance policy account when the insurance term starts.

d) When the insurance policy has been concluded and there is an agreement with the policyholder on periodic premium payment under the insurance policy, the insurer/foreign non-life insurer’s branch shall record into its revenue the premiums already incurred in the respective premium payment period(s) and shall not record into its revenue the periodic premiums not yet incurred by the policyholder as agreed in the insurance policy.

2. Time of recognizing revenues in case of con-insurance: The non-life insurer/foreign non-life insurer’s branch shall record into its insurance business revenue account the direct premiums in proportion to the co-insurance allocation in accordance with Clause 1 of this Article.

3. Time of recognizing revenues in case of accepting inward reinsurance: the non-life insurer/Vietnam-based foreign branch/reinsurer shall record into its revenue account the reinsurance premiums and other accounts receivable from reinsurance activities under a certified reinsurance slip.

4. Time of recognizing revenues in case of retrocession: the non-life insurer/Vietnam-based foreign branch/reinsurer shall record into its revenue account the retrocession premiums, retrocession commissions and other accounts receivable from retrocession activities in the same period as the quarterly accounting period in which the direct insurance premiums or respective inward reinsurance premiums are recognized.

5. Other accounts receivable: shall be recorded by the insurer/Vietnam-based foreign branch/reinsurer into the income account as soon as such economic activity takes place and there is evidence of the parties’ payment consent, regardless of whether the amounts have been collected or not.

6. Accounts payable to reduce revenue: shall be recorded by the insurer/Vietnam-based foreign branch/reinsurer into income reduction account as soon as such economic activity takes place and there is evidence of the parties’ consent, regardless of whether the payment thereof has been made or not.

7. Revenue from the rendering of auxiliary insurance services: shall be recorded by the insurer/Vietnam-based reinsurer/foreign branch into the revenue account when the services are completely or partially rendered, regardless of whether the fees thereof have been received or not.

Section 5

SEGREGATION OF SHAREHOLDERS’ EQUITY FROM PREMIUMS, AND PRINCIPLES OF SURPLUS DISTRIBUTION

Article 42. Segregation of shareholders’ equity from insurance premiums by non-life insurers/health insurers/reinsurers/Vietnam-based foreign branches

1. A non-life insurer/reinsurer/Vietnam-based foreign branch must segregate its shareholders' equity from the insurance premiums collected in accordance with Article 101 of the Law on Insurance Business and the following requirements:

a) Transactions of assets, capital sources, revenues, expenses directly related to which source shall be separately recorded for such source,

b) Revenues and business expenses for each type of insurance shall be separately monitored;

c) Revenues for and expenses for insurance business operating within and outside the territory of Vietnam shall be separately monitored;

d) Recognize and monitor separately investment assets from shareholders’ equity and those from idle capital from operational provisions;

dd) Revenues and expenses directly related to any operation of a non-life insurer/health insurer/foreign branch shall be directly recognized for such operation. General revenues and expenses must be allocated on a reasonable and consistent basis;

e) The Appointed Actuary must undertake that transactions related to various sources and types of insurance shall be aggregated and allocated to each source and type of insurance in a fair, reasonable, and consistent basis. At the end of year, the Appointed Actuary shall re-adjust the allocation of transactions related to the sources or types of insurance in accordance with this Circular, the principles registered with the Ministry of Finance, and the actual situation of the insurer.

2. The At-law Representative, Appointed Actuary and Chief Accountant of the non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch shall be responsible for establishing and registering the principles of revenue and expense allocation as specified in this Circular with the Ministry of Finance and segregating the shareholders’ equity from the insurance premiums, as well as take accountability for the accuracy of data on the insurance premiums and the shareholders' equity. The Board of Directors or the Members' Council of the non-life insurer/health insurer/reinsurer, or the authorized body of the Vietnam-based foreign branch shall be responsible for approving the principles of revenue and expense allocation and supervising the implementation of such principles after they are approved by the Ministry of Finance.

3. On a quarterly basis, the non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch shall send the report on segregation of shareholders’ equity from insurance premiums, made using the form provided by the Ministry of Finance.

4. On an annual basis, the non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch shall send the report on segregation and maintenance of the shareholders' equity from insurance premiums, made using the form provided by the Ministry of Finance and enclosed with a certification by an independent auditing organization.

5. In the case where the reinsurer/foreign reinsurer’s branch does not have a direct agreement with the policyholders on premium collection and insurance payout, it shall not segregate the shareholders’ equity from the insurance premiums as specified in this Circular.

Article 43. Allocation of transactions of assets, capital sources, revenues, and expenses related to various sources of a non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch.

1. Assets acquired from the insurance premiums and the policyholders’ equity shall be determined as follows:

a) Assets acquired from the insurance premiums include assets acquired from operational provisions and those corresponding to the accounts payable allocated to the insurance premiums (excluding intercompany payables among the funds);

b) Assets acquired from the shareholders' equity include fixed assets, capital work in progress, real estate investments, other assets acquired from the shareholders’ equity and accounts payable allocated to the shareholders' fund.

2. Insurance premiums and shareholders’ equity shall be determined as follows:

a) Capital sources from insurance premiums include:

Operational provisions;

Liabilities directly related or allocated to the insurance premiums according to the respective allocation criteria and method.

b) Capital sources of the shareholders’ fund include:

Shareholders’ equity;

Liabilities related or allocated to the shareholders’ equity according to the respective allocation criteria;

3. Revenues of the insurance premiums include:

a) Revenue from insurance brokerage operations;

b) Revenue from investments of the assets from insurance premiums;

c) Other income directly related or allocated to the insurance premiums according to the respective allocation criteria and method.

4. Revenues of the shareholders’ equity include:

a) Revenue from investments of the shareholders’ equity assets;

b) Receivable agent service charges; Revenue from the rendering of auxiliary insurance services;

c) Other income directly related or allocated to the shareholders’ equity according to the respective allocation criteria and method.

5. Expenses from the insurance premiums:

a) Insurance payouts less reinsurance recoveries, expenses for insurance technical reserving, expenses for insurance agent commissions, expenses for insurance brokerage commissions, expenses for management of insurance agents; bonuses and allowances and other incentives offered to insurance agents as agreed in the insurance agency agreements;

b) Expenses for damage survey, policy administration expenses of the leading insurer in the case of co-insurance, expenses for risk and loss prevention and limitation, expenses for risk assessment of the insured, expenses for disposal of fully compensated goods;

c) Expenses for investments of the assets acquired from the insurance premiums;

d) Other expenses directly related or allocated to the insurance premiums;

dd) Expenses for using insurance auxiliary services directly related to the premiums;

e) General expenses, including administrative expenses and other expenses allocated to the insurance premiums according to the allocation principles registered with the Ministry of Finance.

g) Other expenses as specified by the law.

6. Expenses from the shareholders’ equity include:

a) General expenses, including administrative expenses and other expenses allocated to the shareholders' equity according to the allocation principles registered with the Ministry of Finance;

b) Expenses related to agent services;

c) Expenses for investments of the assets acquired from the shareholders’ equity;

d) Expenses for using insurance auxiliary services directly related to the shareholders’ equity;

dd) Expenses for the rendering of auxiliary insurance services;

e) Other income directly related or allocated to the shareholders’ equity according to the respective allocation criteria and method.

7. Criteria and method for allocation of general operating expenses

a) Criteria and method for allocation of general operating expenses between the insurance premiums and the shareholders’ equity:

Administrative expenses: to be allocated to the insurance premiums and the shareholders' equity based on administrative time data of each source;

Expenses for financing activities: to be allocated in proportion to the investment asset allocation of each source.

b) Criteria and method for allocation of general operating expenses among the types of insurance in the insurance premiums:

Administrative expenses: to be allocated in proportion to the total premium revenue of each type of insurance;

Expenses for financing activities: to be allocated in proportion to the investment asset allocation of each type of insurance;

Distribution expenses to be allocated in proportion to the premium revenue of each type of insurance;

Direct expenses for insurance business operations: Expenses for underwriting to be allocated in proportion to the premium revenue; damage survey expenses to be allocated in proportion to the direct insurance payouts.

c) In the case where a non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch applies the criteria and method for allocation of general expenses other than those specified at Point a and Point b of this Clause, such criteria and method must ensure the fairness among the sources and align with the actual operations of the insurer/branch.

Article 44. Transfer of assets and compensation for deficits of the policyholders’ funds by non-life insurers/health insurers/reinsurers/Vietnam-based foreign branches

1. In the case where the insurance premiums run a deficit (the situation where the asset value is lower than the liabilities), the non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch shall compensate for the insurance premiums with cash or deposits funded by the shareholders' equity at credit institutions. When the insurance premiums generate any surplus (the positive difference between the asset value and the liabilities), the insurer/branch shall be refunded a part or all of the amount it has compensated for the fund before but shall not charge interests the insurance premiums, provided that the refund does not cause the policyholders' equity to be in deficit.

2. The non-life insurer/health insurer/reinsurer/Vietnam-based foreign branch must record in writing all transactions related to the amount transferred from the shareholders' equity to compensate for the deficit of the insurance premiums and the refund thereof from the insurance premiums to the shareholders' equity. Such transactions must be presented on the regular report segregation of the shareholders’ equity from insurance premiums, which must be certified by its Appointed Actuary and Chief Accountant.

Article 45. Segregation of the shareholders’ equity from premiums of a life insurer

1. A life insurer must segregate as well as record, manage, and monitor the shareholders’ equity separately from the premiums (hereinafter referred to as the shareholders’ fund and the policyholders’ fund, respectively) as specified in Article 101 of the Law on Insurance Business. Depending on the actual operations of the life insurer and relevant law regulations, the policyholders’ fund may be further divided.

2. The segregation and accounting of assets, capital sources, revenues, expenses, and performance of each fund must satisfy the following requirements:

a) Transactions of assets, capital sources, revenues, expenses directly related to which fund shall be separately recorded for such fund,

b) Assets acquired from a policyholders’ fund shall be used to fulfill liabilities and cover expenses related to business transactions of such policyholders’ fund. The insurer may not use assets of the policyholders’ fund to pay fines for its law violations or policy breaches, to fund irrelevant advertisements, or donate to charities;

c) Revenues for and expenses for insurance business operating within and outside the territory of Vietnam shall be separately monitored and recorded;

d) The Appointed Actuary must undertake that transactions related to various funds shall be aggregated and allocated to each fund in a fair and reasonable basis. At the end of year, the Appointed Actuary shall re-adjust the allocation of transactions related to such funds in accordance with Article 46 of this Circular and the actual situation of the insurer.

3. The At-law Representative, Appointed Actuary, and Chief Accountant of the life insurer shall take accountability for the segregation of funds, the accuracy of data on the policyholders’ funds and shareholders’ fund.

4. Annually, the life insurer shall send a report on segregation of the shareholders’ equity from the insurance premiums, made using Form No. 08-NT provided in Appendix VIII to this Circular, which must be enclosed with a certification by an independent auditing organization.

Article 46. Allocation of transactions of assets, capital sources, revenues, and expenses related to various funds of a life insurer.

1. Assets belonging to the policyholders’ fund and shareholders’ fund shall be determined as follows:

a) Assets belonging to the policyholders’ fund include assets acquired from operational provisions and those corresponding to the accounts payable allocated to the policyholders’ fund (excluding intercompany payables among the funds). Assets belonging to the universal life insurance policyholders’ fund, the unit-linked insurance policyholders’ fund, or the pension policyholders’ fund include at least assets acquired from the customers’ cash value and those corresponding to the accounts payable allocated to the policyholders’ fund (excluding intercompany payables among the funds, other than the shareholders’ initial contributions to establish the funds).

b) Assets belonging to a shareholders’ fund are assets formed from the shareholders’ fund itself, prepaid expenses, fixed assets, capital work in progress, and surpluses belonging to the shareholders in the shareholders’ funds as specified by the law.

2. Capital sources of the policyholders’ fund and shareholders’ fund shall be determined as follows:

a) Capital sources of the policyholders’ fund include:

- Operational provisions, other than the equalization reserve;

- Liabilities directly related or allocated to the policyholders’ fund according to the respective allocation criteria and method.

b) Capital sources of the shareholders’ fund include:

- Shareholders’ equity;

- Liabilities related or allocated to the shareholders’ fund according to the respective allocation criteria;

- Equalization reserve.

3. Revenues of the policyholders’ fund include:

a) Revenue from insurance brokerage operations;

b) Revenue from investments of the policyholders’ fund assets;

c) Other income directly related or allocated to the policyholders’ fund according to the respective allocation criteria and method.

4. Revenues of the shareholders’ fund include:

a) Revenue from investments of the shareholders’ fund assets;

b) Revenue from the rendering of auxiliary insurance services;

c) Other income directly related or allocated to the shareholders’ fund according to the respective allocation criteria and method.

5. The Policyholders’ Funds shall be reimbursed to cover:

a) Expenses for covering claim payouts, setting aside as operational provisions (other than the equalization reserve), and paying insurance agent and brokerage commissions directly related to each policyholders’ fund;

b) Expenses for damage survey and agent management; bonuses and allowances and other incentives offered to insurance agents as agreed in the insurance agency agreements; expense for loss prevention/mitigation and expenses for risk assessment of the insured.

c) Expenses for asset investments of the policyholders’ fund;

d) Expenses for using insurance auxiliary services directly related to each policyholders’ fund;

dd) Other expenses directly related to the policyholders’ fund;

e) General expenses allocated to the policyholders’ fund following the fund segregation rules registered with the Ministry of Finance;

g) Other expenses as specified by the law.

6. Expenses of the shareholders’ fund include:

a) General operating expenses allocated to the policyholders’ fund according to the respective allocation criteria and method, including salary expenses and salary-related expenses, expenses for advertisements, taxes, expenses for depreciation of fixed assets, expenses for office rental, stationery expenses and other expenses;

b) Expenses for setting aside the equalization reserve;

c) Expenses for investments of the shareholders’ fund assets;

d) Expenses for using insurance auxiliary services directly related to the shareholders’ fund;

dd) Other expenses directly related to or other general expenses allocated to the shareholders’ fund according to the rules registered with the Ministry of Finance.

7. Criteria and method for allocation of general operating expenses

a) Criteria and method for allocation of general operating expenses between the policyholders’ fund and shareholders’ fund:

- Administrative expenses: to be allocated to policyholders' fund and shareholders' fund based on service duration data of each fund. Annually, the insurer shall re-evaluate the allocation ratios based on the service duration of each fund in the current fiscal year and then decide on the allocation ratio of expenses to be applied for the succeeding fiscal year on the basis of ensuring the fairness between the funds and aligning with the actual operations of the insurer;

- Expenses for financing activities: to be allocated in proportion to the investment asset allocation of each fund.

b) Criteria and method for allocation of general operating expenses among the policyholders’ funds:

- Business administrative expenses: to be allocated among the policyholders' funds in proportion to the total premium revenue of each policyholders' fund;

- Expenses for financing activities: to be allocated in proportion to the investment asset allocation of each policyholders’ fund;

- Distribution expenses to be allocated in proportion to the new business premium revenue of each policyholders' fund;

- Direct expenses for insurance business operations:

Expenses for appraisal to be allocated in proportion to the new business premiums;

Expenses for claims assessment to be allocated in proportion to the direct insurance payouts.

c) In the case where a life insurer applies the criteria and method for allocation of general expenses other than those specified at Point a and Point b of this Clause, such criteria and method must ensure the fairness among the funds and align with the actual operations of the insurer.

Article 47. Transfer of assets and compensation of deficits in the policyholders’ funds by life insurers

1. In the case where a policyholders' fund run a deficit (the situation where the asset value is lower than the sum of operational provisions and accounts payable allocated to such policyholders' fund), the life insurer shall compensate for such policyholders’ fund with cash or deposits, which shall be at least equal to the deficit, from the shareholders’ fund at credit institutions no later than three (03) months after the deficit is determined. When the policyholders' fund generates any surplus, the insurer shall be refunded a part or all of the amount it has compensated for the fund before but shall not charge interests on such policyholders' fund, provided that the refund does not cause such policyholders' fund to be in deficit.

2. The life insurer may not transfer assets or capital from the policyholders' fund to the shareholders' fund, except refunding the amount it has contributed to establish the fund and the respective interests (if any) in accordance with the regulations of the Government, or the replenishment amount transferred from the shareholders' fund to the policyholder to compensated for the deficit thereof as specified in Clause 1 of this Article, or transferring surpluses.

3. In the case where the life insurer maintains multiple policyholders' funds, it may not transfer assets or capital among the policyholders' funds except allocating charges/fees in case of investment-linked insurance or pension products. The life insurer may not use the assets of one policyholders' fund to compensate for the deficit of another policyholders' fund.

4. The life insurer must record in writing all transactions related to the amount transferred from the shareholders' fund to compensate for the deficit of the policyholders' fund and the refund thereof from the policyholders' fund to the shareholders' fund. Such transactions must be presented on the periodical fund segregation reports, which must be certified by its Appointed Actuary and Chief Accountant.

Article 48. Principles of distributing surplus for participating life insurance policies

1. At the end of a fiscal year, a life insurer may partially or wholly distribute the surplus of its participating policyholders' fund to the policyholders and shareholders. In any case, the life insurer shall ensure that all policyholders receive not less than 70% of the surplus of total profits earned or the surplus difference between the actual amounts and the assumptions used in the rate-making methodology and considerations, including: the assumption about the risk ratio associated with insurance benefits, the assumption about investment interest rates, and the assumption about costs, whichever is greater. The determination of the surplus difference between the actual amounts and the assumptions used in the rate-making methodology and considerations as specified in this Clause is not applicable in the fiscal years before 2023.

2. Life insurers must obtain approval from the Ministry of Finance to apply or change the method of surplus distribution for the participating policyholders’ fund before applying such method, unless changing the risk ratio assumption specified in Clause 1 of this Article. Life insurer may, at their discretion, choose the method of determining and distributing the surplus, but must ensure that the surplus distributed to the policyholders is not lower than the requirement specified in Clause 1 of this Article. Reports on surplus distribution shall be made using Form No. 8-NT provided in Appendix VIII to this Circular.

Section 6

INFORMATION DISCLOSURE

Article 49. Publication of information

Any insurer/reinsurer/Vietnam-based foreign branch shall be responsible for posting, storing, and retaining information to be publicized in a periodic, regular or ad hoc manner as follows:

1. Information shall be published on the website of the insurer/reinsurer/Vietnam-based foreign branch in Vietnamese and other languages (if any).

2. Information to be publicized in a periodic, regular or ad hoc manner shall be posted on the website of the insurer/reinsurer/Vietnam-based foreign branch.

3. Information to be published on the website of the insurer/reinsurer/Vietnam-based foreign branch must indicate the time of publication and be accessible, searchable by users on the respective website.

4. Information to be publicized in a periodic or ad-hoc manner must be stored as hard copies (if any) and electronic data, and be accessible on the website of the insurer/reinsurer/Vietnam-based foreign branch for at least 05 years from the date on which the information is disclosed.

5. Information to be disclosed in a regular manner must be updated and accessible on the website of the insurer/reinsurer/Vietnam-based foreign branch.

6. In the case where the obligation to disclose information arises on a holiday or a non-business day as specified by the law, the insurer/reinsurer/Vietnam-based foreign branch must fulfill such disclosure obligation on the business day immediately succeeding the said holiday or non-business day.

Article 50. Information to be disclosed in an ad hoc manner

1. The value of additional announced profits or additional accumulated dividends in the fiscal year in order to ensure the principle of surplus distribution as specified by the law.

2. The adjustment to the announced investment interest rates of universal life insurance funds, voluntary pension funds or unit prices of unit-linked funds that are misvalued.

3. Restricted reinsurance.

4. Unusual developments that affect the solvency and reputation of the insurer as specified at Point a, Clause 2, Article 106 of the Law on Insurance Business.

Chapter V

INSURANCE AGENTS AND INSURANCE BROKERS

Section 1

INSURANCE AGENTS

Article 51. Insurance agent commissions

1. Insurers or branches of foreign non-life insurers shall pay insurance agent commissions as specified in Clause 3 of this Article to insurance agents after the insurance agents provide services to the insurers or branches of foreign non-life insurers.

2. An insurer/foreign non-life insurer’s branch shall, pursuant to Clause 3 of this Article and its specific conditions and characteristics, develop its own agent commission regulations which must be consistently and publicly applied within the respective insurer/foreign non-life insurer’s branch.

3. The maximum commission rates, which are based on the bone fide premiums collected under each policy and paid by the insurer/foreign non-life insurer’s branch to insurance agents are specified as follows (unless otherwise specified at Point 3.4 of this Clause):

3.1. Maximum insurance agent commission rate for non-life insurance policies:

Maximum insurance agent commission rates for compulsory insurance

- For all-in-one policies, agent commissions shall be equal to total amount of agent commissions paid for each type of insurance under such policies.

3.2. Maximum insurance agent commission rate for life insurance policies:

a) For individual life insurance policies:

Maximum commission rates applied to types of insurance are specified as follows:

- For insurance policies issued before July 1, 2024, the maximum agent commission rates are displayed in the following table:

- For insurance policies issued from July 1, 2024, the maximum agent commission rate is implemented as follows:

+ For insurance policies with the yearly renewable term of 1 year or less: 20%

+ For insurance policies with the term of more than 01 year:

b) Maximum insurance agent commission rate for pension policies: 3% of the total premium;

c) For group life insurance policies: The maximum insurance agent commission rates shall be equal to 50% of the respective rates applied to individual life insurance policies of the same type of insurance.

3.3. Maximum insurance agent commission rate for health insurance policies: 20%.

3.4. For insurance products, which are guided in separate guiding documents, shall comply with the respective guiding documents.

4. In the case where a mutual organization provides microinsurance to its members through a microinsurance agent, the maximum insurance agent commission rate is equal to 10% of the bone fide premiums collected under each policy.

Article 52. Bonuses, allowances and other incentives offered to insurance agents under insurance agency agreements

1. Non-life insurers or branches of foreign non-life insurers shall offer bonuses, allowances and other incentives to insurance agents under insurance agency agreements as follows:

a) For health insurance policies: The sum of bonuses, allowances and other incentives offered to agents shall not exceed 100% of insurance agent commissions of all health insurance policies in the fiscal year;

b) For non-life insurance policies: The sum of bonuses, allowances and other incentives offered to agents shall not exceed 50% of insurance agent commissions of all non-life insurance policies in the fiscal year.

2. Bonuses, allowances and other incentives as agreed in agent policies of life insurers, health insurers shall be implemented as follows:

a) For agents conducting new business: The total bonuses, allowances and other incentives of agents in each fiscal year must not exceed the total 20% of the bone fide premiums collected under insurance policies with the term of 01 year or less and the yearly renewable term of 01 year, and 30% of the bone fide first-year premiums collected under insurance policies with the term of over 01 year.

b) For agents servicing renewable insurance policies with the term of over 01 year: The total bonuses, allowances and other incentives in each fiscal year must not exceed 7% of the bone fide renewable premiums collected in the year.

3. Life insurers that are offering bonuses, allowances and other incentives insurance agents, which are higher than the rates specified in Clause 2 of this Article, shall review and develop roadmaps and plans to reduce such amounts in each fiscal year and accomplish such plans by no later than December 31, 2025.

4. The Boards of Directors (Members’ Councils) of the life insurers shall approve the plans as specified in Clause 3 of this Article before December 31, 2023 and inspect, monitor such roadmaps and plans.

Article 53. Distribution of insurance products by agents

1. When giving advice on insurance products, any insurance agent or corporate agent’s employee who directly perform insurance agent operations must provide adequate and accurate information to policyholders about insurance products and use the documents provided by the insurer/non-life foreign insurer’s branch. The agent or the corporate agent’s employee may not on his/her own compile product brochures or sales illustrations, or deliberately change the contents of the product brochures or sales illustrations provided to him/her by the insurer/foreign non-life insurer’s branch.

2. When providing investment-linked insurance products, any individual insurance agent or any corporate agent’s employee who directly acts as an insurance agent to distribute the unit-linked insurance product must comply with the following regulations:

a) Collecting information and completing the documents specified at Point b, Clause 2, Article 30 of this Circular;

b) Informing the policyholder about the calculation tool so that they can develop the insurance plan on his/her own and the terms and conditions of the insurance product the customer intends to purchase posted on the website of the insurer as specified in Clause 4, Article 97 of the Decree No. 46/2023/ND-CP; analyzing customer information including financial needs and capabilities of the policyholder; helping the policyholder complete the risk tolerance questionnaire, thereby advising the policyholder to choose the appropriate unit-linked fund (for unit-linked insurance products);

c) Explaining to the policyholder about the benefits of the product and the characteristic risks associated therewith, and require the policyholder to sign off the documents as specified in Article 30 of this Circular.

d) Not making comparison or guaranteeing that the investment results of one unit-linked fund are better than that of another unit-linked fund or of another insurer;

dd) Make an audio recording of information related to the advice on the insurance product at the time the policyholder signs the insurance application form. Such audio recording must cover at least the following information:

- The insurance agent’s name and reference number of his/her insurance agent certification;

- The policyholder’s name, age, phone number, and address;

- Advice given by the insurance agent or corporate agent’s employee who directly perform insurance agent operations on insurance benefits, investment profits and risks that may face the policyholder as he/she purchases the investment-linked insurance product, the charges/fees levied on the policyholder by the insurer, and the requirements for claiming the benefits agreed upon in the insurance policy;

- Notification of premiums and the payment term as decided by the policyholder to confirm that they are suitable with the financial capacity of the policyholder;

- Information of the policyholder about the free-look period, his/her rights and responsibilities including that for making truthful declarations; key information about the benefits as agreed under the insurance policy and the conditions to claim such benefits;

- The policyholder’s confirmation that his/her purchase of the insurance is in a sole voluntary manner and in accordance with his/her financial and insurance needs.

In case of the audio recording contains other information, which are related to privacy and personal secrets, the consent of the policyholder must be obtained in advance.

Insurers must comply with this regulation no later than 01 year after the effective date of this Decree.

3. Corporate agents shall comply with the following regulations:

a) Explaining to policyholders that the products distributed by the corporate agents are insurance products. Purchasing insurance products is not a mandatory condition for using other products or services of the corporate agents;

b) Reconciling with the insurers the data on new business policies, premium revenue, insurance policies in force distributed by the corporate agents on a monthly basis.

c) Credit institutions and foreign bank branches acting as insurance agents are not allowed to advise on, introduce, or offer invest-linked insurance products for sale, or arrange the signing of invest-linked insurance policies with customers within the period of 60 days before and 60 days after the full disbursement of such loans.

4. In case of distributing insurance products through any corporate agent, any insurer/foreign non-life insurer’s branch must:

a) Regularly supervise and conduct inspections to ensure the quality of the introduction and advice on insurance products given by the employees of the corporate agent; promptly coordinate with the corporate agent to check, review and settle customer complaints related to the advice given by the employees of such corporate agent and handle misconduct (if any).

b) Not sign any individual agency agreement with any employee of the corporate agent in order to perform agent operations for the same insurance policy. Any insurer/foreign non-life insurer’s branch that has signed an individual insurance agency agreement with an employee of a corporate agent in order to perform agent operations for the same insurance contract with such corporate agent before the effective date of this Circular must review and ensure compliance with this regulation before July 01, 2024.

5. In case of distributing investment-linked insurance products, any life insurer shall:

a) Independently verify the advice given by the agent. If the product is distributed through a corporate agent, the verification process shall be carried out before the issuance of the policy is decided. The verification must aim at identifying whether the policyholder purchases the insurance product in a sole voluntary manner and the advised insurance product is suitable with the financial needs of the policyholder;

b) Not issue policies if the audio records as specified at Point dd, Clause 2 of this Article do not contain the policyholders’ confirmation that they voluntarily purchase insurance based on their financial capacity and insurance needs;

c) Store and hold in strict confidence documents and audio recordings as specified at Point dd, Clause 2 of this Article for at least 05 years from the effective date of the respective insurance policies. Insurers may only use the above information for evaluating the quality of insurance agent operations, addressing feedback and complaints related to insurance agent operations, and preventing insurance fraud, as well as provide them to competent authorities upon request.

6. In the case where an insurer/non-life foreign insurer’s branch signs multiple agency agreements to perform the same insurance policy, it is necessary to clearly specify the authorized agent operations in each insurance agency agreement as the basis for offering commissions, bonuses, allowances, and other incentives to the insurance agents as agreed upon in the agency agreements. In all cases, the total sum of commissions shall not exceed the maximum commission rate specified in Article 51 of this Circular.