Decree 21/2023/ND-CP on microinsurance

DECREE

On microinsurance^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 17, 2020 Law on Enterprises;

Pursuant to the June 17, 2020 Law on Investment;

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

At the proposal of the Minister of Finance;

The Government promulgates the Decree on microinsurance.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree details the implementation of Clause 2, Article 88 regarding microinsurance; and Clause 3, Article 144; Clause 3, Article 145; Clause 2, Article 146; Clause 3, Article 148; Clauses 2, 3 and 5, Article 149; and Clause 5, Article 150, of the Law on Insurance Business.

Article 2. Subjects of application

1. Microinsurance-providing organizations, including:

a/ Non-life insurance enterprises, life insurance enterprises and health insurance enterprises (below collectively referred to as insurance enterprises), and foreign non-life insurance enterprises’ branches established and operating in Vietnam;

b/ Mutual organizations providing microinsurance established and operating in Vietnam.

2. State management agencies in charge of insurance business activities.

3. Organizations and individuals involved in microinsurance activities, including:

a/ Insurance buyers under microinsurance contracts and members participating in microinsurance;

b/ Members’ representative organizations;

c/ Other related organizations and individuals.

Chapter II

MICROINSURANCE PRODUCTS

Article 3. The sum insured and the maximum premium of a microinsurance product

1. The sum insured under each insurance contract of a microinsurance product to protect the insured from life and health risks must not exceed 5 times the annual per-capita income of a household living just above the poverty line in urban areas as specified by the Government at the time of provision of such product.

2. The sum insured under each insurance contract of a microinsurance product to protect the insured from property risks must not exceed the market value of the insured property at the time of participation in insurance and must not exceed 5 times the annual per-capita income of a household living just above the poverty line in urban areas as specified by the Government at the time of provision of such product.

3. The annual premium for each insurance contract of a microinsurance product must not exceed 5% of the annual per-capita income of a household living just above the poverty line in urban areas as specified by the Government at the time of provision of such product. The premium must correspond to the insurance benefit.

Article 4. Microinsurance products provided by insurance enterprises or foreign non-life insurance enterprises’ branches

1. Insurance enterprises and foreign non-life insurance enterprises’ branches wishing to provide microinsurance products shall comply with the Law on Insurance Business and guiding documents; and Articles 3, 4 and 6 of this Decree.

2. Life insurance enterprises may provide microinsurance products to protect the insured from life and health risks with a term not exceeding 5 years.

3. Non-life insurance enterprises and foreign non-life insurance enterprises’ branches may provide:

a/ Microinsurance products to protect the insured from life and health risks with a term of up to 1 year;

b/ Microinsurance products to protect the insured from property risks with a term not exceeding 5 years.

4. Health insurance enterprises may provide:

a/ Microinsurance products to protect the insured from life risks with a term of up to 1 year;

b/ Microinsurance products to protect the insured from health risks with a term not exceeding 5 years.

5. The name of a microinsurance product provided by an insurance enterprise or a foreign non-life insurance enterprise’s branch must have the phrase “Microinsurance product” as a component to distinguish it from other insurance products of such enterprise or branch.

Article 5. Microinsurance products provided by mutual organizations providing microinsurance

A mutual organization providing microinsurance may only provide microinsurance products with a term of up to 1 year so as to meet needs of its members. Insurance products cover one or some of the following specific benefits:

1. Healthcare benefit, covering part or the whole of hospitalization and surgery costs for the insured when the insured are hospitalized or undergo surgery covered by insurance.

2. Accidental disability benefit, covering the sum insured in proportion to the insured’s disability rate as agreed upon in the microinsurance contract when the insured suffers an accidental disability covered by insurance.

3. Total and permanent death or disability benefit, covering payment to the beneficiary of the sum insured as agreed upon in the microinsurance contract when the insured dies or suffers total and permanent disability covered by insurance.

4. Funeral allowance benefit, covering payment of an additional funeral allowance amount as agreed upon in the microinsurance contract when the death benefit is paid.

5. Property benefit, covering payment of insurance claims as agreed upon in the microinsurance contract when the insured property is damaged due to causes covered by insurance.

Article 6. Dossiers, order and procedures for registration of methods and bases for calculating premiums of microinsurance products

1. Microinsurance-providing organizations shall register bases and methods for calculating premiums of microinsurance products before provision.

2. A microinsurance-providing organization shall submit to the Ministry of Finance 1 dossier for registration of premium calculation bases and method, which must comprise:

a/ A request for registration of premium calculation bases and methods, made according to Form No. 06 provided in the Appendix to this Decree;

b/ A summary of insurance benefits and terms on exclusion of insurance liability of the insurance product to be provided;

c/ The formula, method and bases for calculating net premium and gross premium and documents explaining bases used for calculating the premium of the microinsurance product to be provided; and principles of premium increase or reduction (if any). These documents shall be certified by a microinsurance actuary.

3. Within 14 days after receiving a complete and valid dossier, the Ministry of Finance shall issue an approval of the premium calculation bases and method of the microinsurance-providing organization. In case of disapproval, the Ministry of Finance shall issue a reply, clearly stating the reason.

4. If wishing to change premium calculation bases and method for a microinsurance product, a microinsurance-providing organization shall submit to the Ministry of Finance 1 dossier of request for approval of modification or supplementation of the premium calculation bases and method, which must comprise:

a/ A request for modification or supplementation of premium calculation bases and method, made according to Form No. 06 provided in the Appendix to this Decree;

b/ Explanatory documents on modifications or supplementations, certified by a microinsurance actuary.

5. Within 14 days after receiving a complete and valid dossier, the Ministry of Finance shall issue an approval of modification or supplementation of premium calculation bases and method of the microinsurance-providing organization. In case of disapproval, the Ministry of Finance shall issue a reply, stating the reason.

Chapter III

ESTABLISHMENT, ORGANIZATION AND OPERATION OF MUTUAL ORGANIZATIONS PROVIDING MICROINSURANCE

Section 1

GRANT, RE-GRANT, MODIFICATION OR SUPPLEMENTATION AND REVOCATION OF ESTABLISHMENT AND OPERATION LICENSES, AND SUSPENSION OF OPERATION, OF MUTUAL ORGANIZATIONS PROVIDING MICROINSURANCE

Article 7. Conditions for grant of establishment and operation licenses of mutual organizations providing microinsurance

A mutual organization providing microinsurance must satisfy the conditions specified in Article 149 of the Law on Insurance Business, in which the conditions mentioned in Clauses 2, 3 and 5 are specified as follows:

1. The mutual organization providing microinsurance has the founding capital not lower than VND 10 million. Capital sources for founding of a mutual organization providing microinsurance include:

a/ Contributed capital of individuals who are founding members. Founding members may not use loans or investment entrustment capital of other organizations or individuals for capital contribution;

b/ Support of the members’ representative organization;

c/ Donations of donors, international organizations, programs and projects;

d/ Other lawful sources as specified by law.

2. Persons expected to act as Chairperson of the Board of Directors, General Director/Director, legal representative and actuary satisfy the conditions and criteria specified in Articles 24 and 25 of this Decree.

3. The draft charter is consistent with the operational objectives of the mutual organization providing microinsurance and complies with Article 8 of this Decree.

Article 8. Charters of mutual organizations providing microinsurance

1. The charter of a mutual organization providing microinsurance must have at least the following contents:

a/ Name and proposed location of the head office of the mutual organization providing microinsurance;

b/ Purpose of establishment of the mutual organization providing microinsurance;

c/ Contents, scope, geographical area and duration of operation;

d/ Procedures for becoming members, procedures for membership termination, and rights and obligations of members of the mutual organization providing microinsurance. Members of a mutual organization providing microinsurance must be Vietnamese citizens aged 18 years or older and having full civil act capacity; be members of the same organization and satisfy the conditions specified in its charter;

dd/ Names, addresses, rights, obligations and number of founding members of the mutual organization providing microinsurance (which must be at least 7 in case the founding members are individuals); or name, address, rights and obligations of the members’ representative organization (in case the founding member is the members’ representative organization);

e/ The organizational structure, functions, tasks, powers, tenure and mode of operation of the Members’ General Meeting (in case the founding members are individuals), Board of Directors, Board of Management and Supervisory Board; procedures for election, removal from office and relief from duty of members of the Board of Directors, Chairperson of the Board of Directors, and Supervisory Board;

g/ Cases of holding of extraordinary General Meetings of Members (in case the founding members are individuals);

h/ Order and procedures for conducting General Meetings of Members and adopting resolutions at General Meetings of Members; standards, order and procedures for election of delegates to attend General Meetings of Members (in case the founding members are individuals);

i/ Founding capital of the mutual organization providing microinsurance; method of capital contribution; method and principles of reimbursement of founding capital amount contributed by the members’ representative organization (if any);

k/ Financial regulations; principles for deciding on the increase or reduction of premiums; method of using operation outcomes of the mutual organization providing microinsurance;

l/ Principles of internal dispute settlement;

m/ Principles and order of division of assets in case the mutual organization providing microinsurance is dissolved;

2. The replacement or supplementation or modification of the Charter of a mutual organization providing microinsurance shall be decided by its General Meeting of Members (in case the founding members are individuals) or the members’ representative organization (in case the founding member is the members’ representative organization).

Article 9. Meetings to establish mutual organizations providing microinsurance

1. Participants in a meeting to establish a mutual organization providing microinsurance in case its founding members are individuals include:

a/ The founding members;

b/ Other members belonging to the same organization with the founding members and wishing to participate in the provision of microinsurance products.

2. A meeting shall adopt a resolution with the following contents:

a/ Authorization for a representative of the founding members of the mutual organization providing microinsurance to submit a dossier of application for an establishment and operation license;

b/ Draft charter of the mutual organization providing microinsurance;

c/ Tentative plan on provision of microinsurance products as specified at Point d, Clause 2, Article 10 of this Decree;

d/ Persons expected to be appointed as the Chairperson of the Board of Directors, General Director/Director, legal representative, and actuary;

dd/ Other matters relating to the establishment and organization and operation of the mutual organization providing microinsurance.

3. To be adopted, the resolution of the meeting to establish the mutual organization providing microinsurance mentioned in Clause 2 of this Article must be that gaining 51% or more of votes for.

Article 10. Dossiers, order and procedures for grant of establishment and operation licenses of mutual organizations providing microinsurance

1. Founding members of a mutual organization providing microinsurance shall submit a dossier of application for an establishment and operation license according to the following provisions:

a/ In case these founding members are individuals as specified at Point a, Clause 1, Article 149 of the Law on Insurance Business: They shall hold a meeting to establish a mutual organization providing microinsurance under Article 9 of this Decree. The authorized representative shall submit a dossier of application for an establishment and operation license of the mutual organization providing microinsurance;

b/ In case the founding member is the members’ representative organization as specified at Point b, Clause 1, Article 149 of the Law on Insurance Business: The person authorized by the members’ representative organization shall submit a dossier of application for an establishment and operation license of the mutual organization providing microinsurance.

2. A dossier of application for an establishment and operation license of a mutual organization providing microinsurance must comprise:

a/ An application for an establishment and operation license, made according to Form No. 01 provided in the Appendix to this Decree;

b/ The draft charter of the mutual organization providing microinsurance;

c/ The certification by a commercial bank licensed to operate in Vietnam that the founding capital amount (which must not be lower than the level specified in Clause 1, Article 7 of this Decree) has been deposited into a blocked bank account and may be released only after the Ministry of Finance grants the establishment and operation license to the mutual organization providing microinsurance or issues a refusal to grant the license;

d/ The plan on microinsurance provision, which must clearly state the provision process and network; expected revenues, expenses and results of microinsurance activities in the first 3 years in proportion to the number of members and network of the mutual organization providing microinsurance;

dd/ A resolution of the meeting to establish the mutual organization providing microinsurance regarding establishment of such organization, which must have the contents specified in Clause 2, Article 9 of this Decree (in case the founding members are individuals);

e/ A competent authority’s document as required by the Charter of the members’ representative organization on the establishment of the mutual organization providing microinsurance (in case the founding member is the members’ representative organization);

g/ The list of founding members and documents proving the founding members’ satisfaction of the conditions specified at Point a, Clause 1, Article 149 of the Law on Insurance Business (in case the founding members are individuals);

h/ The charter and a copy of the establishment decision or business registration certificate or another document of equivalent validity of the members’ representative organization (in case the founding member is the members’ representative organization);

i/ Curriculum vitae and criminal record certificate; a copy of citizen identity card or people’s identity card or passport or another lawful personal identification paper; copies of diplomas, degrees and documents proving the capacity and professional qualifications of persons expected to be appointed as Chairperson of the Board of Directors, General Director/Director, legal representative, and microinsurance actuary of the mutual organization providing microinsurance;

k/ Explanations about, and commitment to building, an information technology system satisfying the conditions specified in Clause 6, Article 149 of the Law on Insurance Business.

3. Within 21 days after receiving a dossier of application for a license, if finding such dossier incomplete or invalid, the Ministry of Finance shall issue a notice, requesting the applicant to supplement or modify the dossier. The time limit for dossier supplementation or modification is 6 months from the date of issuance of the notice. In case the applicant fails to supplement or modify the dossier within such time limit, the Ministry of Finance shall issue a refusal to consider granting a license.

4. Within 60 days after receiving a complete and valid dossier, the Ministry of Finance shall grant a license, made according to Form No. 02 provided in the Appendix to this Decree, to a mutual organization providing microinsurance. In case of refusal to grant a license, the Ministry of Finance shall issue a reply, clearly stating the reason.

5. The Ministry of Finance shall announce on its portal contents of establishment and operation licenses of mutual organizations providing microinsurance within 30 days after granting such a license.

Article 11. Dossiers, order and procedures for re-grant of establishment and operation licenses

1. In case the establishment and operation license of a mutual organization providing microinsurance is lost, broken, damaged or otherwise destroyed, the mutual organization providing microinsurance shall submit to the Ministry of Finance a dossier of request for re-grant of its establishment and operation license specified in  Clause 2 of this Article.

2. A dossier of request for re-grant of an establishment and operation license must comprise:

a/ A request for re-grant of an establishment and operation license, made according to Form No. 03 provided in the Appendix to this Decree;

b/ The commitment of the mutual organization providing microinsurance that its license is lost, damaged, broken or destroyed and supporting documents (if any).

3. Within 14 days after receiving a complete and valid dossier, the Ministry of Finance shall re-grant an establishment and operation license. In case of refusal to re-grant a license, the Ministry of Finance shall issue a reply, clearly stating the reason.

Article 12. Dossiers, order and procedures for modification or supplementation of establishment and operation licenses

1. A mutual organization providing microinsurance shall request the Ministry of Finance to modify or supplement its establishment and operation license in the following cases:

a/ Its name or head office’s location is changed;

b/ Its operation content, scope or duration is changed.

2. A dossier of request for change of the name or head office’s location of a mutual organization providing microinsurance must comprise:

a/ A request for change of the name or head office’s location of a mutual organization providing microinsurance, made according to Form No. 04 provided in the Appendix to this Decree;

b/ A competent authority’s document as required in the Charter of the mutual organization providing microinsurance regarding the change of its name or head office’s location;

c/ Documents proving the right of the mutual organization providing microinsurance to use its head office’s location (in case of request for change of the head office’s location).

3. A dossier of request for change of the operation content, scope or duration of a mutual organization providing microinsurance must comprise:

a/ A request for change of the operation content, scope or duration of a mutual organization providing microinsurance, made according to Form No. 04 provided in the Appendix to this Decree;

b/ A competent authority’s document as required in the Charter of the mutual organization providing microinsurance regarding the change of its operation content, scope or duration;

c/ Documents proving that the mutual organization providing microinsurance has made full deposit payment under Article 37 of this Decree; fully set aside technical reserves under Article 38 of this Decree; earned positive profits at the time of making audited financial statements of the year preceding the year of dossier submission (in case of request for expansion of operation content or scope); or ensures fulfillment of its responsibilities toward members participating in microinsurance (in case of request for narrowing of the operation content or scope or change of the operation duration).

4. Within 14 days after receiving a complete and valid dossier (for dossiers of request for change of the operation content, scope or duration) or within 7 working days after receiving a complete and valid dossier (for dossiers of request for change of the name or head office’s location), the Ministry of Finance shall grant a modified license, made according to Form No. 05 provided in the Appendix to this Decree. In case of refusal to grant a modified license, the Ministry of Finance shall issue a reply, clearly stating the reason.

Article 13. Order and procedures for suspension of operation of mutual organizations providing microinsurance

1. Within 15 days from the date of expiration of the time limit specified in Clause 4, Article 36 of this Decree, the Ministry of Finance shall issue a decision to suspend the operation of a mutual organization providing microinsurance. The suspension period is between 1 month and 6 months, depending on the nature and severity of the violation.

2. During the suspension period, a mutual organization providing microinsurance shall:

a/ Refrain from signing new microinsurance contracts or extending the existing ones;

b/ Fully set aside technical reserves in accordance with law for microinsurance contracts signed before the time of suspension; and continue to pay debts and fulfill obligations under contracts entered into with members participating in microinsurance and its employees in accordance with law;

c/ Implement a plan to remediate its violations.

3. Within 15 days from the date of expiration of the suspension period, the mutual organization providing microinsurance shall send to the Ministry of Finance a report on results of the implementation of the plan to remediate its violations.

a/ If having remediated its violations, the mutual organization providing microinsurance may resume its normal operation;

b/ In case the mutual organization providing microinsurance is unable to remediate its violations, the Ministry of Finance shall revoke its establishment and operation license. The revocation of establishment and operation licenses must comply with Articles 14 and 16 of this Decree.

Article 14. Revocation of establishment and operation licenses

1. A mutual organization providing microinsurance will have its establishment and operation license revoked in the following cases:

a/ The dossier of application for an establishment and operation license contains fraudulent information to make the organization eligible for grant of the license;

b/ It operates in contravention of its establishment and operation license;

c/ It is unable to remediate violations under Point b, Clause 3, Article 13 of this Decree;

d/ It is unable to increase the number of members under the plan reported to the Ministry of Finance as specified in Clause 3, Article 32 of this Decree;

dd/ It dissolves on a voluntary basis.

2. For the cases specified at Points a and b, Clause 1 of this Article, the order and procedures for revocation of establishment and operation licenses must comply with Article 15 of this Decree.

3. For the cases specified at Points c and d, Clause 1 of this Article, the order and procedures for revocation of establishment and operation certificates must comply with Article 16 of this Decree.

4. For the case specified at Point dd, Clause 1 of this Article, dossiers, order and procedures for revocation of establishment and operation licenses must comply with Article 17 of this Decree.

5. A mutual organization providing microinsurance shall terminate its operation from the date on which the Ministry of Finance issues a decision to revoke its establishment and operation license.

Article 15. Order and procedures for revocation of establishment and operation licenses in case of licensing-related frauds or operation in contravention of establishment and operation licenses

1. From the date of signing the record of violations in one of the cases specified at Points a and b, Clause 1, Article 14 of this Decree, a mutual organization providing microinsurance shall:

a/ Refrain from signing new microinsurance contracts or extending the existing ones;

b/ Notify all members participating in microinsurance and related individuals and organizations of the division of assets before the establishment and operation license is revoked;

c/ Form a dissolution council to divide assets in the order of priority specified in Clause 2 of this Article.

2. The division of assets shall be carried out in the following order of priority:

a/ Paying indemnities and sums insured for the insurance-covered claims;

b/ Refunding premiums corresponding to the remaining coverage period of microinsurance contracts;

c/ Paying arrears of salary, severance allowance, social insurance and health insurance sums to employees;

d/ Fulfilling financial obligations toward the State; paying unsecured debts to creditors on the list of creditors; and paying secured debts not yet paid for the reason that the value of collateral is insufficient for debt payment;

dd/ Refunding founding capital amounts contributed by founding members.

In case the value of assets is insufficient for division, subjects in the same order of priority may receive payments in proportion to their debt amounts. In case assets of a mutual organization providing microinsurance are not used up after the division of the above amounts, the remainder shall be divided to founding members and members participating in microinsurance.

3. Within 12 months after signing the record of violations, a mutual organization providing microinsurance shall accomplish the tasks specified in Clauses 1 and 2 of this Article and send a report thereon to the Ministry of Finance, together with documents proving the task accomplishment.

4. Within 30 days after receiving the report specified in Clause 3 of this Article, the Ministry of Finance shall issue a decision on revocation of the establishment and operation license of a mutual organization providing microinsurance and publish such decision on its portal.

Article 16. Order and procedures for revocation of establishment and operation licenses in case mutual organizations providing microinsurance are unable to remediate violations

1. From the date of expiration of the suspension period specified in Clause 1, Article 13 of this Decree but a mutual organization providing microinsurance is unable to remediate the violations, or from the date on which the mutual organization providing microinsurance reports to the Ministry of Finance on its inability to increase the number of members under Clause 3, Article 32 of this Decree, the mutual organization providing microinsurance shall:

a/ Notify all members participating in microinsurance and related individuals and organizations of the division of assets before the establishment and operation license is revoked;

b/ Form a dissolution council to divide assets in the order of priority specified in Clause 2, Article 15 of this Decree.

2. A mutual organization providing microinsurance shall accomplish the tasks specified in Clause 1 of this Article, and shall send a report to the Ministry of Finance, together with supporting documents, within 12 months from the date of expiration of the suspension period specified in Clause 1, Article 13 of this Decree, in case it is unable to remediate its violations; or within 12 months from the date on which it reports to the Ministry of Finance on its inability to increase the number of members under Clause 3, Article 32 of this Decree.

3. Within 30 days after receiving the report specified in Clause 2 of this Article, the Ministry of Finance shall issue a decision on revocation of the establishment and operation license of a mutual organization providing microinsurance and publish such decision on its portal.

Article 17. Order and procedures for revocation of establishment and operation licenses in case mutual organizations providing microinsurance dissolve on a voluntary basis

1. A mutual organization providing microinsurance may only dissolve itself when it has fulfilled all obligations and is not involved in any dispute with members participating in microinsurance, its employees, the State and other related individuals and organizations.

2. A mutual organization providing microinsurance that dissolves on a voluntary basis shall send to the Ministry of Finance a dossier of request for approval of dissolution, which must comprise:

a/ A request for approval of dissolution;

b/ The minutes of the meeting and resolution of the General Meeting of Members (in case the founding members are individuals) or a competent authority’s document required by the Charter of the members’ representative organization (in case the founding member is the members’ representative organization) on the dissolution, and a dissolution plan;

c/ A plan on fulfillment of obligations toward members participating in microinsurance, the State, employees and other related organizations and individuals;

d/ A plan on handling and division of assets from microinsurance activities to members participating in microinsurance.

3. Within 14 days after receiving a complete dossier of request for approval of dissolution from a mutual organization providing microinsurance, the Ministry of Finance shall issue an in-principle approval of dissolution of the mutual organization providing microinsurance. In case of disapproval, the Ministry of Finance shall issue a reply, clearly stating the reason.

4. After receiving the in-principle approval of its dissolution, a mutual organization providing microinsurance shall:

a/ Refrain from signing new microinsurance contracts or extending existing ones;

b/ Publish information on its voluntary dissolution on 5 consecutive issues of a daily newspaper;

c/ Notify its voluntary dissolution to all members participating in microinsurance and related individuals and organizations;

d/ Form a dissolution council to divide assets under the plan on handling and division of assets reported to the Ministry of Finance.

5. Within 12 months from the date on which the Ministry of Finance issues the in-principle approval of the dissolution of a mutual organization providing microinsurance, such organization shall accomplish its obligations toward members participating in microinsurance, the State, employees and other related organizations and individuals; and handle and divide assets under the plan reported to the Ministry of Finance.

6. After accomplishing all obligations to members participating in microinsurance, employees, the State and other related individuals and organizations, a mutual organization providing microinsurance shall send to the Ministry of Finance a report on its accomplishment of all obligations, together with supporting documents.

7. Within 7 days after receiving the report on the accomplishment of obligations from a mutual organization providing microinsurance, the Ministry of Finance shall issue a decision on revocation of the establishment and operation license of such organization and publish such decision on its portal.

Article 18. General provisions on dossiers and documents

1. The dossiers and documents specified in Clause 2, Article 10; Clause 2, Article 11; Clauses 2 and 3, Article 12; and Clause 2, Article 17 must satisfy the following requirements:

a/ Documents containing signatures, titles and seals of foreign organizations and individuals must be consularly legalized in accordance with law no more than 12 months before the date of submission of a dossier, except the following papers: application for a license; copy of citizen identity card or people’s identity card or passport or another lawful personal identification paper; document issued by the enterprise’s competent authority; power of attorney; and commitment;

b/ In case a dossier contains documents that are copies, such documents must be copies issued from the original register or certified copies;

c/ Foreign-language documents shall be accompanied by Vietnamese translations certified by a competent agency;

d/ Criminal record certificates made according to the set form must be those issued by a competent agency no more than 12 months before the date of submission of a dossier. Such certificate must contain adequate information on the status of previous criminal convictions and information on the prohibition from holding certain positions or from establishing and managing enterprises or cooperatives;

dd/ Curriculum vitae must be made no more than 6 months before the date of submission of a dossier;

e/ The must be a list of documents included in the dossier.

2. Organizations and individuals involved in the process of making dossiers and documents shall take responsibility before law for the accuracy, truthfulness and completeness of such dossiers and documents. In case organizations or individuals commit frauds or forge papers and documents in the dossier of application for a license in order to prove their eligibility for grant of a license, the Ministry of Finance may refuse to consider granting an establishment and operation license for microinsurance provision for such organizations and individuals for a period of 5 years from the time of detecting the acts of committing frauds or forging papers and documents.

3. When legal, identification and residence papers of citizens that are components of dossiers specified in this Decree have been integrated into the National Population Database and the Citizen Identity Database, the Ministry of Finance shall exploit and use information in these two databases on the basis of exchange and provision of information among state management agencies.

Section 2

OPERATION ORGANIZATION AND RISK MANAGEMENT

Article 19. Contents of operation of mutual organizations providing microinsurance

Contents of operation of mutual organizations providing microinsurance include:

1. Providing microinsurance products.

2. Investing in working capital, required reserve funds and idle capital from technical reserves.

Article 20. Organizational and management structure of mutual organizations providing microinsurance

1. The organizational structure of a mutual organization providing microinsurance with founding members being individuals as specified at Point a, Clause 1, Article 149 of the Law on Insurance Business shall be composed of:

a/ General Meeting of Members;

b/ Board of Directors;

c/ General Director/Director;

d/ Supervisory Board or Supervisor.

2. The organizational structure of a mutual organization providing microinsurance with the founding member being the members’ representative organization as specified at Point b, Clause 1, Article 149 of the Law on Insurance Business shall be composed of:

a/ Members’ representative organization;

b/ Board of Directors;

c/ General Director/Director;

d/ Supervisory Board or Supervisor.

Article 21. General Meeting of Members

1. For a mutual organization providing microinsurance with founding members being individuals, the General Meeting of Members has the supreme decision-making power. General Meetings of Members include annual General Meetings of Members and extraordinary General Meetings of Members. A General Meeting of Members shall be held in the form of plenary general meeting.

2. An annual General Meeting of Members of a mutual organization providing microinsurance convened by the Board of Directors shall be held within 3 months from the end of a fiscal year to decide on:

a/ Approval of the report on performance in the year by the mutual organization providing microinsurance; and report on operation of the Board of Directors, Board of Management and Supervisory Board or Supervisor;

b/ Approval of operation and financial options and plans for the subsequent year of the mutual organization providing microinsurance;

c/ Making of deductions for funds in accordance with law; reduction of premiums for members in the subsequent fiscal year at the request of the Board of Directors:

d/ Mobilization of additional capital;

dd/ Election and removal from office of members of the Board of Directors and Supervisory Board;

e/ Dissolution of the mutual organization providing microinsurance;

g/ Modification or supplementation of the Charter of the mutual organization providing microinsurance;

h/ Payment of remuneration to members of the Board of Directors, Board of Management, Supervisory Board or Supervisor, and holders of other titles (if any) of the mutual organization providing microinsurance;

i/ Other matters as requested in writing by the Board of Directors or by at least one-third of total members of the mutual organization providing microinsurance.

A General Meeting of Members shall be held when it is attended by at least 75% of total members; otherwise, the General Meeting of Members shall be postponed. After 30 days from the intended date of the first meeting, the second General Meeting of Members shall be held when it is attended by at least 50% of total members; otherwise, the third meeting shall be held, regardless of the number of the attending members, within 20 days from the intended date of the second meeting.

3. An extraordinary General Meeting of Members shall be convened by the Board of Directors, Supervisory Board or Supervisor, or members representing at least one-third of total members of a mutual organization providing microinsurance in the following cases:

a/ To resolve matters falling beyond the competence of the Board of Directors;

b/ The Board of Directors cannot hold a regular meeting after having convened the meeting twice;

c/ At the request of the Supervisory Board or Supervisor;

d/ At the request of at least one-third of total members.

Within 15 days after receiving a request from the Supervisory Board or Supervisor or from at least one-third of total members, the Board of Directors shall convene an extraordinary General Meeting of Members. Past the 15-day time limit, if the Board of Directors fails to convene an extraordinary General Meeting of Members, the Supervisory Board or Supervisor may convene the General Meeting of Members.

If the Supervisory Board or Supervisor fails to convene an extraordinary General Meeting of Members within 15 days from the date on which it is empowered to convene such a meeting under Clause 3 of this Article, the members representing at least one-third of total members may convene the meeting.

Article 22. Members’ representative organizations

For a mutual organization providing microinsurance with the founding member being the members’ representative organization, such members’ representative organization is the body having the supreme decision-making power and may decide on:

1. Approval of the report on performance in the year by the mutual organization providing microinsurance; and report on operation of the Board of Directors, Board of Management and Supervisory Board or Supervisor.

2. Approval of financial options and plans for the subsequent year of the mutual organization providing microinsurance.

3. Reimbursement of the founding capital amount given as support from the members’ representative organization when the mutual organization providing microinsurance earn positive profits, and have made deductions for and maintained the required reserve fund not lower than VND 50 billion under Clause 2, Article 42 of this Decree.

4. Making of deductions for funds in accordance with law; reduction of premiums for members in the subsequent fiscal year at the request of the Board of Directors.

5. Mobilization of additional capital.

6. Appointment and removal from office of members of the Board of Director and Supervisory Board.

7. Dissolution of the mutual organization providing microinsurance.

8. Modification or supplementation of the Charter of the mutual organization providing microinsurance.

9. Payment of remuneration to members of the Board of Directors, Board of Management, Supervisory Board or Supervisor, and holders of other titles (if any) of the mutual organization providing microinsurance.

10. Other matters as requested in writing by the Board of Directors or by at least one-third of total members of the mutual organization providing microinsurance.

Article 23. Board of Directors

1. The Board of Directors of a mutual organization providing microinsurance is the governing body of the mutual organization providing microinsurance which has full power to act on behalf of the mutual organization providing microinsurance to decide on all matters related to the purpose and interests of the mutual organization providing microinsurance, except matters falling within the jurisdiction of the General Meeting of Members or Members’ Representative Organization. The Board of Directors shall be elected by the General Meeting of Members (for mutual organizations providing microinsurance founded by members) or appointed by the Members’ Representative Organization (for mutual organizations providing microinsurance established by Members’ Representative Organizations).

2. The Board of Directors of a mutual organization providing microinsurance shall meet at least twice a year to exercise the following rights and perform the following tasks:

a/ To decide on the development strategy of the mutual organization providing microinsurance;

b/ To propose the General Meeting of Members or the Members’ Representative Organization to decide on the increase or reduction of premiums for members in the next fiscal year; to decide on or handle losses incurred during the operation process;

c/ To decide on investment plans;

d/ To decide on operational and technological development solutions; to approve contracts of a value equal to or higher than 50% of the total value of assets recorded in the account book of the mutual organization providing microinsurance or a lower percentage specified in the Charter of the mutual organization providing microinsurance;

dd/ To appoint, relieve from office or dismiss the General Director/Director and other important managerial title holders of the mutual organization providing microinsurance; to decide on salary and other benefits of these managerial title holders;

e/ To decide on the organizational structure and internal management regulation of the mutual organization providing microinsurance;

g/ To submit annual financial-settlement reports to the General Meeting of Members or Members’ Representative Organization;

h/ To approve the agenda of, and content of documents for use at, the General Meeting of Members, convene a meeting of the General Meeting of Members or carry out procedures for collection of opinions for the General Meeting of Members to approve a decision;

i/ Other rights and tasks provided by law and the Charter of the mutual organization providing microinsurance.

Article 24. Chairperson of the Board of Directors, General Director/Director

1. The legal representative of a mutual organization providing microinsurance is the Chairperson of the Board of Directors or the General Director/Director. In case the Charter of the mutual organization providing microinsurance has no provision on this issue, the legal representative is the General Director/Director.

2. The General Director/Director is the person who executes the day-to-day operations of the mutual organization providing microinsurance and is held responsible before the Board of Directors for the performance of the assigned tasks.

3. The Chairperson of the Board of Directors and the General Director/Director must meet the following general criteria:

a/ Not being examined for penal liability, or having been convicted but not having his/her conviction expunged under regulations;

b/ Having a university or higher degree in insurance, finance or banking. Those who possess a university or higher degree in another major must have an insurance training certificate issued by an insurance training institution lawfully established and operating at home or abroad;

c/ In addition to the criteria specified at Points a and b of this Clause, the General Director/Director of a mutual organization providing microinsurance must have at least 3 years’ experience in the field of insurance.

Article 25. Criteria and conditions applicable to microinsurance actuaries

1. A microinsurance actuary must meet the following criteria and conditions:

a/ Not being examined for penal liability, or having been convicted but not having his/her conviction expunged under regulations;

b/ Being an associate of an actuarial association that is an official member of the International Actuarial Association, or having at least 5 years’ experience in the field of insurance and providing proofs of having passed at least 2 exams organized by one of the following associations: the United Kingdom Association of Consulting Actuaries, the American Society of Enrolled Actuaries, the Institute of Actuaries of Australia, and the Canadian Institute of Actuaries, or having passed exams under an actuarial training course or program recognized by one of the above associations as equivalent to 2 exams of that association.

After 5 years from the effective date of this Decree, microinsurance actuaries must become associates of an actuarial association that is an official member of the International Actuarial Association.

2. Mutual organizations providing microinsurance may employ microinsurance actuaries in the following forms:

a/ Signing labor contracts with microinsurance actuaries;

b/ Negotiating and concluding outsourcing contracts with other organizations and individuals for the latter to perform the tasks of microinsurance actuaries specified in Clause 3 of this Article. In this case, mutual organizations providing microinsurance shall still be held ultimately and solely responsible before members participating in microinsurance.

3. A mutual organization providing microinsurance shall employ actuaries who meet the criteria and conditions specified in Clause 1 of this Article to perform the following tasks:

a/ To calculate premiums; to annually evaluate the difference between the premium calculation assumptions and the actual context for marketing each insurance product, and calculate and adjust the premium rates in the following year and the plan on use of proceeds from insurance operations;

b/ To calculate the setting aside of technical reserves in accordance with law;

c/ Quarterly and annually, to submit to the Board of Directors and the General Director/Director reports on financial status and investment activities of the mutual organization providing microinsurance, stating arising risks and recommendations on investment assets and investment term of each type of assets, ensuring the commensuration between terms of investment assets and the obligations committed under insurance contracts;

d/ To promptly send to the General Director/Director and the Board of Directors reports on any extraordinary matters that are likely to adversely affect the financial status of the mutual organization providing microinsurance and propose remedial measures.

dd/ To evaluate reinsurance programs and reinsurance contracts (if any) before they are submitted to the General Director/Director and the Board of Directors for approval;

e/ To make annual reports on issues related to their tasks according to Form No. 11 provided in the Appendix to this Decree and submit them to the Ministry of Finance within 90 days after the end of a fiscal year;

g/ To perform other tasks to ensure the financial prudence of the mutual organization providing microinsurance.

Article 26. Risk management

1. Each mutual organization providing microinsurance shall establish a Supervisory Board or appoint a Supervisor under Article 27 of this Decree.

2. Mutual organizations providing microinsurance shall formulate and implement internal regulations on assignment of responsibilities; product research and development; exploitation, appraisal, compensation, and reinsurance processes and other business processes.

3. A mutual organization providing microinsurance shall regularly inspect and supervise the observance of laws, business processes and internal regulations. Inspection and supervision activities must be independent from insurance operations and help promptly evaluate and detect all risks that are likely to adversely affect operational efficiency and objectives of the mutual organization providing microinsurance and report them to competent persons of the mutual organization providing microinsurance for the latter to take appropriate handling measures.

4. Inspection and supervision results shall be recorded in writing and kept at the mutual organization providing microinsurance.

Article 27. Supervisory Board, Supervisor

1. The Supervisory Board and Supervisor of a mutual organization providing microinsurance shall be elected by the General Meeting of Members (for mutual organizations providing microinsurance whose founding members are individuals) or appointed by the Members’ Representative Organization (for mutual organizations providing microinsurance whose founding members are members’ representative organizations).

2. The Supervisory Board and Supervisor  of a mutual organization providing microinsurance shall operate independently, be held responsible before the General Meeting of Members or the Members’ Representative Organization, and exercise the following rights and perform the following tasks:

a/ To examine the rationality and legitimacy of the management and administration of operations and keeping of accounting books and financial statements of the mutual organization providing microinsurance;

b/ To appraise annual financial statements of the mutual organization providing microinsurance;

c/ To report to the General Meeting of Members on the accuracy, truthfulness and legitimacy of the recording and retention of documents and making of accounting books, financial statements and other reports of the mutual microfinance organization; and on the honesty and legitimacy of the management and administration of operations of the mutual organization providing microinsurance;

d/ To recommend measures to supplement, alter and improve the organizational structure for management and administration of operations of the mutual organization providing microinsurance;

dd/ Other rights and tasks as specified in the Charter of the mutual organization providing microinsurance.

The organization of the implementation of Points a and b of this Clause must neither interfere with the normal operation of the Board of Directors nor disrupt the administration of day-to-day operations of the mutual organization providing microinsurance.

3. A member of the Supervisory Board or the Supervisor may not concurrently act as a member of the Board of Directors, the General Director/Director, chief accountant, or treasurer and must not be the natural father or mother; adoptive father or mother; spouse; natural child or adopted child; or sibling of a member of the Board of Directors or another member of the Supervisory Board (in case a Supervisory Board has been established).

Section 3

MICROINSURANCE OPERATIONS

Article 28. Distribution of microinsurance products

1. Mutual organizations providing microinsurance may distribute microinsurance products through the following organizations and individuals:

a/ Members participating in microinsurance;

b/ Insurance agents.

2. Members participating in microinsurance that wish to provide counseling on microinsurance products and assist in the conclusion of microinsurance contracts shall annually receive at least 14 hours of training in microinsurance products before doing such jobs. Mutual organizations providing microinsurance shall provide training to their members.

3. Insurance agents providing microinsurance must have one of the following insurance agent certificates:

a/ Basic life insurance agent certificate;

b/ Health insurance agent certificate;

c/ Basic non-life insurance agent certificate (applicable only to insurance agents providing microinsurance products with property insurance benefits).

Article 29. Contents of microinsurance contracts

A microinsurance contract must contain at least the following details:

1. Member participating in microinsurance and beneficiary (if any).

2. Subject matter insured.

3. Sum insured or insurable value.

4. Insurance coverage or benefits; rules, conditions and terms of insurance.

5. Period of insurance, effective time of the insurance contract.

6. Premium rate, premium payment mode and term.

7. Mode of payment of indemnity and making of payout.

8. Rights and obligations of the mutual organization providing microinsurance in accordance with law.

9. Rights and obligations of the member participating in microinsurance in accordance with law.

Article 30. Rights and obligations of mutual organizations providing microinsurance

1. A mutual organization providing microinsurance has the following rights:

a/ To collect premiums as agreed in microinsurance contracts;

b/ To request members participating in microinsurance to fully and truthfully provide information relating to the conclusion and performance of microinsurance contracts:

c/ To refuse to make payouts to beneficiaries or refuse to indemnify the insured in case it is discovered that members participating in microinsurance  intentionally provide false information and such information is directly related to the
insured events;

d/ To refuse to make payouts to beneficiaries or refuse to indemnify the insured in cases falling beyond the insurance coverage or in cases of exclusion as agreed in microinsurance contracts;

dd/ Other rights as provided by law, agreed in microinsurance contracts and specified in the Charter of the mutual microfinance organization.

2. A mutual organization providing microinsurance has the following obligations:

a/ To provide sufficient and accurate information and explanations on rules, conditions and terms of microinsurance products to members participating in microinsurance; and rights and obligations of members participating in microinsurance;

b/ To promptly make payouts to beneficiaries or indemnify the insured upon occurrence of insured events;

c/ To monitor, collate and confirm with members participating in microinsurance on information on the microinsurance products the members have participated in, premium amounts already paid and premium payment terms, and to-be-made payouts;

d/ To notify members participating in microinsurance of annual profits from microinsurance operations, and the plan on use of these profits.

dd/ Other obligations specified  by law, agreed in microinsurance contracts and specified in the Charter of the mutual organization providing microinsurance.

Article 31. Rights and obligations of members participating in microinsurance

1. Members participating in microinsurance at a mutual organization providing microinsurance have the following rights:

a/ To enjoy benefits under the microinsurance contracts they have concluded with the mutual organization providing microinsurance;

b/ To enjoy profits from microinsurance operations of the mutual organization providing microinsurance under the Charter of such organization;

c/ To be entitled to equality and equal voting rights, regardless of premium amounts they have paid, in deciding on the organization, management and operation of the mutual organization providing microinsurance; to be provided with sufficient and accurate information on operations of the mutual organization providing microinsurance and use of profits of such organization (in case the profits are positive) and other contents specified in the Charter of the mutual organization providing microinsurance;

d/ To attend or authorize others to attend the General Meeting of Members of the mutual organization providing microinsurance;

dd/ To receive part of the remaining assets in proportion to the paid premium amount when the mutual organization providing microinsurance is dissolved;

e/ Other rights provided by law, agreed in microinsurance contracts and specified in the Charter of the mutual organization providing microinsurance.

2. Members participating in microinsurance at a mutual organization providing microinsurance have the following obligations:

a/ To pay premiums according to the terms and modes agreed in microinsurance contracts;

b/ To abide by the Charter, internal rules and operation regulation of the mutual organization providing microinsurance and resolutions adopted by the General Meeting of Members;

c/ To be liable for debts and losses of the mutual organization providing microinsurance in proportion to premium amounts they have paid to the mutual organization providing microinsurance;

d/ Other obligations specified by law, agreed in the microinsurance contracts and specified in the Charter of the mutual organization providing microinsurance.

Article 32. Number of members participating in microinsurance

1. After 6 months from the date of being granted the establishment and operation license, a mutual organization providing microinsurance must always maintain at least 1,000 members participating in microinsurance.

2. In case the number of members of a mutual organization providing microinsurance is lower than the minimum number of members specified in Clause 1 of this Article for 6 consecutive months, the mutual organization providing microinsurance shall immediately report to the Ministry of Finance on the current situation, causes and remedial plan, and time limit for implementing the remedial plan.

3. After 6 months from the time of reporting as specified in Clause 2 of this Article, in case the mutual organization providing microinsurance cannot increase the number of members under the plan reported to the Ministry of Finance, the Ministry of Finance shall revoke the establishment and operation license of the mutual organization providing microinsurance. The revocation of establishment and operation licenses must comply with Articles 14 and 16 of this Decree.

Article 33. Termination of membership in a mutual organization providing microinsurance

1. Membership in a mutual organization providing microinsurance terminates in one of the following cases:

a/ The insurance contract between the member and the mutual organization providing microinsurance is terminated or transferred in accordance with law;

b/ The member, who is an individual, dies;

c/ The mutual organization providing microinsurance is dissolved;

d/ Other cases specified in the Charter of the mutual organization providing microinsurance. 

2. Unless otherwise specified by the Charter of a mutual organization providing microinsurance or a microinsurance contract, a founding member may not unilaterally terminate its/his/her membership within 3 years from the date the mutual organization providing microinsurance is granted an establishment and operation license.

3. The settlement of interests and obligations toward members in the cases specified in Clause 1 of this Article must comply with the Charter of the mutual organization providing microinsurance, insurance contracts concluded with the mutual organization providing microinsurance and relevant regulations.

Article 34. Operational reporting

1. Mutual organizations providing microinsurance shall make quarterly and annual operational reports according to Forms No. 07 thru No. 10 provided in the Appendix to this Decree and send them to the Ministry of Finance within 30 days from the last day of a quarter or 90 days from the last day of a fiscal year, respectively.

2. The reports specified in Clause 1 of this Article shall be hand-delivered, sent by post or submitted online under the guidance of the Ministry of Finance.

3. In addition to the reports specified in Clause 1 of this Article, the Ministry of Finance may request mutual organizations providing microinsurance to additionally report on operational and financial status to serve the management, monitoring, making of statistics, and market analysis.

Article 35. Reinsurance

1. A mutual organization providing microinsurance may pass part of the liability insured under an insurance contract to one or more than one domestic and foreign insurance enterprise or reinsurance enterprise.

2. Reinsurance enterprises must satisfy the following conditions:

a/ Lawfully operating and fully meeting the solvency requirements prescribed by law;

b/ Being rated at least “BBB” by Standard & Poor’s or Fitch, “B++” by A.M.Best, “Baal” by Moody’s or equivalent by other experienced credit rating agencies in the fiscal year preceding the year of concluding the reinsurance contract, for foreign insurance enterprises or reinsurance enterprises that assume reinsurance for 10% or more of the insurance liability of 1 microinsurance contract.

3. Mutual organizations providing microinsurance shall be solely held responsible before members participating in microinsurance under microinsurance contracts, even in the case of reinsurance for the insured liabilities. Mutual organizations providing microinsurance may not refuse to perform, or delay the performance of, their liabilities toward members participating in microinsurance, even if the enterprises assuming reinsurance fail to fulfill their payment obligation for reinsurance for the liabilities assumed under the reinsurance contracts.

Section 4

FINANCIAL AND ACCOUNTING REGIMES, AND PUBLICIZATION OF INFORMATION AND FINANCIAL STATEMENTS

Article 36. Management of operating capital of mutual organizations providing microinsurance

1. Operating capital of mutual organizations providing microinsurance covers:

a/ Founding capital;

b/ Required reserve fund;

c/ Unused operating profits.

2. During their operation, mutual organizations providing microinsurance must maintain their operating capital at a level not lower than the founding capital level specified in Clause 1, Article 7 of this Decree.

3. A mutual organization providing microinsurance shall carry out regular revaluation of the operating capital. In case its operating capital does not meet the requirement in Clause 2 of this Article, it shall immediately report to the Ministry of Finance the plan and time limit for increase of founding capital. The increase of founding capital must adhere to the following principles:

a/ The increase of founding capital must be in Vietnam dong;

b/ It is not permitted to use borrowed capital and investment trust capital of other organizations and individuals to increase founding capital;

c/ Sources for increasing founding capital include those specified in Clause 1, Article 7 of this Decree.

4. After 6 months from the date of reporting on the deficiency of founding capital to the Ministry of Finance under Clause 3 of this Article, if the mutual organization providing microinsurance is incapable of increasing founding capital according to the reported plan, the Ministry of Finance shall suspend its operation under Article 13 of this Decree.

5. Mutual organizations providing microinsurance shall make investments using their founding capital and required reserve fund under Article 39 of this Decree.

Article 37. Making of escrow accounts

1. Mutual organizations providing microinsurance shall use part of their founding capital for opening an escrow account at a commercial bank operating in Vietnam (except banks placed under special control).

2. The money amount deposited in the escrow account must equal 10% of the founding capital level specified in Clause 1, Article 7 of this Decree. Such amount must be maintained throughout the operation of mutual organizations providing microinsurance.

3. Throughout its operation, a mutual organization providing microinsurance may only use the escrow account balance to fulfill its commitments with members participating in microinsurance in case its technical reserves are insufficient for payment of insurance benefits. Within 90 days after using the escrow account balance, the mutual organization providing microinsurance shall make up the escrow account balance.

4. When dividing assets according to the order of revocation of the establishment and operation license specified in Articles 15, 16 and 17 of this Decree, a mutual organization providing microinsurance may withdraw the whole money amount deposited in the escrow account under the Dissolution Council’s decision.

Article 38. Technical reserves

Mutual organizations providing microinsurance shall set aside technical reserves to make payment for insurance liabilities identified before, and arising from, concluded microinsurance contracts.

Mutual organizations providing microinsurance shall revaluate and set aside technical reserves on a monthly basis according to the following guidance:

1. Unearned premium reserve: To be used to make insurance payouts or pay indemnities for the liabilities that will arise during the remaining validity of microinsurance contracts. Mutual organizations providing microinsurance may themselves choose one of the following methods of setting aside the unearned premium reserve:

a/ The fixed percentage: The unearned premium reserve is equal to 50% of the total premium of microinsurance contracts concluded in a fiscal year and still valid at the time of setting aside the technical reserves.

b/ The eights method (for annual premium payment): This method assumes that the insurance premiums of microinsurance contracts issued in a quarter by a mutual organization providing microinsurance are valid in the middle of that quarter and still valid at the time of calculating the unearned premium reserve. The unearned premium reserve shall be calculated according to the following formula:

For example: The unearned premium reserve on December 31, X, for a microinsurance contract with a term of 1 year and still valid on December 31, X, shall be calculated as follows:

c/ The twenty-fourths method (for contracts with annual premium payment): This method assumes that premiums of microinsurance contracts issued in a month by a mutual organization providing microinsurance are valid in the middle of that month and still valid at the time of calculating the unearned premium reserve. The unearned premium reserve shall be calculated according to the following formula:

For example: The unearned premium reserve on December 31, X, for a microinsurance contract with a term of 1 year and still valid on December 31, X, shall be calculated as follows:

d/ The pro-rata method: This method may be applied for calculation of unearned premium reserves for microinsurance contracts of all terms according to the following general formula:

dd/ For contracts under which premiums are not paid on an annual basis, the unearned premium reserves shall be set aside at the level equaling 50% of the total collected premiums in a period.

2. Claims reserves:

a/ Reported but not settled claims reserves: To be set aside at the level equaling the total payable insurance payouts for claims for insurance payouts or indemnities which have been reported but not yet settled by the end of the period of setting aside claims reserves.

b/ Incurred but not reported claims reserves: To be set aside at the level equaling 3% of the total premium collected in a fiscal year.

3. Equalization reserve: To be set aside at the level equaling 1% of the pre-tax operating profit (if any) every year until reaching 5% of the premium collected in a fiscal year of the organization.

Article 39. Financial investment

1. The making of investments using the founding capital and required reserve fund specified at Points a and b, Clause 1, Article 36 of this Decree; and using idle capital from technical reserves specified in Clause 2 of this Article of mutual organizations providing microinsurance must be carried out in a safe and efficient manner, meeting regular payment requirements for commitments under microinsurance contracts.

2. Idle capital from technical reserves

a/ Mutual organizations providing microinsurance shall maintain an amount of money for making insurance payouts or paying indemnities on a regular basis in a period, which must not be lower than 25% of the total technical reserves and shall be deposited for a term of up to 1 year at commercial banks operating in Vietnam (except banks placed under special control);

b/ The idle capital from technical reserves is the total technical reserves minus the amount used to make insurance payouts or pay indemnities on a regular basis in a period specified at Point a of this Clause.

3. The founding capital, required reserve fund and idle capital from technical reserves of mutual organizations providing microinsurance may only be used to invest in Vietnam in the following fields:

a/ Purchasing government bonds of under-5-year terms;

b/ Depositing at commercial banks operating in Vietnam (except banks placed under special control).

4. Mutual organizations providing microinsurance shall issue and implement, and inspect and supervise the implementation of, investment regulations and procedures.

Article 40. Revenues of mutual organizations providing microinsurance

Revenues of a mutual organization providing microinsurance are receivables in a period, including:

1. Revenue from microinsurance products, which is the receivable in a period after subtracting payables for reducing receivables in a period, in which:

a/ Receivables in a period include: underlying premium; commission income from retrocession (if any); third-party receipts.

b/ Payables for reducing receivables in a period include: insurance premium refund; reinsurance premium; refund of reinsurance commission income; and decrease in reinsurance commission income.

2. Revenues from investment activities.

3. Other lawful revenues (if any).

Article 41. Expenses of mutual organizations providing microinsurance

Expenses of mutual organizations providing microinsurance are payables and deductibles  in a period, including:

1. Expenses for deployment of microinsurance products: payables and deductibles in a period after subtracting receivables for reducing expenses arising in a period, in which:

a/ Payables and deductibles in a period include: claim settlement expenses; expenses for technical reserves; expenses for payment of insurance commissions; expenses for distribution of microinsurance products; expenses for loss assessment; expenses for prevention and mitigation of risks and damage; expenses for assessment of risks of subject matters insured; expenses for insurance appraisal; expenses for product research, design and development; expenses for construction and improvement of the information technology system serving the management of microinsurance contracts and finance-accounting of microinsurance activities; expenses for training and dissemination of microinsurance; expenses for payment of salaries, business-trip allowances, social insurance, unemployment insurance and health insurance premiums, and allowances for the executive board and persons in charge of
microinsurance activities; office rent expenses (if any); expenses for procurement and repair of office supplies and assets serving microinsurance activities, and expenses for outsourced services to ensure microinsurance activities.

b/ Receivables for reducing payables in a period include claim receipts from retrocession.

2. Investment expenses.

3. Other lawful expenses (if any).

Article 42. Operating profits

The operating profit of a mutual organization providing microinsurance is the difference determined by subtracting the total expense (inclusive of financial obligations to the State) from the total revenue in a fiscal year in accordance with law.

In case the operating profit is positive, after fulfilling the financial obligations to the State, the mutual organization providing microinsurance shall:

1. Deduct 10% of its after-tax operating profit (if any) to set up the required reserve fund. The maximum balance of the required reserve fund is VND 50 billion;

2. After setting aside the required reserve fund, a mutual organization providing microinsurance shall use the remainder of its operating profit to:

a/ Supplement operating capital;

b/ Refund the founding capital provided by the members’ representative organization as a non-interest bearing loan. The refund shall be made only after the mutual organization providing microinsurance has set up and managed to maintain the required reserve fund not lower than VND 50 billion;

c/ Use as a basis for reducing premiums, increasing the insurance payouts or supplementing insurance benefits for members participating in microinsurance in the following fiscal year;

d/ Serve other purposes as stated in its Charter.

Article 43. Accounting regime and fiscal year

1. The Ministry of Finance shall guide the accounting regime applicable to mutual organizations providing microinsurance.

2. The fiscal year of a mutual organization providing microinsurance starts on January 1 and ends on December 31 of the same calendar year.

3. At least 30 days from the last day of a quarter, a mutual organization providing microinsurance shall formulate its quarterly financial statement and send it to the Ministry of Finance.

4. At least 90 days from the last day of a fiscal year, a mutual organization providing microinsurance shall carry out financial account-finalization, and formulate and send to the Ministry of Finance the financial statement audited by an independent auditing company in accordance with law.

Article 44. Responsibility for information publicization

1. Mutual organizations providing microinsurance shall publicize the information specified in Article 45 of this Decree to members participating in microinsurance.

2. Mutual organizations providing microinsurance shall post information subject to publicization on their websites or send it directly to members participating in microinsurance. Information must be publicized in an accurate, prompt, sufficient and easy-to-check manner.

3. Time limits for information publicization:

a/ For the information specified in Clauses 1 and 2, Article 45 of this Decree: 7 working days after the occurrence of one of the events concerning the information;

b/ For the information specified in Clause 3, Article 45 of this Decree: 7 working days after the deadline for sending reports specified in Clause 4, Article 43
of this Decree;

c/ For the information specified in Clause 4, Article 45 of this Decree: 3 working days after the occurrence of one of the events concerning the information.

Article 45. To-be-publicized information contents

1. Information relating to the licensing, organization and personal of a mutual organization providing microinsurance, including:

a/ Information in the establishment and operation license and the modified license;

b/ Information on the appointment and change of the Chairperson of the Board of Directors, General Director/Director, legal representative, and microinsurance actuaries;

c/ Address of head office;

d/ Hotline.

2. Information about microinsurance business operations, including:

a/ Principles, terms and clauses, premium rate table of each microinsurance product provided by the mutual organization providing microinsurance;

b/ Claim dossiers and procedures and time limits for settlement of claims for indemnities and making of insurance payouts;

c/ Investment management targets and policies.

3. Audited financial statements.

4. Extraordinary information relating to a mutual organization providing microinsurance:

a/ Suspension of operation, revocation of the establishment and operation license;

b/ Decision(s) on sanctioning of administrative violation(s) in deployment of microinsurance products.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 46. Effect

1. This Decree takes effect on May 5, 2023.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and subjects of application of this Decree shall implement this Decree.-

On behalf of the Government
For the Prime Minister
Deputy Prime Minister
LE MINH KHAI

* The Appendix to this Decree is not translated.