THE GOVERNMENT _________ No. 46/2023/ND-CP | THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness _____________________________________ Hanoi, July 1, 2023 |
DECREE
Detailing the implementation of a number of articles of the Law on Insurance Business
_______________
Pursuant to the Law on Government Organization dated June 19, 2015; Law Amending and Supplementing a Number of Articles of the Law on Government Organization and the Law on Organization of Local Government dated November 22, 2019;
Pursuant to the Law on Insurance Business dated June 16, 2022;
Pursuant to the Law on Enterprises dated June 17, 2020;
Pursuant to the Law on Investment dated June 17, 2020;
At the proposal of the Minister of Finance;
The Government hereby promulgates the Decree detailing the implementation of a number of articles of the Law on Insurance Business.
Chapter I
GENERAL PROVISIONS
Article 1. Scope of regulation
This Decree details the implementation of Clause 2, Article 6; Clause 2, Article 7; Clause 5, Article 11; Point b, Clause 1, Article 64; Point a, Clause 2, Article 64; Clause 3, Article 65; Point dd, Clause 1, Article 67; Point a, Clause 2, Article 67; Clause 6, Article 69; Clause 4, Article 71; Clause 4, Article 74; Clause 2, Article 77; Clause 5, Article 81; Clause 4, Article 83; Clause 5, Article 87; Clause 1, Article 89; Clause 3, Article 93; Clause 6, Clause 6, Article 94; Clause 4, Article 97; Clause 2, Article 98; Point b, Clause 1 and Clause 5, Article 99; Clause 5, Article 100; Clause 3, Article 101; Clause 2, Article 102; Clause 3, Article 115; Point d, Clause 2, Article 125; Point b, Clause 1 and Point a, Clause 2, Article 133; Clause 2, Article 134; Clause 4, Article 136; Clause 1 and Clause 3, Article 138; Clause 3, Article 143; Clause 1, Article 152; Clause 3, Article 156; Point b, Clause 5, Article 157 of the Law on Insurance Business.
Article 2. Subjects of application
1. Non-life insurers, life insurers, health insurers (hereinafter referred to as insurers), reinsurance carriers (reinsurers), insurance agents, insurance brokers, organizations and individuals providing insurance auxiliary services, mutual organizations providing microinsurance.
2. Branches of foreign insurers or reinsurers (hereinafter collectively referred to as Vietnam-based foreign branches); representative offices of foreign insurers or reinsurers, foreign insurance brokers, and foreign finance/insurance corporations in Vietnam (hereinafter collectively referred to as Vietnam-based foreign representative offices).
3. Policyholders, insured persons and beneficiaries.
4. State regulatory authorities in charge of managing insurance business.
5. Organizations and individuals involved in insurance business.
Article 3. Life insurance
Types of life insurance:
1. Whole life insurance.
2. Pure endowment insurance.
3. Term life insurance.
4. Endowment insurance.
5. Annuity.
6. Investment-linked insurance (including universal life insurance and unit-linked insurance) as specified in Chapter VIII of this Decree.
7. Pension as specified in Chapter VII of this Decree.
Article 4. Non-life insurance
Types of non-life insurance:
1. Property insurance.
2. Cargo insurance.
3. Aviation insurance.
4. Motor insurance.
5. Fire and explosion insurance.
6. Hull insurance, Protection and indemnity insurance.
7. Liability insurance.
8. Credit and financial risk insurance.
9. Agricultural insurance.
10. Guarantee insurance.
11. Other loss insurance.
Article 5. Health insurance
Types of health insurance:
1. Health and personal accident insurance.
2. Medical expense insurance.
Article 6. Principles of building, managing, exploiting and using the database on insurance business activities
1. The database on insurance business activities is a specialized, regulatory database on insurance centralizedly and uniformly managed by the Ministry of Finance.
2. The database on insurance business activities is a collection of documents and data, information about insurance business and other related information that have been collected, processed, digitized, integrated and stored on information technology systems; thereby meeting the requirements of policy-making, statistical work, projection, management and supervision of insurance business, creating an environment for the application of basic data analysis models in order to manage and supervise insurance business.
3. The building, management, exploitation and use of the database on insurance business activities must follow the below principles:
a) The database on insurance business activities shall be updated and maintained regularly so as to promptly support the State governance over insurance business activities;
b) The database on insurance business activities shall be kept operating continuously, stably and smoothly with its update and change history explicitly displayed. Information thereof shall be stored and kept confidential, and information safety shall be ensured;
c) The building, management, exploitation and use of the database on insurance business activities must comply with the Law on Insurance Business, the Law on Information Technology, the Law on Electronic Transactions; regulations on management, connection and sharing of digital data promulgated by State authorities; regulations on privacy, protection of personal secrets, family secrets, business secrets of enterprises and other relevant laws.
Article 7. Contents of the database on insurance business activities
The database on insurance business activities shall cover the following information:
1. Information about insurers, reinsurers, Vietnam-based foreign branches, insurance brokers, mutual organizations providing microinsurance, Vietnam-based representative offices:
a) Information about the establishment and operation licenses, licenses to set up Vietnam-based foreign representative offices;
b) Information about the financial situation and insurance operations in the reports:
Financial statements, reports on professional operations, reports on segregation of shareholders’ equity from premiums, reports on solvency assessment and risk management, and other reports of insurers, reinsurers, Vietnam-based foreign branches as specified in Article 106 of the Law on Insurance Business;
Financial statements, periodical reports on professional operations, ad hoc reports, other information and data disclosure of insurance brokers as specified in Clause 5, Article 138 of the Law on Insurance Business;
Financial statements, reports on professional operations and other reports of mutual organizations providing microinsurance as specified.
c) Information about: Managers and supervisors of insurers, reinsurers, Vietnam-based foreign branches, members of the Boards of Directors, members of the Members’ Councils, Directors or General Directors, at-law representatives, Deputy Directors or Deputy General Directors, Chief Accountants, heads of operational departments of insurance brokers (hereinafter referred to as managers of the insurance brokers); Chairpersons of Boards of Directors, Directors or General Directors, Appointed Actuaries of mutual organizations providing microinsurance. Such information includes: Date of appointment, date of dismissal or no longer holding position (if any); Diplomas, certificates, working experience in the fields of insurance, finance, banking or other fields as specified for each title mentioned in Article 80, Clause 1, Article 138 and Clause 3, Article 149 of the Law on Insurance Business.
2. Information about the policyholders, the insured persons, and the beneficiaries under the insurance policies that take effect and arise in the reporting period, including:
a) For life insurance policies: The quantity of the insured persons (detailed by insured peril, insured age, coverage period, policy year when the peril occurs, gender, bad habits affecting health), the survival probability of the insured persons in each year and other relevant information for the calculation of insurance risk ratios;
b) For health insurance policies: The quantity of insurance policies, insured persons and claims, the total amount of insurance payments (detailed by age and insurance benefits) and other relevant information for the calculation of insurance risk ratios;
c) For non-life insurance policies: The quantity of insurance policies, the total sum insured, the quantity of claims, the total amount of insurance indemnities (detailed by the insured, type and use) and other relevant information for the calculation of insurance risk ratios.
3. Information about insurance agents: Reports on training and employment of insurance agents by insurers, branches of foreign non-life insurers, mutual organizations providing microinsurance as specified at Point k, Clause 2, Article 128 of the Law on Insurance Business.
4. Information on testing and grant of insurance certifications, insurance auxiliary service provider certifications, insurance brokerage certifications, including: Personal identifiable information of certificate holders; names of certificates; names of training institutions; exam codes; decisions to approve exam results.
5. Information about supervision and management, and administrative sanctions in relation to insurance business: Names of sanctioned organizations and individuals, reference numbers of sanctioning decisions, dates of sanctioning, violations, forms and levels of sanctions, and remedial measures (if any).
6. The Minister of Finance shall provide the forms and templates mentioned at Point c, Clause 1 and Clause 2 of this Article.
Article 8. Information for building the database on insurance business activities
1. Responsibilities for providing and updating information:
a) Information as specified at Point b and Point c, Clause 1, Article 7 of this Decree shall be provided by insurers, reinsurers, Vietnam-based foreign branches, insurance brokers, mutual organizations providing microinsurance;
b) Information as specified at Clauses 2 and 3, Article 7 of this Decree shall be provided by insurers, branches of foreign non-life insurers, and mutual organizations providing microinsurance;
c) Information as specified at Point a, Clause 1 and Clauses 4 and 5, Article 7 of this Decree shall be updated by the Ministry of Finance (the Insurance Supervisory Authority);
d) The organizations mentioned in Clause 2, Article 11 of the Law on Insurance Business shall be responsible for sharing and providing sufficient and accurate information onto the Database on insurance business activities in accordance with this Decree. If any insufficiency or inaccuracy of information is detected, the information providers must review, correct, update and report to the Ministry of Finance.
2. Forms of providing and updating information:
Information for the building of the Database on insurance business activities shall be provided or updated in online forms provided on the Insurance Regulatory Information Database Portal or as electronic data files.
3. Deadlines for providing and updating information:
a) Information as specified at Points a and c, Clause 1, Article 7 of this Decree shall be provided and updated within 10 days after it arises;
b) Deadlines for providing information specified at Point b, Clause 1 and Clause 3, Article 7 of this Decree shall be set in the Minister of Finance’s regulations detailing Article 106, Clause 5, Article 138 and Point k, Clause 2, Article 128 of the Law on Insurance Business on reporting and providing information of insurers, reinsurers, Vietnam-based foreign branches, and insurance brokers, and the Government’s regulations on reporting regime of mutual organizations providing microinsurance;
c) Information as specified in Clause 2, Article 7 of this Decree shall be provided annually within no later than 90 days after the end of the fiscal year;
d) Information as specified in Clause 4, Article 7 of this Decree shall be provided monthly within no later than 15 days after the end of the month;
dd) Information as specified at Clause 5, Article 7 of this Decree shall be updated immediately after the administrative sanctions are imposed;
4. The information, as specified in Clauses 1, 3, 4, and 5, Clause 7 of this Decree, which shall be provided and updated onto the database on insurance business activities are that arising from January 1, 2024. The information, as specified in Clause 2, Clause 7 of this Decree, which shall be provided and updated onto the database on insurance business activities are that arising from January 1, 2025.
Article 9. Use information from the database on business insurance activities
1. The use of the database on insurance business activities must meet the following requirements:
a) The Ministry of Finance shall use data from the database on insurance business activities for State governance over insurance business;
b) State regulatory authorities shall use the information therefrom for State governance within the ambit of their tasks and powers;
c) Agencies, organizations and individuals are allowed to exploit and use their own information and personal information of other persons with prior consent of such persons as specified by the law; general information and statistics on insurance business and the insurance market disclosed by the Ministry of Finance from time to time.
2. Agencies, organizations and individuals shall exploit and use information from the database on insurance business activities via the web portal of the Ministry of Finance.
Article 10. Connection to the database on insurance business activities
The database on insurance business activities shall be connected to other national databases and specialized databases in accordance with Decree No. 47/2020/ND-CP dated April 9, 2020 of the Government specifying the management, connection and sharing of digital data among State authorities and other specialized laws.
Chapter II
INSURERS, REINSURERS, AND VIETNAM-BASED FOREIGN BRANCHES
Section 1
GRANT OF ESTABLISHMENT AND OPERATION LICENSES
Article 11. Financial requirements for insurers, reinsurers, and Vietnam-based foreign branches to be granted establishment and operation licenses
1. Any organization that contributes 10% or more of the charter capital to establish an insurer or reinsurer must satisfy the requirements specified Articles 64, 65, 66 of the Law on Insurance Business and the following financial requirements:
a) Any capital-contributing organization that operates in a line of business subject to the legal capital or minimum (charter) capital requirement shall ensure that the shareholders’ equity minus the required minimum (legal/charter) capital is greater than or equal to its estimated capital contribution;
b) If the capital-contributing organization is established and operated in accordance with the Law on Credit Institutions, the Law on Insurance Business, and the Law on Securities, it must maintain and satisfy the requirements of financial safety and be permitted to contribute capital by a competent authority in accordance with the law. If the applicable law does not require it to obtain written permission from a competent authority, the capital contributing organization must have a written certification thereof;
c) If the capital-contributing organization is a foreign insurer/reinsurer or a foreign financial/insurance corporation, it must maintain and satisfy the requirements of financial safety and be permitted to establish an insurer/reinsurer in Vietnam by a competent authority of the country where such organization is headquartered. If such permission is not required by such country, the organization shall obtain a statutory written confirmation of such non-requirement by a competent authority/organization/person under the law of such country;
d) It has made financial statements, which must be audited and given unqualified opinions, in 03 consecutive years preceding the year in which the application dossier for the establishment and operation license is submitted.
2. Any foreign non-life insurer or foreign reinsurer which wants to establish a branch in Vietnam must satisfy the requirements specified in Clause 67 of the Law on Insurance Business and the following financial requirements:
a) Those specified at Points a and d, Clause 1 of this Article;
b) Such foreign non-life insurer or foreign reinsurer is certified by a competent authority of the foreign country where it is headquartered that it maintains and satisfies the requirements of financial safety and does not seriously violate the law on insurance business within 03 consecutive years before the application dossier for the establishment and operation license is submitted.
Article 12. The application dossier for an establishment and operation license of a limited liability insurer/reinsurer
1. An application for grant of the License made using the form provided in Appendix I to this Decree.
2. The draft charter of the company as specified in the Law on Enterprises.
3. A plan on the first 05 years’ operation suitable to the line of business to be licensed, in which the types of insurance to be deployed, target market, distribution channel, technical reserving methodology, reinsurance program, capital investment, business efficiency, solvency, internal control, internal auditing, risk management, information technology of the insurer/reinsurer.
4. A true copy of the citizen identity card/people’s identity card/passport; a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law; the curriculum vitae, true copies of diplomas, certificates and other documents proving the qualifications and eligibility of the person to be appointed as Chairperson of the Members’ Council, Director/General Director, at-law representative or appointed actuary of the insurer/reinsurer.
5. A list of members enclosed with the following documents:
a) A true copy of the establishment decision or the business registration certificate or another equivalent paper;
b) A true copy of the company’s charter;
c) The decision by the authorized person of the capital-contributing organization on such organization’s contribution of capital to establish the insurance company;
d) The power of attorney and a copy of the citizen identity card, people’s identity card or passport of the duly authorized representative of the capital-contributing organization;
dd) True copies of the audited financial statements in 03 consecutive years preceding the year in which the application dossier is submitted. In the case where a foreign insurer/reinsurer or a foreign financial/insurance corporation authorizes its subsidiary to contribute capital to establish an insurer/reinsurer in Vietnam, true copies of such subsidiary’s audited financial statement in 03 fiscal years immediately preceding the year, in which the application dossier is submitted, are also required.
The audited financial statements of the insurer/reinsurer or the foreign financial/insurance corporation or its subsidiary must comply with Point d, Clause 1, Article 11 of this Decree;
e) The foreign insurer’s power of attorney for its subsidiary specializing in making offshore investment and its commitment to take joint responsibility with the subsidiary for the capital contribution and obligation to establish an insurer in Vietnam (in the case where a foreign insurer authorizes its subsidiary specializing in making offshore investment to establish an insurer in Vietnam);
g) Written commitments of the foreign insurer/reinsurer or the foreign financial/insurance corporation to providing financial, technological, corporate governance, risk management, administration and operation support to the insurer/reinsurer to be established in Vietnam; ensuring that such insurer/reinsurer complies with the Law on Insurance Business regarding assurance of financial prudence and risk management;
h) Documentary proof of the compliance with Point c, Clause 1, Article 65 of the Law on Insurance Business of the foreign insurer’s/reinsurer’s or the foreign financial/insurance corporation’s capital contribution.
6. A list of beneficial owners, including their full name, date of birth, people’s identity card/citizen identity card/passport number, nationality (in the case where one has multiple nationalities, all his/her nationalities and registered residences in the countries of nationality must be listed therein), residential address in Vietnam (if any), percentage of direct and indirect ownership in the insurer/reinsurer to be established.
7. A certification by a bank licensed to operate in Vietnam of the charter capital deposited at a frozen account opened at the bank, which must not be less than the minimum charter capital, as specified in Article 35 of this Decree. The amount each member has contributed, the frozen amount, the purpose of freezing, the frozen period, and requirements for unfreezing shall be specified therein.
8. A minutes of the meeting of members (to be included in the application dossier for establishment of a limited liability company with 2 or more members) which records:
a) Agreement to contribute capital to establish the limited liability insurer/reinsurer, enclosed with the list of members;
b) Adoption of the company’s charter.
9. The written confirmation by a competent authority of the country where the capital-contributing foreign insurer/reinsurer or financial/insurance corporation is headquartered that:
a) The foreign insurer/reinsurer or the foreign financial/insurance corporation is permitted to establish an insurer/reinsurer in Vietnam. If such permission is not required by such country, it shall obtain a statutory written confirmation of such non-requirement by a competent authority/organization/person under the law of such country;
b) The foreign insurer/reinsurer or the foreign financial/insurance corporation is operating in the line of business in which it expects to operate in Vietnam;
c) The foreign insurer/reinsurer or the foreign financial/insurance corporation is in a sound financial state and fully satisfies the regulatory requirements in the country where it is headquartered;
d) It has not seriously violated the law on insurance business of the country where it is headquartered for 03 consecutive years before the application dossier for the establishment and operation license is submitted.
10. A relevant State authority’s written confirmation that the Vietnamese capital-contributing organization satisfies the requirements of financial safety and is permitted to contribute capital to establish an insurer/reinsurer in accordance with the law. If the applicable law does not require it to obtain written permission, the capital contributing organization must have a written certification.
11. Written commitments of members on their eligibility for being granted the license in accordance with Article 11 of this Decree and Article 65 of the Law on Insurance Business.
12. A document proving that the capital-contributing organization operating in a line of business subject to the minimum (legal/charter) capital requirement satisfies the requirements specified at Point a, Clause 1, Article 11 of this Decree.
13. A written authorization for an individual or organization to carry out licensing procedures on behalf of the members.
Article 13. The application dossier for the establishment and operation license of a joint-stock insurer/reinsurer
1. An application for grant of the License made using the form provided in Appendix I to this Decree.
2. The draft charter of the company as specified in the Law on Enterprises.
3. A plan on the first 05 years’ operation suitable to the line of business to be licensed, in which the types of insurance to be deployed, target market, distribution channel, technical reserving methodology, reinsurance program, capital investment, business efficiency, solvency, internal control, internal auditing, risk management, information technology of the insurer/reinsurer.
4. A true copy of the citizen identity card/people’s identity card/passport; a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law; the curriculum vitae, true copies of diplomas, certificates and other documents proving the qualifications and eligibility of the person to be appointed as Chairperson of the Board of Directors, Director/General Director, at-law representative or appointed actuary of the insurer/reinsurer.
5. Profiles of individual founding shareholders, each consists of:
a) A true copy of the citizen identity card/people’s identity card/passport; and a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law;
b) A bank’s certification of his/her deposit balance in VND or a freely convertible currency.
6. Profiles of institutional shareholders contributing 10% or more of the charter capital, each consists of:
a) A true copy of the establishment decision or the business registration certificate or another equivalent paper;
b) A true copy of the company’s charter;
c) The decision by the authorized person of the capital-contributing organization on such organization’s contribution of capital to establish the insurance company;
d) The power of attorney and a copy of the citizen identity card, people’s identity card or passport of the duly authorized representative of the capital-contributing organization;
dd) True copies of the audited financial statements in 03 consecutive years preceding the year in which the application dossier for the establishment and operation license is submitted. In the case where a foreign insurer/reinsurer or a foreign financial/insurance corporation authorizes its subsidiary to contribute capital to establish an insurer/reinsurer in Vietnam, true copies of such subsidiary’s audited financial statement in 03 fiscal years immediately preceding the year, in which the application dossier is submitted, are also required.
The audited financial statements of the insurer/reinsurer or the foreign financial/insurance corporation or its subsidiary must comply with Point d, Clause 1, Article 11 of this Decree;
e) The foreign insurer’s power of attorney for its subsidiary specializing in making offshore investment and its commitment to take joint responsibility with the subsidiary for the capital contribution and obligation to establish an insurer in Vietnam (in the case where a foreign insurer authorizes its subsidiary specializing in making offshore investment to establish an insurer in Vietnam);
g) Written commitments of the foreign insurer/reinsurer or the foreign financial/insurance corporation to providing financial, technological, corporate governance, risk management, administration and operation support to the insurer/reinsurer to be established in Vietnam; ensuring that such insurer/reinsurer complies with the Law on Insurance Business regarding assurance of financial prudence and risk management;
h) Documentary proof of the compliance with Point b, Clause 1, Article 66 of the Law on Insurance Business of such organization’s capital contribution.
7. Profiles of institutional shareholders contributing less than 10% of the charter capital, each consists of:
a) Documents specified at Points a, b, c, and d, Clause 6 of this Article;
b) A true coy of the audited financial statement in the year immediately preceding the year in which the application dossier for the establishment and operation license is submitted.
8. A list of beneficial owners, including their full name, date of birth, people’s identity card/citizen identity card/passport number, nationality (in the case where one has multiple nationalities, all his/her nationalities and registered residences in the countries of nationality must be listed therein), residential address in Vietnam (if any), percentage of direct and indirect ownership in the insurer/reinsurer to be established.
9. A certification by a bank licensed to operate in Vietnam of the charter capital deposited at a frozen account opened at the bank, which must not be less than the minimum charter capital, as specified in Article 35 of this Decree. The amount each shareholder has contributed, the frozen amount, the purpose of freezing, the frozen period, and requirements for unfreezing shall be specified therein.
10. A minutes of the meeting of shareholders which records:
a) Their agreement to contribute capital to establish the joint-stock insurer/reinsurer, enclosed with a list of shareholders and founding shareholders;
b) Adoption of the company’s charter.
11. A written authorization for an individual or organization to carry out the procedures for being granted the establishment and operation license on behalf of the shareholders.
12. A relevant State authority’s written confirmation that the Vietnamese capital-contributing organization satisfies the requirements of financial safety and is permitted to contribute capital to establish an insurer/reinsurer in accordance with the law. If the applicable law does not require it to obtain written permission, the capital contributing organization must have a written certification.
13. The written confirmation by a competent authority of the country where the capital-contributing foreign insurer/reinsurer or financial/insurance corporation is headquartered that:
a) The foreign insurer/reinsurer or the foreign financial/insurance corporation is permitted to establish an insurer/reinsurer in Vietnam. If such permission is not required by such country, it shall obtain a statutory written confirmation of such non-requirement by a competent authority/organization/person under the law of such country;
b) The foreign insurer/reinsurer or the foreign financial/insurance corporation is operating in the line of business in which it expects to operate in Vietnam;
c) The foreign insurer/reinsurer or the foreign financial/insurance corporation is in a sound financial state and fully satisfies the regulatory requirements in the country where it is headquartered;
d) It has not seriously violated the law on insurance business of the country where it is headquartered for 03 consecutive years before the application dossier for the establishment and operation license is submitted.
14. Written commitments of shareholders on their eligibility for being granted the license in accordance with Clause 1, Article 11 of this Decree and Article 66 of the Law on Insurance Business.
15. A document proving that the capital-contributing organization operating in a line of business subject to the minimum (legal/charter) capital requirement satisfies the requirements specified at Point a, Clause 1, Article 11 of this Decree.
Article 14. The application dossier for an establishment and operation license of a Vietnam-based foreign branch
1. An application for grant of the License made using the form provided in Appendix I to this Decree.
2. The draft Regulation on organization and operation of the Vietnam-based foreign branch already approved by the foreign non-life insurer or foreign reinsurer.
3. A plan on the first 05 years’ operation suitable to the line of business to be licensed, in which the types of insurance to be deployed, target market, distribution channel, technical reserving methodology, reinsurance program, capital investment, business efficiency, solvency, internal control, internal auditing, risk management, information technology of the Vietnam-based foreign branch.
4. A true copy of the citizen identity card/people’s identity card/passport; a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law; the curriculum vitae, true copies of diplomas, certificates and other documents proving the qualifications and eligibility of the person to be appointed as Director, at-law representative or appointed actuary of the Vietnam-based foreign branch.
5. Documents on the foreign non-life insurer or the foreign reinsurer:
a) A true copy of the establishment decision or the business registration certificate or another equivalent paper;
b) A true copy of the company’s charter;
c) The decision by the authorized person of the foreign non-life insurer or the foreign reinsurer on the establishment of a branch in Vietnam;
d) The power of attorney and a copy of the citizen identity card/people’s identity card/passport of the duly authorized representative of the foreign non-life insurer or the foreign reinsurer;
dd) True copies of the audited financial statements in 03 consecutive years preceding the year in which the application dossier for the establishment and operation license is submitted;
e) A written commitment of the foreign non-life insurer or the foreign reinsurer to taking responsibility for all arising obligations of the Vietnam-based foreign branch;
g) Documentary proof of the compliance with Point b, Clause 1, Article 66 of the Law on Insurance Business of the foreign non-life insurer’s or the foreign reinsurer’s capital contribution.
6. A certification by a bank licensed to operate in Vietnam of the allocated capital deposited at a frozen account opened at the bank, which must not be less than the minimum allocated capital, as specified in Article 36 of this Decree. The contributed amount, the frozen amount, the purpose of freezing, the frozen period, and requirements for unfreezing shall be specified therein.
7. The written confirmation by an insurance regulatory authority of the country where the foreign non-life insurer or the foreign reinsurer is headquartered that:
a) The foreign non-life insurer or the foreign reinsurer is allowed to establish a branch in Vietnam and operating in the line of business in which it expects to operate in Vietnam;
b) The foreign non-life insurer or the foreign reinsurer is in a sound financial state and fully satisfies the regulatory requirements in the country where it is headquartered;
c) The foreign non-life insurer or the foreign reinsurer has not seriously violated the law on insurance business of the country where it is headquartered for 03 consecutive years before the application dossier for the establishment and operation license is submitted.
8. A written commitment of the foreign non-life insurer or the foreign reinsurer to satisfying the requirements specified in Clause 2, Article 11 of this Decree and Clauses 1 and 2, Article 67 of the Law on Insurance Business.
9. A document proving that the capital-contributing organization operating in a line of business subject to the minimum (legal/charter) capital requirement satisfies the requirements specified at Point a, Clause 2, Article 11 of this Decree.
Article 15. General standards for the submission and supplementation of dossiers and documents
1. Any application dossier for the establishment and operation license as well as its supporting documents shall be submitted to the Ministry of Finance in 02 counterparts, one of which shall be deemed an original and the other a duplicate original.
2. The dossiers and documents submitted to the Ministry of Finance shall satisfy the following requirements:
a) Documents included in the application dossier, which bear foreign signatures, titles and seals of any foreign organizations and individuals, must be legalized in accordance with the law within 12 months before the application dossier is submitted, except for the following: A written request for a license; copy of citizen identity card/people’s identity card/passport; documents made by authorized persons of the enterprise; powers of attorney; written commitments;
b) If a dossier contains any true copies, they must be duplicate originals or certified copies;
c) Any application dossier for an establishment and operation license of any foreign organization/individual shall be drawn up in Vietnamese and English languages, unless the documents written in Vietnamese are originals (or true copies of Vietnamese originals) made in Vietnam;
d) Any document written in any foreign language must be enclosed with its Vietnamese translation certified by a competent authority. Translations of financial statements must be certified by organizations or individuals licensed to practice translation as specified by the law;
dd) The criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law must be issued by the competent authority no more than 12 months before the application dossier is submitted. It must contain sufficient information on the criminal record and the possible prohibition from holding certain positions or establishing and managing enterprises or cooperatives;
e) The curriculum vitae must be made no more than 06 months before the application dossier is submitted;
g) The certification of the bank licensed to operate in Vietnam of the deposit balance in VND or a freely convertible currency, as specified in this Decree, must be made no more than 06 months before the application dossier is submitted;
h) Each dossier shall include a list of documents.
3. Organizations and individuals involving in the compilation of such dossiers and documents must take accountability before the law for the accuracy, truthfulness and sufficiency thereof. In the case where any organization or individual falsifies information in the application dossier in order to be deceitfully eligible for a license, within 05 years from the time such fraudulent acts are detected, the Ministry of Finance reserves the right to refuse to consider granting the license to such organization or individual.
4. When the documents on the background and identity of Vietnamese citizens that are part of the dossier specified in this Decree have been updated in the National Population Database and the Citizenship Database, the Ministry of Finance shall be responsible for exploiting and using such information from the National Population Database and the Citizenship Database on the basis of information exchange and provision between State regulatory authorities.
Article 16. The process and procedures for applying for an establishment and operation license
1. Any organization or individual that wishes to apply for an establishment and operation license shall prepare a dossier as specified in this Decree and submit it directly to the Ministry of Finance or sent by post or through the online public service system if applicable.
2. Within 30 days after an application dossier for a license is received, if it is deemed incomplete and invalid, the Ministry of Finance shall serve a written notice requesting supplementation and modification thereof. The time limit for supplementation and modification of a dossier is 6 months after the notice is served. If a dossier is not supplemented and modified within such period of time, the Ministry of Finance shall refuse to consider granting the license.
The sum of time during which the organization or individual may supplement and modify the dossier shall not exceed 12 months from the first notice of the Ministry of Finance. Once the above time period has passed, if the organization or individual fails to finalize the dossier or documents, the Ministry of Finance reserve the right to refuse to consider granting the license.
3. Within 60 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant the establishment and operation license, made using the template provided in Appendix II to this Decree, to the insurer/reinsurer or Vietnam-based foreign branch. In case of disapproval, the Ministry of Finance shall send a written notice of approval explaining the reasons. The Ministry of Finance may only refuse to grant the license when the capital-contributing organization or individual, or the insurer/reinsurer or Vietnam-based foreign branch fails to fully satisfy the requirements and complete the application dossier as specified in this Decree or such organization or individual falsifies or forges the documents specified in Clause 3, Article 15 of this Decree.
Article 17. Revocation of establishment and operation licenses
1. In the cases specified at Points a, d and e, Clause 1, Article 75 of the Law on Insurance Business, the establishment and operation license of an insurer or branch of a foreign non-life insurer shall be revoked following the below procedures:
a) Within 20 days after signing the record of violations (in the cases specified at Points a and d, Clause 1, Article 75 of the Law on Insurance Business) or receiving the notice that the foreign non-life insurer goes bankrupt or has its license revoked, the Ministry of Finance shall send a written request to the insurer or branch of the foreign non-life insurer to: Immediately stop the conclusion of new insurance/reinsurance policies, not sign or renew other insurance-related contracts; Transfer the insurance policy portfolio.
b) Within 06 months after receiving the written request of the Ministry of Finance, the insurer or branch of the foreign non-life insurer must complete the transfer of insurance policy portfolio as specified in Clause 2, Article 75 of the Law on Insurance Business and Article 34 of this Decree;
c) Within 20 days after receiving all reports on the completion of the insurance portfolio transfer from the insurer or branch of the foreign non-life insurer, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of such insurer or branch of the foreign non-life insurer;
d) The insurer shall carry out procedures for dissolving itself or the Vietnam-based branch of the foreign non-life insurer shall carry out procedures for being closed down as specified in Article 115 of the Law on Insurance Business.
2. In the cases specified at Points a, d and e, Clause 1, Article 75 of the Law on Insurance Business, the establishment and operation license of a reinsurer or branch of a foreign reinsurer shall be revoked following the below procedures:
a) Within 20 days after signing the record of violations (in the cases specified at Points a and d, Clause 1, Article 75 of the Law on Insurance Business) or receiving the notice that the foreign reinsurer goes bankrupt or has its license revoked, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of such reinsurer or branch of foreign reinsurer;
b) After receiving the decision on revocation of its establishment and operation license, the reinsurer or branch of the foreign reinsurer shall immediately stop the conclusion of new insurance/reinsurance policies and not sign or renew other contracts; The reinsurer shall carry out procedures for dissolving itself or the Vietnam-based branch of the foreign reinsurer shall carry out procedures for being closed down as specified in Article 115 of the Law on Insurance Business.
3. In the cases specified at Point b, Clause 1, Article 75 of the Law on Insurance Business, the establishment and operation license of an insurer/reinsurer or Vietnam-based foreign branch shall be revoked following the below procedures:
a) Within 20 days after the time period specified at Point b, Clause 1, Article 75 of the Law on Insurance Business has passed, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of the insurer/reinsurer or Vietnam-based foreign branch;
b) The insurer/reinsurer or Vietnam-based foreign branch shall carry out procedures for dissolving itself or being closed down as specified in Article 115 of the Law on Insurance Business.
4. In case of split-up, separation, merger or consolidation as specified at Point c, Clause 1, Article 75 of the Law on Insurance Business, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of the insurer/reinsurer involved in the consolidation, split up or merged at the same time the Ministry grants the establishment and operation license(s) to the new insurer(s) formed after the split-up, separation, merger or consolidation.
5. In case of voluntary dissolution or close-down specified at Point c, Clause 1, Article 75 of the Law on Insurance Business, within 14 days after receiving all reports on the completion of insurance portfolio transfer and procedures for dissolution and close-down as specified in Article 115 of the Law on Insurance Business from the insurer/reinsurer or Vietnam-based foreign branch, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of such insurer/reinsurer or Vietnam-based foreign bank.
6. In the cases specified at Point dd, Clause 1, Article 75 of the Law on Insurance Business, within 20 days after the effective date of the Court’s decision to declare bankruptcy of the insurer/reinsurer in accordance with the law, the Ministry of Finance shall issue a decision to revoke the establishment and operation license of such insurer/reinsurer.
Section 2
MODIFICATION OF ESTABLISHMENT AND OPERATION LICENSES OF INSURERS, REINSURERS, VIETNAM-BASED FOREIGN BRANCHES
Article 18. Change of the name or location of an insurer/reinsurer/Vietnam-based foreign branch’s head office
- An application dossier for change of the name or location of any insurer/reinsurer/Vietnam-based foreign branch’s head office consists of:
a) A written request to change the head office’s name or location, made using to the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the change of the head office’s name or location;
c) Evidence indicating the right to use the new location of the head office (in case of change the head office’s location).
2. Within 07 business days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 19. Increase of the charter capital of an insurer/reinsurer or the allocated capital of Vietnam-based foreign branch
1. Any insurer/reinsurer that wishes to increase its charter capital and any Vietnam-based foreign branch that wants to increase its allocated capital must satisfy the following requirements:
a) The increase in charter capital or allocated capital shall be made in VND;
b) Shareholders, members of the insurer/reinsurer or the parent company of the Vietnam-based foreign branch are not allowed to use loans lent, or investments entrusted, by other organizations and individuals to increase the charter capital/allocated capital of the insurer/reinsurer/Vietnam-based foreign branch;
c) After increasing its charter capital, the insurer/reinsurer shall maintain the satisfaction of the shareholder structure requirements specified in Article 66 of the Law on Insurance Business regarding joint-stock companies.
Joint-stock companies established before January 1, 2023 must satisfy the shareholder structure requirements specified in Article 66 of the Law on Insurance Business from January 1, 2026.
d) In the case where the insurer/reinsurer increases its charter capital with the capital contributions by new shareholders or members, such new shareholders or members must satisfy the requirements specified in Clauses 1 and 2, Article 64 and Article 65 of the Law on Insurance Business.
2. The application dossier for the Ministry of Finance’s in-principle approval of the charter capital (for the insurer/reinsurer)/allocated capital (for the Vietnam-based foreign branch) increase consists of:
a) A written request to increase the charter capital/allocated capital, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the increase of the charter capital (or allocated capital). The increased amount as well as the method and time of increasing shall be specified therein;
c) A plan on capitalization and use of charter capital or allocated capital;
d) A list of expected members of the (limited liability) insurer/reinsurer or expected shareholders to hold 10% or more of the charter capital of the (joint-stock) insurer/reinsurer after the capital is increased; documentary proof of the new shareholders’/members’ satisfaction of the requirements specified in Article 64 and Article 65 of the Law on Insurance Business. This requirement is not applicable to charter capital raised by public offerings or listed and public joint-stock companies’ issues.
3. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. In case of raising charter capital by public offerings or listed and public joint-stock companies’ issues, after obtaining the Ministry of Finance’s in-principle approval, the insurer/reinsurer shall conduct the issues in accordance with the Law on Securities.
5. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital/allocated capital increase, the insurer/reinsurer/Vietnam-based foreign branch shall complete such change and submit to the Ministry of Finance a dossier consisting of:
a) A brief report on the result of the charter capital (or allocated capital) increase under the capital change plan approved by the Ministry of Finance;
b) A bank’s certification that shareholders (or members) have fully paid the additional capital contributions to the insurer/reinsurer, or that the foreign non-life insurer or the foreign reinsurer has fully allocated the increased amount to its Vietnam-based foreign branch (in case of capital increase) into a frozen account; or the Vietnam Securities Depository and Clearing Corporation’s confirmation that additional securities have been registered in case of increasing the charter capital through issue of bonus shares from additional paid-in capital;
c) The documents mentioned at Point d, Clause 2 of this Article, in case of raising charter capital by public offerings or listed and public joint-stock companies’ issues.
6. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to the insurer, reinsurer, or Vietnam-based foreign branch. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
7. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital/allocated capital increase, if the insurer/reinsurer/Vietnam-based foreign branch fails to implement the approved capital change plan, it shall report a remedial plan to the Ministry of Finance. This requirement is not applicable to the supplementation of the charter capital to satisfy the requirement for charter capital management specified in Clause 3, Article 37 of this Decree.
Article 20. Reduction of the charter capital or allocated capital
1. Any insurer/reinsurer/Vietnam-based foreign branch that wishes to reduce its charter capital/allocated capital must satisfy the following requirements:
a) Such insurer/reinsurer/Vietnam-based foreign branch must satisfy the financial requirements specified in this Decree;
b) After reducing its charter capital/allocated capital, the insurer/reinsurer/Vietnam-based foreign branch still maintains the satisfaction of the capital and solvency margin requirements as specified by the law and the shareholder structure requirement specified in Article 66 of the Law on Insurance Business regarding joint-stock companies.
2. The application dossier for the Ministry of Finance’s in-principle approval of the charter capital (for the insurer/reinsurer)/allocated capital (for the Vietnam-based foreign branch) reduction consists of:
a) A written request to change the charter capital/allocated capital, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the reduction of the charter capital (or allocated capital). The reduced amount as well as the method and time of reducing shall be specified therein;
c) A plan to reduce the charter capital/allocated capital, which proves that the insurer/reinsurer/Vietnam-based foreign branch satisfies the financial requirements specified in Clause 1 of this Article.
3. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital/allocated capital reduction, the insurer/reinsurer/Vietnam-based foreign branch shall complete such reduction and submit to the Ministry of Finance a dossier consisting of:
a) A brief report on the result of the charter capital (or allocated capital) reduction under the plan approved by the Ministry of Finance. The financial indicators after the capital reduction is completed shall be specified therein;
b) Evidence indicating that the insurer/reinsurer has completed the payment to its shareholders (or members) or that the Vietnam-based foreign branch has fully returned the reduced amount to the foreign non-life insurer or the foreign reinsurer (in case of capital reduction).
5. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to the insurer, reinsurer, or Vietnam-based foreign branch. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
6. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital/allocated capital reduction, if the insurer/reinsurer/Vietnam-based foreign branch fails to implement the approved capital change plan, it shall report a remedial plan to the Ministry of Finance.
7. Single-member limited liability companies may not decrease their charter capital.
Article 21. Change of the operations, business scope and operational duration
1. Any insurer/reinsurer/Vietnam-based foreign branch that wishes to expand the operations, business scope and operational duration stated in its establishment and operation license must satisfy the following requirements:
a) It complies with regulations on solvency;
b) It has not been imposed any administrative sanction in relation to insurance business within 12 months before the application dossier for expansion of the operations and business scope is submitted;
c) In case of expanding the content of operation to provide investment-linked insurance or pension, in addition to the requirements specified at Points a and b of this Clause, the life insurer must:
Maintain a solvency margin that is VND two (200) billion higher than the minimum solvency margin, in case of providing investment-linked insurance;
Maintain a solvency margin that is VND 300 billion higher than the minimum solvency margin, in case of providing pension;
Have an information technology system that satisfy the requirements for deployment of each type of insurance as specified in Clause 2, Article 97 of this Decree.
d) In case of expanding the content of operation to provide unit-linked insurance products of the investment-linked insurance group, the insurer must be able to periodically value assets and units of the unit-linked insurance funds in an objective and precise manner at least once a week and publicly announce to the policyholders the buying and selling prices of fund units; establish an Investment Council, employ a fund management company and a custodian bank meeting the requirements specified in Articles 100, 112 and 113 to this Decree.
2. Any insurer/reinsurer/Vietnam-based foreign branch that wishes to narrow the operations and business scope stated in its establishment and operation license must satisfy the following requirements:
a) Current obligations to the State are fulfilled;
b) The narrowing of the operations and business scope does not cause damage to the interests of the insured and other relevant entities;
c) The transfer of insurance policies has been approved by the Ministry of Finance as specified in Article 34 of this Decree.
3. The application dossier for the expansion of the operations, business scope and operational duration consists of:
a) A written request to expand the content, scope and duration of operation, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the expansion of the operations, business scope and operational duration;
c) Documentary proof of the insurer’s/branch’s satisfaction of the requirements specified at Clause 1 of this Article, other than those specified at Point b, Clause 1 hereof;
d) In case of expanding the operations to provide investment-linked insurance and pension, in addition to the documents specified at Points a, b and c of this Clause, the insurer must provide the additional documents as specified in Clauses 4 and 5 of this Article.
4. In case of expanding the content of operation to provide investment-linked insurance products, in addition to the documents specified at Points a, b and c Clause 3 of this Article, the insurer must provide the following documents:
a) Brief descriptions of the investment-linked insurance products to be provided; investment policy of the investment-linked fund; rate-making methodologies and considerations; product brochures; sales illustrations, insurance claim templates; insurance certificate templates; analysis of the customers’ insurance needs and other documents that the customers must declare and sign when buying insurance or when adjusting the insurance policies;
b) Explanations of technical infrastructure for the implementation of investment-linked insurance products, including: The information technology system; the accounting system, including a detailed description of the insurer’s settlement plan for the investment-linked fund in the case where: A customer make a claim upon the occurrence of an insured event; a customer wants to surrender his/her policy; a customer wants to withdraw a portion of policy value, get a policy loan from surrender value, and claim the maturity benefit; a customer requests a unit-linked insurance fund switch; a unit-linked insurance fund is misvalued in the case where unit-linked insurance products are provided, and other cases specified in the terms and conditions of the products to be provided;
c) The process for selecting, training and managing investment-linked insurance product distribution agents; the training programs on investment-linked insurance products for insurance agents; distribution channels and methods of managing agents who advise, introduce, offer for sale and arrange the signing of investment-linked insurance policies in order to ensure legal compliance;
d) In case of expanding the content of operation to provide unit-linked insurance products of the investment-linked insurance group, the insurer must provide the following additional documents: A list of unit-linked insurance funds and investment policies that the insurer plans to apply to the assets of each unit-linked insurance fund; the basis for allocation of premiums and expenses among unit-linked insurance funds; the method for valuating unit-linked insurance fund units; documentary proof of the Investment Council members’ satisfaction of the requirements with respect to qualifications, capacity and professional experience as specified in Article 112 of this Decree; documentary proof that the fund management company satisfies the requirements specified in Article 100 of this Decree;
dd) Written commitments enclosed with detailed explanations of the insurer’s satisfaction of the requirements specified at Points c, d, Clause 1 of this Article.
5. In case of expanding the content of operation to provide pension products, in addition to the documents specified at Points a, b and c, Clause 3 of this Article, the insurer shall provide the following documents:
a) Brief descriptions of the pension products to be provided, including information about each product’s target market and the expected insurance benefits; the rate-making methodologies and considerations; product brochures; sales illustrations, insurance claim templates; insurance certificate templates and other documents that the customers must declare and sign when buying insurance or when adjusting the insurance policies;
b) Explanations of technical infrastructure for the implementation of pension products, including: The information technology system; the accounting system; the process for selecting, training and managing distribution agents; the agent training programs with respect to pension products;
c) Detailed settlement plans and materials provided to the customers by the insurer in relation to pension products in the case where: A customer make a claim upon the occurrence of an insured event; a customer requests the pension transfer; or claim the maturity benefit, and other cases as specified in the terms and conditions thereof;
d) Written commitments enclosed with detailed explanations of the insurer’s satisfaction of the requirements specified at Point c, Clause 1 of this Article.
6. The application dossier for narrowing the operations and business scope consists of:
a) A written request to narrow the operations and business scope, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the narrowing of the content, scope and duration of operation;
c) Documentary proof of the enterprise’s/insurer’s satisfaction of the requirements specified in Clause 2 of this Article;
d) The dossier on the transfer of insurance policy portfolio as specified in Article 34 of this Decree.
7. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 22. Transfer of shares or capital contributions making shareholders or members hold 10% or more or less than 10% of the charter capital
1. The purchase, sale and transfer of shares or capital contributions, making any or several of the shareholders or members hold 10% or more or less than 10% of the charter capital must satisfy the following requirements:
a) It does not cause damage to the legitimate rights and interests of the policyholder, the employees and the State;
b) It complies with the regulations of applicable laws;
c) Any organization that receives shares or capital contributions so as to hold 10% or more of the insurer/reinsurer’s charter capital must satisfy the requirements specified in Clause 1 and Point b, Clause 2, Article 64 and Articles 65 and 66 of the Law on Insurance Business regarding its respective type of enterprise, and Article 11 of this Decree;
d) After transferring the shares or capital contributions, the insurer/reinsurer maintains the satisfaction of requirement specified at Point a, Clause 2, Clauses 3 and 4, Article 64 of the Law on Insurance Business and the shareholder structure requirement specified in Article 66 of the Law on Insurance Business regarding joint-stock companies.
2. The application dossier for transfer of shares or capital contributions making any or several of the shareholders or members hold 10% or more or less than 10% of the charter capital consists of:
a) A written request to transfer shares/capital contributions, made using the form provided in Appendix IV to this Decree;
b) A written approval by the authorized person as stated in the company’s Charter on the transfer of the shares/capital contributions;
d) A list of shareholders (or members), the charter capital of the insurer/reinsurer after the shares/capital contributions are transferred and the structure thereof; documentary proof of the satisfaction of the requirements specified in Clause 1 of this Article by organizations and individuals receiving the shares or capital contributions worth more than 10% of the charter capital and the enterprise after the capital contributions are transferred. This requirement is not applicable to the transfer transactions made through trading on the stock market, as for listed companies;
d) An original duplicate or certified copy of the principle contract on transfer (unless the insurer/reinsurer is an organization listed, or registered for trading, on the stock market);
dd) The audited financial statement in the year immediately preceding the year in which the application dossier for transfer of shares of capital contributions is submitted, applicable to any institutional shareholder or member; the certification of the bank licensed to operate in Vietnam of the deposit balance in VND or a freely convertible currency, applicable to any individual shareholder;
e) Written commitments of the shareholders on their satisfaction of the requirements specified in Clause 1 of this Article.
3. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall give the reasons why.
4. Within 14 days after the transfer of the shares/capital contributions is completed under the approved plan, the insurer/reinsurer must submit to the Ministry of Finance 01 dossier consisting of:
a) A report on the results of the transfer of capital contributions;
b) Documents specified at Point c and Point d, Clause 1 of this Article in the case where the transfer is made on the stock market by a listed company;
c) Written certifications of the parties that the relevant obligations and responsibilities for the transfer of the shares/capital contributions have been fulfilled;
d) A bank’s confirmation of money transfer;
dd) A certification of fulfillment of tax obligations related to the transfer (if any).
5. If it fails to implement the approved capital transfer plan, the insurer/reinsurer shall report a remedial plan to the Ministry of Finance.
6. Within 14 days after receiving the report on the results of the transfer of capital contributions from the insurer/reinsurer, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to such insurer/reinsurer.
Article 23. Corporate split-up, separation, consolidation, merger, and transformation
1. The corporate split-up, separation, consolidation, merger, transformation of any insurer/reinsurer/Vietnam-based foreign branch must satisfy the following requirements:
a) Cause no damage to lawful rights and interests of policyholders, employees and the State;
b) It complies with the regulations of applicable laws;
c) Organizations and individuals that plan to contribute capital to any insurer/reinsurer/Vietnam-based foreign branch after its separation, split-up, consolidation, merger or transformation must satisfy the requirements specified in Clause 1 and Point b, Clause 2, Article 64, Articles 65 and 66, and Clause 1, Article 67 of the Law on Insurance Business regarding its respective type of enterprise or branch, and Article 11 of this Decree;
d) Any insurer/reinsurer/Vietnam-based foreign branch formed after the corporate separation, split-up, consolidation, merger or transformation must satisfy the requirements specified at Point a, Clause 2, Clauses 3 and 4, Article 64 of the Law on Insurance Business and the shareholder structure requirement specified in Article 66 of the Law on Insurance Business regarding joint-stock companies, and the requirements specified in Clause 2, Article 67 of the Law on Insurance Business regarding Vietnam-based foreign branches.
2. The application dossier for corporate split-up, separation, consolidation, merger or transformation consists of:
a) A written request for the license for corporate split-up, separation, consolidation, merger or transformation, made using the form provided in Appendix VI to this Decree;
b) A written approval by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch) on the corporate split-up, separation, consolidation, merger or transformation;
c) A report on the plan to split and deal with valid policies of customers, liabilities and obligations to the State, commitments to employees when the insurer/reinsurer/Vietnam-based foreign branch is split up, spun off, or transformed or involves in a consolidation or merger;
d) A list of shareholders (or members), the charter capital of the insurer/reinsurer formed after the corporate split-up, separation, consolidation, merger or transformation, and the structure thereof;
dd) An original duplicate or certified copy of the principle contract on consolidation or merger (unless the insurer is an organization listed, or registered for trading on the stock market);
e) Written opinions of a valuation agency explicitly determining the conversion rate of shares or the valuation of capital contributions (in case of consolidation or merger), or the values of assets split to the parties (in case of split-up or separation);
g) Copies from the original books or certified of audited financial statements for 03 consecutive years preceding the year of application for consolidation or merger of merged or consolidated organizations with insurers, reinsurers, foreign branches in Vietnam;
h) Documentary proof of the satisfaction of the requirement specified in Clause 1 of this Article by the capital-contributing organization/individual and any insurer/reinsurer/Vietnam-based foreign branch to be established after the split-up, separation, consolidation, merger or transformation satisfies.
3. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall give the reasons why.
4. Within 14 days after the corporate split-up, separation, consolidation, merger or transformation is completed under the approved plan, the insurer/reinsurer/Vietnam-based foreign branch must report the results thereof to the Ministry of Finance. If the insurer/reinsurer/Vietnam-based foreign branch fails to implement the approved plan, it shall report a remedial plan to the Ministry of Finance.
Within 14 days after receiving the report on the implementation of the split-up, separation, consolidation, merger or transformation plan from the insurer/reinsurer/Vietnam-based foreign branch, the Ministry of Finance shall grant an adjustment license or establishment and operation license(s) to such insurer/reinsurer/Vietnam-based foreign branch.
Article 24. Appointment and change of the Chairperson of the Board of Directors (Chairperson of the Members’ Council), General Director (Director), or Appointed Actuary
1. Any insurer/reinsurer/Vietnam-based foreign branch must obtain written approval from the Ministry of Finance before appointing or changing the following titles:
a) Chairperson of the Board of Directors or Chairperson of the Members’ Council of the insurer/reinsurer;
b) Director general (director);
c) Appointed Actuary.
2. The Chairperson of the Board of Directors, the Chairperson of the Members’ Council, the General Director (Director), or the Appointed Actuary to be appointed must satisfy the requirements specified in Article 81 of the Law on Insurance Business and additionally the Appointed Actuary must satisfy the requirements specified in Articles 29 and 30 of this Decree.
3. The application dossier for appointing or replacing any title specified in Clause 1 of this Article consists of:
a) A written request to appoint or change the title, made using the form provided in Appendix III to this Decree;
b) A written approval by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch);
c) A criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law as specified at Point dd, Clause 2, Article 15 of this Decree; a true copy of the citizen identity card/people’s identity card/passport; the curriculum vitae, notarized copies of documents proving the work experience and time holding managerial/supervisory titles, notarized copies of diplomas and certificates proving the qualifications and professional capacity of the person to be appointed or changed. In the case where the documents are written in a foreign language, a notarized translation thereof shall be enclosed;
d) A written commitment of the candidates for the General Director(Director) or Appointed Actuary to working for the insurer/reinsurer/Vietnam-based foreign branch and residing in Vietnam once his/her appointment is approved by the Ministry of Finance.
4. Within 07 business days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 25. Opening or close-down of a branch or a representative office in Vietnam of an insurer/reinsurer, or change of the location thereof
1. Within 15 days after obtaining the competent authority’s decision on the opening or close-down of a Vietnam-based branch/representative office or changing the location thereof, the insurer/reinsurer shall send a written notice to the Ministry of Finance, enclosed with the following:
a) A written approval by the authorized person stated in the company’s Charter on the opening or close-down of the branch/representative office, or change of the location thereof;
b) A report on responsibilities, problems and solutions thereto upon close-down of the branch/representative office, which ensures that it does not cause damage to current obligations to the State, the interests of policyholders and other relevant entities;
c) Evidence indicating the right to use the location of the branch/representative office in case of opening a branch/representative office or changing the location thereof.
2. Within 07 business days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written recognition of the insurer/reinsurer’s opening or close-down of the Vietnam-based branch/representative office, or change of the location thereof and notify the business registration agency.
Section 3
ORGANIZATION
Article 26. Requirements and standards for a Supervisor and the Head of the Board of Supervisors
1. The general standards specified in Clause 1, Article 81 of the Law on Insurance Business.
2. He/she must have a university degree, or any higher degree, specialized in any of the disciplines including insurance, economics, finance, banking, business administration, law, accounting, or auditing. Within 01 year after the effective date of this Decree, the insurer/reinsurer/Vietnam-based foreign branch shall review and ensure the satisfaction of this requirement.
3. The Head of the Board of Supervisors has at least 05 years of direct working experience in any or many of the fields including insurance, finance, and banking, or has at least 03 years holding managerial/executive/supervisory tittle(s) in any enterprise operating in any or many of the fields including insurance, finance or banking. A Supervisor has at least 03 years of direct working experience in any or many of the fields including insurance, finance, and banking.
4. He/she is not a family member of any member of the Board of Directors or the Members’ Council, or the Director/General Directors and other managers. The identification of who is a family member shall comply with the Law on Enterprises.
5. He/she is not a manager; not required to be a shareholder or employee, unless otherwise specified in the Charter/Regulations.
Article 27. Requirements and standards for the Head of Internal Audit
1. The general standards specified in Clause 1, Article 81 of the Law on Insurance Business.
2. The candidate must have a university degree, or any higher degree, specialized in insurance. In the case where he/she does not obtain a university degree or any higher degree specialized in insurance, he/she must have a university degree or any higher degree in any of the disciplines including economics, finance, banking, business administration, law, accounting, or auditing and have an insurance certification issued by any insurance training institution legally established and operated in Vietnam or abroad.
3. He/she has at least 03 years of direct working experience in any or many of the fields including insurance, finance, banking, accounting, auditing.
4. Clause 2 of this Article shall take effect after 01 year from the effective date of this Decree.
Article 28. Requirements and standards for the Head of Risk Management or the Head of Compliance
1. The general standards specified in Clause 1, Article 81 of the Law on Insurance Business.
2. The Head of Risk Management must have a university degree or any higher degree in risk management or insurance actuarial science. In the case where he/she does not have a university degree or higher in risk management or insurance actuarial science, he/she must have a university degree or any higher degree in any of the disciplines including insurance, economics, finance, banking, business administration, law, accounting, or auditing and have a certificate of training in risk management or insurance actuarial mathematics issued by any training institution legally established in Vietnam and abroad.
3. The Head of Compliance must have a university degree or any higher degree specialized in insurance. In the case where he/she does not obtain a university degree or any higher degree specialized in insurance, he/she must have a university degree or any higher degree in any of the disciplines including economics, finance, banking, business administration, law, accounting, or auditing and have an insurance certification issued by any insurance training institution legally established and operated in Vietnam or abroad.
4. He/she has at least 03 years of direct working experience in any or many of the fields including insurance, finance, and banking.
5. Clauses 2, 3, and 4 of this Article take effect after 01 year from the effective date of this Decree.
Article 29. Requirements and standards of the Appointed Actuary of a life/health insurer
1. The general standards specified in Clause 1, Article 81 of the Law on Insurance Business.
2. The candidate has been trained and has at least 10 years of actuarial experience in life/health insurance and at least 05 years of working experience since becoming a Fellow of any internationally accredited actuarial association such as: The UK Institute and Faculty of Actuaries, the American Academy of Actuaries, the Institute of Actuaries of Australia, the Canadian Institute of Actuaries, or the Society of Actuaries which is a full member organization of the International Actuarial Association.
3. The candidate shall not violate the code of professional conduct and ethics for actuaries.
4. The candidate is an employee of the life/health insurer.
5. He/she shall reside in Vietnam during his/her incumbency.
6. Clause 2 of this Article is not applicable to Appointed Actuaries who have been approved by the Ministry of Finance before the effective date of this Decree.
Article 30. Requirements and standards of the Appointed Actuary of a non-life insurer/reinsurer/Vietnam-based foreign branch
1. The general standards specified in Clause 1, Article 81 of the Law on Insurance Business.
2. The candidate must be an Associate of the Society of Actuaries which is a full member organization of the International Actuarial Association; or has at least 05 years of working experience in non-life insurance and possesses evidence indicates that he/she has passed at least 02 exams organized by the UK Institute and Faculty of Actuaries, the American Academy of Actuaries, the Institute of Actuaries of Australia, the Canadian Institute of Actuaries, or that he/she has passed exams of actuarial training courses or programs recognized by one of the above bodies as equivalent to their 02 exams.
Within 03 years from the effective date of this Decree, the Appointed Actuaries of non-life insurers/reinsurers/Vietnam-based foreign branches must be at least Associates of any full member organization of the International Actuarial Association and shall not violate the code of professional conduct and ethics for actuaries.
Within 05 years from the effective date of this Decree, the Appointed Actuaries of non-life insurers/reinsurers/Vietnam-based foreign branches must be Fellows trained in non-life insurance actuarial science of any full member organization of the International Actuarial Association and shall not violate the code of professional conduct and ethics for actuaries.
3. He/she is an employee of the non-life insurer/reinsurer/Vietnam-based foreign branch.
4. He/she shall reside in Vietnam during his/her incumbency.
5. Clauses 3 and 4 of this Article take effect one year after this Decree takes effect.
Article 31. Termination and suspension of the rights and obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or Appointed Actuary
1. In the case where the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or Appointed Actuary is known to commit violations against the principles of incumbency specified in Article 82 of the Law on Insurance Business or no longer satisfies the requirements and standards specified in Article 81 of the Law on Insurance Business, the Ministry of Finance shall meet with the insurer/reinsurer/Vietnam-based foreign branch and make a meeting minutes thereof.
2. In the case where the insurer/reinsurer/Vietnam-based foreign branch encloses a plan to ensure the satisfaction of the requirements specified at Article 81 and Article 82 of the Law on Insurance Business with the meeting minutes:
a) Within 7 business days, the Ministry of Finance shall consider issuing a decision to suspend the rights and obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or Appointed Actuary for 30 days;
b) When the suspension period is over, if the insurer/reinsurer/Vietnam-based foreign branch fails to implement the plan to ensure the satisfaction of the requirements specified at Articles 81 and 82 of the Law on Insurance Business, within 7 business days, the Ministry of Finance shall consider issuing a decision to terminate the rights and obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or Appointed Actuary.
3. If the insurer/reinsurer/Vietnam-based foreign branch fails to enclose the plan to ensure the satisfaction of the requirements specified at Articles 81 and 82 of the Law on Insurance Business with the meeting minutes, within 7 business days, the Ministry of Finance shall consider issuing a decision to terminate the rights and obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or Appointed Actuary.
Section 4
PROFESSIONAL OPERATIONS
Article 32. Procedures for registration of rate-making methodologies and considerations
1. Insurers and branches of foreign non-life insurers must register the rate-making methodologies and considerations, which shall be approved by the Ministry of Finance, for their life and health insurance products and motor insurance products other than motor vehicle owner’s civil liability insurance, before such products are provided.
2. Any insurer or branch of a foreign non-life insurer must submit to the Ministry of Finance 01 application dossier for registration of its rate-making methodology and considerations consisting of:
a) An application for registration of its rate-making methodology and considerations, made using the form provided in Appendix VII to this Decree;
b) A summary of insurance benefits and exclusions of the insurance product to be provided;
c) Written explanations about the rate-making methodology and considerations, including at least information about the formula, methodology, and considerations for calculating premiums; charges and fees payable by customers for investment-lined insurance and pension products. Written explanations about the rate-making methodologies and considerations shall be made using the template guided by the Minister of Finance.
3. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval of the rate-making methodologies and considerations of the insurer or branches of the foreign non-life insurer. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. In case of changing the methodology and considerations for rate-making of insurance products or changing the rules, conditions and terms of insurance products, which affects the rate-making methodology and considerations, the insurer or branch of the foreign non-life insurer shall submit to the Ministry of Finance 01 application dossier for registration of its amended rate-making methodology and considerations consisting of:
a)An application for amendment of the ratemaking methodology and considerations, made using the form provided in Appendix VII to this Decree;
b) Technical documents explaining the amendments and supplements certified by actuaries.
5. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval of the amendment of the rate-making methodology and considerations of the insurer or branch of the non-life insurer. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
6. Within 02 years after this Decree takes effect:
a) Life insurers may continue to provide life and health insurance products approved by the Ministry of Finance before the effective date of this Decree.
b) Non-life insurers and branches of foreign non-life insurers may continue to use the premium schedules of health insurance products or accidental death insurance products with the coverage period of 01 year or less, which have been approved by the Ministry of Finance before the effective date of this Decree, and health insurance products provided before October 1, 2012, and motor insurance products approved for registration by the Ministry of Finance before the effective date of this Decree.
c) Insurers and branches of foreign non-life insurers must revise and re-register their ratemaking methodologies and considerations for their life, health and motor insurance products to ensure the compliance with regulations of the Ministry of Finance. Insurers and branches of foreign non-life insurers shall not re-register the rate-making methodologies and considerations for their life, health and motor insurance products that have been approved for registration by the Ministry of Finance before the effective date of this Decree and satisfied the requirements in terms of rate-making methodologies and considerations as specified by the Ministry of Finance.
Article 33. Requirements for foreign insurers/reinsurers/organizations accepting outward reinsurance
1. Any foreign insurer/reinsurer/organization accepting outward reinsurance shall lawfully operate and fully satisfy the solvency requirements as specified by the applicable law of the country where it is headquartered.
2. Any leading foreign reinsurer, or organization accepting outward reinsurance or any foreign organization accepting outward reinsurance for 10% or more of the insurance limit of each reinsurance contract, 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 such reinsurance contract is concluded.
3. In case of reinsurance to its overseas parent company or a fellow subsidiary which does not obtain a credit rating as mentioned above, the insurer/reinsurer/Vietnam-based foreign branch shall submit to the Ministry of Finance a written certification by a foreign insurance supervisory authority of the country where the company accepting reinsurance is headquartered that such company satisfy the solvency requirement in the fiscal year immediately preceding the year of reinsurance.
Section 5
TRANSFER OF INSURANCE POLICY PORTFOLIO
Article 34. Procedures and dossiers for transfer of insurance policy portfolio
1. Any insurer or branch of a foreign non-life insurer that wishes to transfer the entire insurance policy portfolio of any or many types of insurance (hereinafter referred to as the transferor) must submit to the Ministry of Finance 01 application dossier consisting of:
a) A written request for the license for transfer, made using the form provided in Appendix VIII to this Decree;
b) A transfer plan mentioning: Name and address of the insurer or branch of the foreign non-life insurer accepting the transfer (hereinafter referred to as the transferee); Type of insurance and quantity of insurance policies to be transferred; Methods of transferring technical reserves and liabilities of the policies to be transferred; Expected timeline when the transfer will take place; Detailed explanations of the transferee on its satisfaction of financial requirements after the transfer.
c) A transfer contract mentioning: Subject matter of the transfer; Rights and obligations of the parties to the transfer; Expected timeline when the transfer will take place; Methods for dispute settlement.
d) The transferee’s commitment to guaranteeing the interests of the policyholders under the transferred insurance policies after the transfer takes effect.
dd) Documentary proof of the satisfaction of the requirements specified in Clause 1, Article 92 of the Law on Insurance Business.
2. Within 30 days after receiving a complete dossier of transfer request, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
3. Within 30 days after the Ministry of Finance approves the transfer, the transferor shall announce the transfer by:
a) Publicly announcing the transfer on its website, mentioning the following information: Names and addresses of the transferor and the transferee; Type of insurance and quantity of insurance policies to be transferred; Expected timeline when the transfer will take place; Address for policyholders to seek settlement of complaints relating to the transfer.
b) Sending a notice enclosed with a brief plan on the transfer to every policyholder. The notice sent to the policyholders must explicitly state that within 15 days after receiving the notice, the policyholders may terminate the insurance policies if they do not agree with the transfer plan and the day on which the transfer plan officially takes effect.
c) Sending written agreements to the policyholders and the insured persons on the reduction of the sum insured or insurance benefits and other obligations under the insurance policies in the case where the transfer of insurance policy portfolio is required by the Ministry of Finance as specified in Clause 1, Article 91 of the Law on Insurance Business where the value of assets is lower than that of the technical reserve of the transferred insurance policy portfolio.
4. From the date of signing the contract on transfer of insurance policy portfolio, the transferor may not sign any other new insurance policy of the insurance type that has been transferred.
5. Within 60 days after the Ministry of Finance approves a transfer plan, the transferor shall hand over to the transferee:
a) All insurance policies that are still in effect under the approved transfer plan;
b) Unsettled claims of the insurance type that has been transferred;
c) All assets, funds and technical reserves in relation to the insurance policies that have been transferred.
6. The transferee shall coordinate with the transferor in making a transfer plan and determining the value of assets relating to the funds and technical reserves of the transferred insurance policies, and reach agreement on the effective date of the transfer plan.
7. After the date of transfer, the transferee shall perform the obligations under the transferred insurance policies signed between the transferor and policyholders, including the responsibility for settling insured events that have occurred but not yet been reported. The transferee may receive assets relating to the funds and technical reserves of the transferred insurance policies and use such assets to perform the obligations under the transferred insurance policies.
Section 6
FINANCE, ACCOUNTING AND FINANCIAL STATEMENTS
Article 35. Minimum charter capital
1. The minimum charter capital of any life insurer:
a) Providing life insurance (excluding united-linked insurance and pension) and health insurance: VND 750 billion;
b) Providing the insurance as mentioned at Point a of this Clause, including unit-linked insurance or pension: VND 1,000 billion;
c) Providing the insurance as mentioned at Point a of this Clause, including both unit-linked insurance and pension: VND 1,300 billion.
2. The minimum charter capital of any non-life insurer:
a) Providing non-life insurance (excluding aviation insurance, satellite insurance) and health insurance: VND 400 billion;
b) Providing the insurance as mentioned at Point a of this Clause, including aviation insurance or satellite insurance: VND 450 billion;
c) Providing the insurance as mentioned at Point a of this Clause, including both aviation insurance and satellite insurance: VND 500 billion.
3. The minimum charter capital of any health insurer: VND 400 billion.
4. The minimum charter capital of any reinsurer:
a) Providing non-life reinsurance or retrocession or both non-life and health reinsurance: VND 500 billion;
b) Providing life reinsurance or retrocession or both life and health reinsurance: VND 900 billion;
c) Providing reinsurance or retrocession of 03 types of life, non-life and health reinsurance: VND 1,400 billion.
5. Any insurer or reinsurer that has been established, incorporated and operated before the effective date of this Decree and has its charter capital lower than the minimum charter capital specified in this Article must sufficiently increase the charter capital and deposit in accordance with the regulations before January 1, 2028.
Article 36. Minimum allocated capital
1. The minimum allocated capital of any branch of a foreign non-life insurer:
a) Providing non-life insurance (unless otherwise specified at Point b, Point c of this Clause) and health insurance: VND 250 billion;
b) Providing the insurance as mentioned at Point a of this Clause, including aviation insurance or satellite insurance: VND 300 billion;
c) Providing the insurance as mentioned at Point a of this Clause, including both aviation insurance and satellite insurance: VND 400 billion.
2. The minimum allocated capital of any branch of a foreign reinsurer:
a) Providing non-life reinsurance or retrocession or both non-life and health reinsurance: VND 400 billion;
b) Providing life reinsurance or retrocession or both life and health reinsurance: VND 450 billion;
c) Providing reinsurance or retrocession of 03 types of life, non-life and health reinsurance: VND 700 billion.
3. Any branch of a foreign non-life insurer that has been established, incorporated and operated before the effective date of this Decree and has its allocated capital lower than the minimum allocated capital specified in this Article must sufficiently increase the allocated capital and deposit in accordance with the regulations before January 1, 2028.
Article 37. Management of shareholders’ equity
1. While conducting business, any insurer/reinsurer shall maintain its shareholders’ equity so as to ensure that its solvency margin is higher than the minimum solvency margin and satisfies the following requirements:
a) For any insurer/reinsurer licensed before January 1, 2023: Before January 1, 2028, its charter capital and shareholders’ equity must not be lower than the legal capital as specified in Article 10 of Decree No. 73/2016/ND-CP; from January 1, 2028 onwards, its charter capital and shareholders’ equity shall not be lower than the minimum charter capital as specified in Article 35 of this Decree;
b) For any insurer/reinsurer licensed from January 1, 2028 onwards, its charter capital and shareholders’ equity must not be lower than the minimum charter capital as specified in Article 35 of this Decree.
2. While conducting business, any Vietnam-based foreign branch shall maintain its shareholders’ equity so as to ensure that its solvency margin is higher than the minimum solvency margin and satisfies the following requirements:
a) For any Vietnam-based foreign branch licensed before January 1, 2023: Before January 1, 2028, its allocated capital and shareholders’ equity must not be lower than the legal capital as specified in Article 10 of Decree No. 73/2016/ND-CP; from January 1, 2028 onwards, its allocated capital and shareholders’ equity shall not be lower than the minimum charter capital as specified in Article 36 of this Decree;
b) For any Vietnam-based foreign branch licensed from January 1, 2023 onwards, its allocated capital and shareholders’ equity must not be lower than the minimum allocated capital as specified in Article 36 of this Decree.
3. On a quarterly basis, depending on its financial statements, the insurer/reinsurer or the Vietnam-based foreign branch must re-evaluate its shareholders’ equity. In the case where the shareholders’ equity does not satisfy the requirements specified in Clause 1 and Clause 2 of this Article, the insurer/reinsurer/Vietnam-based foreign branch must carry out the procedures to replenish its capital as specified in Clause 2, 3, 4, 5, and 6 of Article 19 of this Decree within 06 months from the end of such quarter.
Article 38. Technical reserves for non-life insurance
1. Any non-life insurer/non-life reinsurer/Vietnam-based foreign branch must set aside a technical reserve for each type of insurance or each insurance policy in proportion to the obligations committed in such insurance policy, which must be certified by its Appointed Actuary.
2. Technical reserves include:
a) Unearned premium reserve: To be used for paying claims which may be incurred in the following years throughout the policy term;
b) Claims reserve: To be used for paying claims within the insurance coverage that have been incurred but yet reported, or have been unsettled by the end of fiscal year but reported;
c) Catastrophe reserve: To be used to pay claims when catastrophic events or significant losses occur, and the total retained premium collected in a fiscal year, after accounting for the unearned premium reserve and outstanding claims reserve, is not sufficient to cover the payment of claims for the retained liability of the insurer/Vietnam-based foreign branch.
3. Any non-life insurer/Vietnam-based foreign branch/non-life reinsurer may choose from the technical reserving methodologies as specified in Article 39 of this Decree or otherwise choose a different methodology provided that such methodology is proven to deliver a more accurate, adequate result and approved by the Ministry of Finance as specified in Article 45 of this Decree before it is used.
Article 39. Technical reserving methodologies and considerations for non-life insurance
1. Unearned premium reserve:
a) Fixed percentage method;
b) Time apportionment methods.
2. Claims reserve:
a) Stochastic claims reserving method;
b) Deterministic claims reserving method.
3. Catastrophe reserve.
Article 40. Technical reserves for life insurance
1. Any life insurer/life reinsurer/branch of a foreign life insurer must set aside a technical reserve for each insurance policy in proportion to the obligations committed in such insurance policy, which must be certified by its Appointed Actuary.
2. Technical reserves include:
a) Actuarial reserve: To be used for covering liabilities committed upon the occurrence of the insured event;
b) Unearned premium reserve: To be used for paying claims which may be incurred in the following years throughout the policy term;
c) Claims reserve: To be used for paying claims of insured events that have been occurred but yet claimed, or have been unsettled by the end of fiscal year but claimed;
d) Dividend reserve: To be used for paying the dividends as agreed between the insurer and the policyholder in the with-profits policy;
dd) Resilience reserve: To be used for maintaining the interest rate committed by the insurer to the customer in the universal life insurance or pension policy;
e) Equalization reserve: To be used for paying the sum insured when an insured event occurs due to a significant fluctuation in terms of risk ratio or technical interest rate.
3. Any life insurer/life reinsurer/branch of a foreign life reinsurer may choose from the technical reserving methodologies as specified in Article 41 of this Decree or otherwise choose a different methodology provided that such methodology is proven to deliver a more accurate, adequate result and approved by the Ministry of Finance as specified in Article 45 of this Decree before it is used.
4. Life insurers, life reinsurers, branches of foreign life reinsurers must regularly evaluate their technical reserving methodologies and considerations to ensure there are enough reserves to satisfy the committed insurance obligations.
In case of changing the technical reserving methodology, any life insurer/life reinsurer/branch of a foreign life reinsurer shall comply with the regulations of Article 45 of this Decree. In case of changing the technical reserving considerations (unless the technical interest rates are reduced following the guidance of the Ministry of Finance), before applying such considerations, the life insurer/life reinsurer/branch of a foreign life reinsurer shall obtain a written approval from the Ministry of Finance by sending a letter enclosed with documentary proof of such considerations’ conformity to Article 45 of this Decree.
Article 41. Technical reserving methodologies and considerations for life insurance
1. Actuarial reserve for term life insurance, pure endowment, endowment, whole life insurance, and annuity:
a) Any life insurer/life reinsurer/branch of a foreign life reinsurer may, to its sole discretion, choose an actuarial reserving methodology for insurance policies with the term of more than 01 year so as to ensure future insurance liabilities, such as: Gross premium method, pure premium method, Zillmer’s method, or other methods according to international best practices;
b) Considerations for the methods specified at Point a, Clause 1 of this Article include: 1980 CSO Mortality Table, technical interest rate based on the average interest rate of Government bonds with a maturity of 10 years or more, and other technical considerations for each respective insurance product.
2. Actuarial reserve, as for universal life insurance, unit-linked insurance, pension product, include:
a) Insurance risk reserve: Which is either the reserve calculated by the unearned premium method or that calculated by the cash flow method, whichever is greater, covering all future payouts for insurance perils throughout the policy;
b) Universal life technical reserve (applicable to universal life insurance) which is equal to any of the following: Total surrender value of a universal life insurance policy plus the reserve for paying the cash value of such policy under which any insured event is expected to occur in the period; Total cash value of the universal life policy.
Insurers are responsible for evaluating and choosing the technical reserving methodology for universal life insurance in order to ensure the liabilities committed under the insurance policies;
c) Unit-linked technical reserve (applicable to unit-linked insurance) which is the sum of the following:
The total quantity of investment units of the policyholder at the date of valuation multiplied by the buying price of the fund unit at such date of valuation;
The total amount of premiums received from the policyholder at the date of valuation less the charges levied on such policyholder, which is intended to purchase the fund units but yet used;
d) Pension technical reserve (applicable to pension) which is the total pension value by the time the reserve is set aside;
dd) Reserves for benefits other than insurance protection and investment interests.
3. Unearned premium reserve: Which shall be calculated on the gross premiums using the methods specified in Clause 1, Article 39 of this Decree, as for insurance policies with the coverage period of 01 year or less.
4. Claims reserve:
a) Stochastic method;
b) Deterministic method.
5. Dividend reserve, including:
a) Declared dividend reserve, which is equal to the total value of the cash or the present value of the declared dividends to the policyholder which have accrued to the current fiscal year and been unpaid;
b) Undeclared dividend reserve:
Undeclared dividend reserve is set aside to pay future additional dividends to the policyholders, which is calculated by the assets of the with-profits policyholders’ fund minus the fund’s debts, the support capital from the par fund, and the profits allocated in the current year.
6. Resilience reserve: In the case where the investment market fluctuates or the expected results of the investment of premiums are lower than the committed interest rate, the insurer shall set aside a resilience reserve. The amount to be set aside shall be equal to the difference between the expected results of the investment of premiums and the interest rate committed by the insurer to its customers as agreed in the insurance policies.
7. The equalization reserve shall be set aside as a percentage of pre-tax profits of the life insurer/life reinsurer/branch of a foreign life reinsurer.
Article 42. Technical reserves for health insurance
1. Any insurer/reinsurer/Vietnam-based foreign branch must set aside a technical reserve for each health insurance policy in proportion to the obligations committed in such insurance policy, which must be certified by its Appointed Actuary.
2. Technical reserves include:
a) Actuarial reserve: To be used for covering liabilities committed upon the occurrence of the insured event;
b) Unearned premium reserve: To be used for paying claims which may be incurred in the following years throughout the policy term;
c) Claims reserve: To be used for paying claims of insured events that have been occurred but yet claimed, or have been unsettled by the end of fiscal year but claimed;
d) Equalization reserve: To be used for paying the sum insured when an insured event occurs due to a significant fluctuation in terms of risk ratio or technical interest rate.
3. Any insurer/reinsurer/Vietnam-based foreign branch may choose from the technical reserving methodologies and considerations as specified in Article 43 of this Decree or otherwise choose any different methodology and considerations provided that such methodology and considerations are proven to deliver a more accurate, adequate result and approved by the Ministry of Finance as specified in Article 45 of this Decree before they are used.
Article 43. Technical reserving methodologies and considerations for health insurance
1. Actuarial reserve:
Actuarial reserve shall be used for covering liabilities committed upon the occurrence of the insured event under any insurance policy with the coverage period of more than 01 year; Any insurer/reinsurer/Vietnam-based foreign branch may, to its sole discretion, choose an actuarial reserving method, such as: Gross premium method, pure premium method, or other methods according to international best practices.
2. Unearned premium reserve: Which shall be calculated using to the methods specified in Clause 1, Article 39 of this Decree, applicable to insurance policies with the coverage period of 01 year or less.
3. Claims reserve:
a) Stochastic method;
b) Deterministic method.
4. Equalization reserve:
a) For any health/life insurer, it shall be set aside by any health/life insurer as a percentage of pre-tax profits of the life insurer/life reinsurer/foreign life reinsurer’s branch;
b) For any non-life insurer/Vietnam-based foreign branch/health reinsurer: The amount to be set aside annually shall be equal to a percentage of retained premiums of the non-life insurer/reinsurer/Vietnam-based foreign branch.
Article 44. Responsibilities of the Ministry of Finance
The Minister of Finance is responsible for guiding and illustrating the technical reserving methodologies, formulas and considerations for non-life insurance, life insurance and health insurance as specified in this Decree.
Article 45. The application dossier, process and procedures for registration of the technical reserving methodologies
1. Insurers, reinsurers and Vietnam-based foreign branches may not change their technical reserving methodologies during the fiscal year. If wishing to change the methodologies in the succeeding fiscal year, the insurers, reinsurers and Vietnam-based foreign branches shall send requests for the approval from the Ministry of Finance.
2. The application dossier for registration or change of the technical reserving methodology and considerations consists of:
a) A written request for registration or change of the technical reserving methodology and considerations, made using the form provided in Appendix IX to this Decree;
b) Written explanations and illustrations of the methodology or considerations to be applied, which shall be certified by the Appointed Actuary. In case of changing the technical reserving methodology and considerations, the written explanations must prove that the new methodology or considerations reflect the liabilities of the insurer/reinsurer/Vietnam-based foreign branch in a more accurate, adequate manner than the old methodology or considerations.
3. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. Any insurer/reinsurer/Vietnam-based foreign branch that has its reserving methodology and considerations not complying with the regulations of this Decree shall re-register the methodology and considerations with the Ministry of Finance within 06 months from the signing date of this Decree, applicable for the fiscal year from January 1, 2023. This requirement is not applicable to universal life technical reserves.
5. Within 01 year from the effective date of this Decree, life insurers must review and register with the Ministry of Finance the reserving methodologies for universal life technical reserves so as to ensure the value of the reserves as specified in this Decree.
6. For health insurance policies with the term of more than 01 year arising before the effective date of this Decree, non-life insurers may continue to make actuarial reserves using the pure premium method approved by the Ministry of Finance.
Article 46. Investment of shareholders’ equity
1. The investment of shareholders’ equity shall be equal to the capital specified in Clauses 1 and 2, Article 37 of this Decree or the minimum solvency margin, whichever is greater, and shall be made in Vietnam in accordance with the regulations on investment of idle capital from insurance technical reserves.
2. The offshore investment of shareholders’ equity shall comply with Articles 47 and 48 of this Decree.
Article 47. Requirements for offshore investment
1. Such offshore investment is allowed under the law regulations on investment and foreign exchange management.
2. Any insurer/reinsurer that submits an application for approval to make offshore investment must satisfy the following requirements:
a) It is profitable in 03 consecutive years preceding the year such offshore investment is made, which is demonstrated on the financial statements that have been independently audited by independent auditing organizations without any qualified opinion;
b) Its shareholders’ equity by the time of making the latest financial statement satisfies the requirement specified in Article 37 of this Decree;
c) It satisfies the requirements for solvency margin by the time of submitting the latest statement;
d) It has not been imposed any aggregate administrative fine of VND 400 million or more within 12 months before the application dossier is submitted.
3. Financial obligations to the State are fulfilled.
4. The enterprise has its internal processes and mechanisms for internal control and audit, identification and management of risks related to the offshore investment.
5. In addition to the requirements specified in Clauses 1, 2, 3 and 4 of this Article, foreign portfolio investment made by any insurer/reinsurer shall comply with the Government’s regulations on foreign portfolio investment.
Article 48. Limits, documentation, process and procedures for making offshore investment
1. Any insurer/reinsurer may make offshore investment in accordance with the law from the excess of the shareholders’ equity specified in Clause 1, Article 46 of this Article.
2. Offshore investment of shareholders’ equity as specified in Clause 1 of this Article may only be made in the following forms and with the following investment limits:
a) Founding or co-founding, contributing capital to, purchasing shares from, or purchasing capital contributions of insurer/reinsurers or foreign reinsurers, establishing branches, representative offices and other forms of commercial presence by insurers/reinsurers in foreign countries: Unlimited;
b) Foreign portfolio investment limits:
Buying government bonds, treasury bills, promissory notes: Unlimited;
Buying bonds, treasury bills, promissory notes from issuers ranked by international credit ranking organizations such as: Standard & Poor’s, Moody’s Investors Service and Fitch Ratings: Up to 50% of the offshore investment;
Buying listed shares and fund certificates: Up to 15% of the offshore investment;
3. The application dossier for obtaining the approval for making or adjustment or termination of offshore investment under Point a, Clause 2 of this Article consists of:
a) A written request made using the form provided in Appendix X to this Decree;
b) A document by the authorized person stated in the company’s Charter on the insurer/reinsurer’s implementation or adjustment or termination of its offshore investment;
c) A written explanation about the making or adjustment or termination of the offshore investment:
In case of making the offshore investment, such document must explicitly indicate: The country where the investment is made, the investment objective, form of investment, investment source, investment capital size, investment schedule, and expected investment efficiency; and a contract or agreement with partners (if any).
In case of adjusting the investment capital size or the form of offshore investment, such document must explicitly indicate the situation and result of investment, difficulties and advantages (if any), and an adjustment plan.
In case of terminating offshore investment activities, this document must state the reason for the termination, investment result, investment- capital retrieval capacity, and expected time of termination;
d) The internal processes for offshore investment, including the mechanisms for internal control and audit, identification and management of risks related to the offshore investment in case of applying for the approval for making or adjustment of offshore investment;
dd) In case of establishing a branch/representative office/other form of commercial presence in a foreign country, the insurer/reinsurer must submit a draft Regulation on organization and operation of such overseas branch/representative office/other form of commercial presence as specified by the law;
e) Evidence indicating that the insurer/reinsurer satisfies the requirements at Points a, b and c, Clause 2, Article 47 of this Decree, in case of applying for the approval for making offshore investment;
g) A tax authority’s written certification that the tax obligations to Vietnam have been fulfilled by the time the application dossier is submitted in case of applying for the approval of investment making or adjustment.
4. The process and procedures for obtaining the approval for making or adjustment or termination of offshore investment under Point a, Clause 2 of this Article is specified as follows:
a) Unless otherwise specified in Clause 5 of this Article, any insurer/reinsurer that wishes to make or adjust or terminate its offshore investments shall prepare a dossier as specified in Clause 3 of this Article; submit it in person to the Ministry of Finance or send by post or via the online public service portal if applicable;
b) Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why;
c) After having completely made or adjusted or terminated its offshore investments, the insurer/reinsurer must notify the Ministry of Finance.
5. In case of changing the location or name of an overseas branch/representative office/other form of commercial presence, the insurer/reinsurer must notify the Ministry of Finance in writing within 15 days from after the location is changed.
6. Documents, process and procedures applicable to offshore investment as specified at Point b, Clause 2 of this Article shall comply with regulations on foreign portfolio investment.
Article 49. Revenue of an insurer/reinsurer/Vietnam-based foreign branch
1. Revenue of an insurer/reinsurer/Vietnam-based foreign branch is all accounts receivable incurred in the period, including:
a) Revenue from insurance/reinsurance business: The difference between the accounts receivable incurred in a period and the accounts payable to reduce revenues in the same period;
b) Revenue from the rendering of auxiliary insurance services;
c) Revenue from financing activities;
d) Revenue from other activities.
2. Accounts receivable incurred in the period specified at Point a, Clause 1 of this Article include:
a) Direct premiums;
b) Reinsurance premiums;
c) Retrocession commissions;
d) Charges on agent services including damage survey, claim settlement, third-party indemnification, and disposal of wholly compensated goods;
dd) Charges for damage survey other than assessment for member units conducting internal cost-accounting of the same insurer conducting independent cost-accounting;
e) Leading fee receivable by the leading insurer/foreign non-life insurer’s branch, in case of co-insurance.
3. Accounts payable to reduce revenues incurred in the period as specified at Point a, Clause 1 of this Article include:
a) Refund of insurance premiums;
b) Reduction of insurance premiums;
c) Retrocession premiums;
d) Refund of reinsurance premiums;
dd) Reduction of reinsurance premiums;
e) Refund of retrocession commissions;
g) Reduction of retrocession commissions.
4. Revenue from the rendering of auxiliary insurance services: Revenue from providing auxiliary insurance services as specified in Section 3, Chapter IV of the Law on Insurance Business.
5. Revenue from financing activities:
a) Investment income as specified in this Decree;
b) Interests on deposits;
c) Property rentals;
d) Other income as specified by the law.
6. Revenues from other activities:
a) Revenue from transfer, sale or liquidation of fixed assets;
b) Bad debts which have been written off and are now recovered;
c) Other revenues as specified by the law.
7. The Minister of Finance shall promulgate regulations on the time of recognizing insurance revenue for each type of insurance.
Article 50. Expenses of an insurer/Vietnam-based foreign branch
1. Expenses of an insurer/reinsurer/Vietnam-based foreign branch are equal to the amounts payable incurred in the period, including:
a) Expenses for conducting insurance/reinsurance business;
b) Expenses for rendering auxiliary services;
c) Expenses for financing activities;
d) Expenses for other activities.
2. Expenses for conducting insurance/reinsurance business are equal to the difference between the accounts payable incurred in a period and the accounts receivable to reduce expenses in the same period.
3. Accounts payable incurred in the period as specified in Clause 2 of this Article include:
a) Payments of direct non-life insurance claims; life and health insurance payouts;
b) Payable reinsurance recoveries;
c) Amounts set aside as technical reserves;
d) Commissions, bonuses, allowances, and other incentives offered to insurance agents under insurance agency contracts, which must not exceed the maximum limits specified by the Minister of Finance.
After the date of signing of this Decree, such payments must be from operations of insurance agents and explicitly stated in the insurance agency agreements with specific quantitative criteria based on results and achievements in terms of execution and maintenance of life insurance policies and health insurance policies with the term of more than 01 year, and quality of insurance agents. Payments for bonuses, allowances and other incentives offered to insurance agents must be explicitly indicated in the agent reward and allowance policy and financial regulations of the insurer/foreign non-life insurer’s branch;
dd) Payments to insurance broker(s), including: Insurance brokerage commissions and other payments as specified by the regulations;
e) Expenses for damage survey;
g) Expenses for agent services, including damage survey, claim settlement and third-party indemnification;
h) Expenses for disposal of wholly compensated goods;
i) Leading fee payable to the leading insurer/foreign non-life insurer’s branch in case of co-insurance (if this fee is agreed upon in writing by the parties);
k) Expenses for management of insurance agents, including: Expenses for initial training and certification exams, expenses for knowledge improvement training for agents, expenses for recruitment of insurance agents;
l) Expenses for risk and loss prevention and reduction, up to 2% of the premiums received in the fiscal year. Such expenses are used for taking measures to prevent and limit losses as specified in Clause 3, Article 122 of the Law on Insurance Business;
m) Expenses for risk assessment of the insured;
n) Expenses for using insurance auxiliary services, including: Consulting, risk assessment, actuarial, damage survey, and third-party administration services;
o) Other expenses and amounts set aside as specified by the law.
4. The reductions of payables arising in the period as specified in Clause 2 of this Article include:
a) Receivable retrocession recoveries;
b) Reimbursements from subrogation claims; reimbursements from policyholders in case of guarantee insurance;
c) Proceeds from wholly disposed/compensated assets;
d) Amounts set aside as technical reserves for non-life reinsurance ceded.
5. Expenses for providing auxiliary services are equal to the payables incurred in providing auxiliary insurance services in the period.
6. Expenses for financing activities:
a) Expenses for investment activities as specified in this Decree;
b) Investment yield payable to the policyholders as committed in the life insurance policies;
c) Expenses for property lease;
d) Payment of bank fees and loan interests;
dd) Other expenses and amounts set aside as specified by the law.
7. Expenses for other activities:
a) Expenses for transfer, sale or liquidation of fixed assets;
b) Expenses for the recovery of bad debts which have been written off and are now recovered;
c) Other expenses and amounts set aside as specified by the law.
8. Expenses must comply with the regulations of law, ensure that there are sufficient invoices, vouchers or evidence.
Article 51. The application dossier, process and procedures for registration of the principle of segregating shareholders’ equity from premium funds
1. Any insurer/reinsurer/Vietnam-based foreign branch must register with the Ministry of Finance the rules of segregating and allocating its assets, capital funds, revenues, general expenses related to both the shareholders’ fund and the policyholders’ fund before the application thereof.
2. Application and change documents include the following documents:
a) A written request for registration or change, made using the form provided in Appendix XI to this Decree;
b) Written explanations about the principles of fund segregation or allocation to be applied, which must be certified by its Appointed Actuary. In case of change, the application dossier shall include written explanations about the change.
3. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a letter of recognition. In case of disapproval, the Ministry of Finance shall send a written notice giving the reasons why.
4. Any insurer/reinsurer/Vietnam-based foreign branch that has its principle of segregating shareholders’ equity from premiums not complying with the regulations of this Decree shall re-register a new one with the Ministry of Finance within 06 months from the signing date of this Decree, applicable for the fiscal year from January 1, 2023.
Article 52. Profits and profit distribution
1. Profits of any insurer/reinsurer/Vietnam-based foreign branch are equal to the difference between the total revenue and total expenses of such insurer/reinsurer/Vietnam-based foreign branch. Realized profits in the year of the insurer/reinsurer/Vietnam-based foreign branch are profits gained from insurance business, financing activities and other earnings.
2. After satisfying the capital, solvency, and technical reserve requirements, paying corporate income tax as specified by the law, setting aside the statutory reserve, and offsetting losses of previous years that are no longer deductible from earnings before tax, the insurer/reinsurer/Vietnam-based foreign branch may distribute the remaining profits in accordance with the law.
Article 53. The application dossier for approval or change of the method of distributing surplus in life insurance
1. Any life insurer must have its method of distributing the surplus of its with-profits policyholders’ fund approved by the Ministry of Finance before applying such method. The application dossier for approval or change of the method of distributing surplus consists of:
a) A written request to apply or change the method of distributing surplus, made using the form provided in Appendix XII to this Decree;
b) Written explanations about the proposed method of distributing surplus, which must be certified by its Appointed Actuary.
2. Within 30 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 54. Statutory reserve
Any insurer/reinsurer/insurance broker/Vietnam-based foreign branch must set aside a statutory reserve equal to 5% of its annual profit after tax. The statutory reserve can be equal to maximum 10% of the charter capital or the capital allocated to a branch.
Section 7
DISSOLUTION OF AN INSURER/REINSURER, CLOSE-DOWN OF A VIETNAM-BASED FOREIGN BRANCH
Article 55. Requirements, application dossier, process and procedures for dissolving an insurer/reinsurer or closing down a Vietnam-based foreign branch
1. Any insurer/reinsurer may dissolve itself or a Vietnam-based foreign branch may be closed down only if it has fulfilled all liabilities; and other asset-related obligations and is not undergoing dispute settlement by any Court or Arbitration The relevant managers and the insurer/reinsurer/Vietnam-based foreign branch shall be jointly and severally liable for the debts of such insurer/reinsurer/Vietnam-based foreign branch.
2. Debts of a bankrupt insurer/reinsurer/ Vietnam-based foreign branch shall be repaid following the below order of priority:
a) Outstanding salaries, severance allowances, social insurance, health insurance, unemployment insurance as specified by the law and other benefits owed to employees under executed collective bargaining agreement and employment contracts;
b) Indemnities and payouts according to the claims for which the insurer/reinsurer accepts to pay the cash value or account value, or refund the premiums of the policy;
c) Tax arrears;
d) Other debts.
3. After paying all the debts as specified in Clause 2 of this Article, the insurer/reinsurer shall submit the application dossier for dissolution, or the Vietnam-based foreign branch shall submit the application dossier for close-down, to the Ministry of Finance. An application dossier for dissolution of an insurer/reinsurer or for close-down of a Vietnam-based foreign branch consists of:
a) An application for dissolution/close-down signed by the at-law representative, which explicitly indicates the reasons for dissolution/close-down, made using the form provided in Appendix XIX to this Decree;
b) A decision by the authorized person stated in the company’s Charter (for the insurer/reinsurer) or organization and operation regulations (for the Vietnam-based foreign branch);
c) A written revocation of the establishment and operation license in the case specified at Point c, Clause 1, Article 115 of the Law on Insurance Business, or a written termination of controls in the case specified at Point d, Clause 1, Article 115 of the Law on Insurance Business;
d) Evidence indicating that the insurer/reinsurer/Vietnam-based foreign branch has fulfilled all liabilities and asset-related obligations and undertakes that it is not undergoing dispute settlement by any court or arbitration as specified in Clause 4 of this Article;
dd) The establishment and operation license.
4. Evidence indicating that the insurer/reinsurer/Vietnam-based foreign branch has fulfilled all liabilities and asset-related obligations and undertakes that it is not undergoing dispute settlement by any court or arbitration, including the following documents:
a) A report on performance of obligations to employees as specified by the law;
b) A report on performance of debt obligations to policyholders, including also the payment of due liabilities under insurance policies and transfer of insurance policies as specified by the regulations (for the insurer/Vietnam-based foreign branch);
c) A report on performance of obligations to the State and other creditors;
d) A notarized copy of the tax agency’s written certification of the fulfillment of tax obligations;
dd) Other evidentiary documents (if any).
5. Members of the Board of Directors, members of the Members’ Council, the Director or General Director, and the at-law representative of the insurer/reinsurer/Vietnam-based foreign branch shall be liable for the truthfulness and accuracy of the dossier.
6. Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a decision to dissolve the insurer/reinsurer or to close down the Vietnam-based foreign branch.
7. If the application dossier for dissolution/close-down is inaccurate or forged, the persons specified in Clause 5 of this Article shall be jointly and severally liable for paying the outstanding benefits for employees, unpaid tax arrears, and other unpaid debts as well as take personal accountability before the law for the consequences arising therefrom within 5 years after the application dossier for dissolution/close-down is submitted to the Ministry of Finance.
Section 8
FOREIGN REPRESENTATIVE OFFICES IN VIETNAM
Article 56. The application dossier, process and procedures for granting a license to set up a Vietnam-based foreign representative office
1. Any foreign insurer, foreign financial/insurance institution, foreign reinsurer, or foreign insurance broker (hereinafter referred to as foreign enterprise) may submit in person or by post or online (if applicable) to the Ministry of Finance 01 application dossier consisting of:
a) A written request to set up its representative office in Vietnam, made using to the form provided in Appendix XIII to this Decree;
b) A true copy of its establishment decision, business registration certificate or another equivalent paper;
c) True copies of the financial statements, which shall be audited by independent auditing organizations, in 3 consecutive years preceding the year in which the application dossier to set up the Vietnam-based representative office is submitted.
d) The curriculum vitae, a true copy of the citizen identity card/people’s identity card/passport of the person to be appointed as Chief Representative;
dd) The introduction about the foreign enterprise;
e) A written confirmation by an insurance regulatory authority of the country where the foreign enterprise is headquartered that it is permitted to set up a representative office in Vietnam. If such permission is not required by such country, the organization shall obtain a statutory written confirmation of such non-requirement by a competent authority.
2. The application dossier and documentation for obtaining a license to set up a foreign representative office in Vietnam must satisfy the standards specified in Article 15 of this Decree.
3. The process and procedures for granting a license to set up a representative office in Vietnam shall comply with Article 16 of this Decree.
4. The period of time within it a license to set up a representative office in Vietnam is specified in Article 70 of the Law on Insurance Business. The license to set up a representative office in Vietnam shall be made using to the template provided in Appendix XIV to this Decree.
Article 57. Re-grant of a license to set up a foreign representative office in Vietnam
1. Any foreign enterprise may carry out procedures for re-grant of the license to set up its foreign representative office in Vietnam in the case where the old license is lost, destroyed, damaged or eliminated in any way.
2. The application dossier for a license to set up the representative office consists of: An application for re-grant of the license, made using the form provided in Appendix XV to this Decree.
3. The foreign enterprise may submit in person or by post or online (if applicable) to the Ministry of Finance 01 application dossier.
4. Within 14 days after receiving a complete and valid application dossier, the Ministry of Finance shall consider granting an original duplicate of the license as specified by the law. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 58. Amendment of the license to set up a foreign representative office in Vietnam
1. Any foreign enterprise may carry out procedures to amend its license to set up a foreign representative office in Vietnam if:
a) The name, nationality or address of the foreign enterprise is changed;
b) The name of the representative office is changed;
c) The operations of the representative office are changed;
d) The representative office is relocated from one province/municipality to another province/municipality.
2. The application dossier for amendment of the license to set up a foreign representative office in Vietnam consists of:
a) A written request for amendment of the license, made using the form provided in Appendix XV to this Decree;
b) A true copy of the legal document issued by a foreign competent authority evidencing the change, in the case where the foreign enterprise changes its name, nationality, or address;
c) A document made by the authorized person as stated in the foreign enterprise’s charter, which explicitly indicates the decision to change the name or operations of the representative office or change the location thereof.
3. The application dossier for amendment of the license shall be executed into two counterparts in Vietnamese and English respectively as specified in Clauses 2, 3, and 4, Article 15 of this Decree.
4. The foreign enterprise may submit in person or by post or online (if applicable) to the Ministry of Finance 01 application dossier.
5. Within 14 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix XVI to this Decree. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 59. Renewal of the license to set up a foreign representative office in Vietnam
1. Any foreign enterprise that wishes to extend the operation of its representative office in Vietnam must satisfy the following requirements:
a) Its Vietnam-based foreign representative office has not been imposed any administrative sanction in relation to insurance business within 12 months before the application dossier for renewal of the license is submitted;
b) It is lawfully operating by the time the application dossier for renewal of the license is submitted;
c) It has cooperative relations with agencies and organizations in the field of insurance business in Vietnam.
2. The application dossier for renewal of the license to set up a foreign representative office in Vietnam consists of:
a) A written request for renewal of the license, made using the form provided in Appendix XIII to this Decree;
b) A true copy of the establishment decision or the business registration certificate or another equivalent paper;
c) True copies of the foreign enterprise’s financial statements, which shall be audited by independent auditing organizations, in 3 consecutive years preceding the year in which the application dossier for renewal is submitted.
d) The curriculum vitae, a true copy of the citizen identity card/people’s identity card/passport of the person to be appointed as Chief Representative (if any change);
dd) A written report on cooperation between the foreign representative office or the foreign enterprise and agencies or organizations in the field of insurance business in Vietnam.
3. The application dossier for renewal of the license shall be executed into two counterparts in Vietnamese and English respectively as specified in Clauses 2, 3, and 4, Article 15 of this Decree.
4. At least 60 days before the expiration date of its license to set up the foreign representative office in Vietnam, any foreign enterprise wishing to renew such license must submit in person or by post or online (if applicable) 01 application dossier to the Ministry of Finance.
5. Within 30 days after receiving a complete and valid application dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix XVI to this Decree. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 60. Closing down a foreign representative office in Vietnam
1. A foreign representative office in Vietnam shall be closed down in the case where:
a) The foreign enterprise requests so;
b) The foreign enterprise terminates its operation, dissolves itself, goes bankrupt or has its license revoked;
c) After its expiry date, the renewal thereof is not requested or the Ministry of Finance refuses such renewal.
2. The application dossier for closing down a foreign representative office consists of:
a) A written request to close down the representative office in Vietnam, made using to the form provided in Appendix XIII to this Decree;
b) Evidence indicating the fulfillment of obligations toward its employees and other authorities, organizations and persons in Vietnam;
c) The original license to set up the foreign representative office in Vietnam and decisions on renewal thereof (if any);
d) Original licenses and decisions otherwise granted in the course of operation of the Vietnam-based foreign representative office;
dd) A power of attorney by the foreign enterprise for an organization in Vietnam to carry out administrative procedures at relevant State regulatory authorities (if any) on its behalf.
3. In the case where its foreign representative office is closed down as specified at Points a and b, Clause 1 of this Article, the foreign enterprise shall submit in person or by post or online (if applicable) 01 application dossier specified in Clause 2 of this Article to the Ministry of Finance. Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a decision to close down the foreign representative office.
4. In the case where the foreign representative office is closed down as specified at Point c, Clause 1 of this Article:
a) Within 30 days after the expiry date as specified at Point c, Clause 1 of this Article, the Ministry of Finance shall send a written notice to the foreign representative office and to the relevant State statutory authorities that the representative office is deemed closed down as its license expires and the foreign enterprise thereby is requested to carry out procedures for closing down such representative office;
b) Within 20 days after receiving the notice of the Ministry of Finance, the foreign enterprise shall submit in person or by post or online (if applicable) 01 application dossier specified at Points a, c, and dd, Clause 2 of this Article to the Ministry of Finance.
c) Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a decision to close down the foreign representative office.
d) Within 01 year after the Ministry of Finance issues a written notice about the closed-down of the foreign representative office, the foreign enterprise or its authorized representative must send a report on the fulfillment of its obligations to organizations and individuals in Vietnam to the Ministry of Finance, enclosed with supporting documents as specified at Point b, Clause 2 of this Article;
dd) Within 05 business days after the 01-year period as specified at Point d of this Clause has passed, if its obligations to employees and other organizations and individuals in Vietnam have not been fulfilled, the foreign enterprise shall or authorized representative must send a written report on the reasons why to the Ministry of Finance. After the above period of 05 business days has passed, if this report has not been received, the Ministry of Finance will send an official notice to the insurance regulatory authority of the country where the foreign enterprise is headquartered that such foreign enterprise/corporation has not fulfilled its obligations to organizations and individuals in Vietnam;
e) Within 20 days after receiving the report enclosed with documents as specified at Point d of this Clause, the Ministry of Finance shall issue a written certification that the foreign enterprise has completed the procedures for closing down its representative office in Vietnam.
5. Though it is closed down, the foreign representative office in Vietnam must fulfill all procedures and obligations as specified by the law. In the case where the foreign representative is closed down as specified at Point c, Clause 1 of this Article, the foreign enterprise shall itself perform or authorize an organization or individual in Vietnam on its behalf to perform the obligations to employees and other organizations and individuals in Vietnam that have not yet been fulfilled when the representative office is closed down.
Article 61. Revocation of the license to set up a foreign representative office in Vietnam
1. Any foreign representative office in Vietnam has its license revoked in the case where its operation is not in line with such license or the application dossier for such license contains fraudulent information which makes the license deceitfully eligible to be granted.
2. Within 30 days after signing the record of misconducts, the Ministry of Finance shall issue a decision to revoke the license to set up the foreign representative office in Vietnam and send it to such foreign representative office and competent authorities for coordination.
3. Within 30 days after receiving the decision of the Ministry of Finance, the foreign enterprise shall submit to the Ministry of Finance 01 dossier consisting of:
a) Evidence indicating the fulfillment of obligations toward its employees and other authorities, organizations and persons in Vietnam;
b) The original license to set up the foreign representative office in Vietnam and decisions on renewal thereof (if any);
c) Original licenses and decisions otherwise granted in the course of operation of the Vietnam-based foreign representative office;
d) A power of attorney by the foreign enterprise for an organization in Vietnam to carry out administrative procedures at relevant State regulatory authorities (if any) on its behalf.
4. The foreign enterprise may submit in person or by post or online (if applicable) to the Ministry of Finance 01 application dossier as specified in Clause 3 of this Article. Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a decision to close down the foreign representative office.
5. Though its license is revoked, the foreign representative office in Vietnam must fulfill all procedures and obligations as specified by the law.
Chapter III
INSURANCE AGENTS, INSURANCE BROKERS, INSURANCE AUXILIARY SERVICE PROVIDERS
Section 1
INSURANCE AGENTS
Article 62. Requirements for corporate agents
Any corporate agent must satisfy the requirements as specified in Clause 2, Article 125 of the Law on Insurance Business and the following requirements:
1. Any corporate agent that is a credit institution or foreign bank branch must:
a) Set up a department dedicated to performing insurance agent responsibilities;
b) Assign the Head of such department who has at least 03 years of working experiences in finance, banking or insurance and have a university degree or any higher degree specialized in insurance. In the case where he/she does not obtain a university degree or any higher degree specialized in insurance, he/she must have a relevant university degree or any higher degree in other disciplines and have an insurance certification as specified by the Ministry of Finance;
c) Each branch of the credit institution that is a corporate agent must have at least 03 employees who are trained and obtained insurance agent certifications suitable with the type of insurance which the credit institution acts as an agent to distribute. Each transaction office of the credit institution that is a corporate agent must have at least 01 employee who is trained and obtained an insurance agent certification suitable with the type of insurance which the credit institution acts as an agent to distribute;
d) Have a suitable information system that can sufficiently, correctly and timely provide information relating to the insurance policies distributed by the corporate agent;
dd) Have its process to supervise and control quality of insurance operations performed by employees of the corporation agent. The quality supervision and control process must ensure that the corporate agent’s employees, who directly conduct insurance operations, comply with insurance agent principles, operations authorized in the agency agreement, and relevant regulations of the law; enable the insurer/Vietnam-based foreign branch to check and supervise the quality of insurance operations performed by the corporate agent’s employees; and sanction the corporate agent’s employees when they committed violations while directly performing insurance operations;
e) At each branch or transaction office of credit institutions and foreign bank branches, a stand-alone counter (desk) to conduct insurance agent operations, which shall be separated from the transaction counter or operational areas of such credit institutions and foreign bank branches.
2. Any other corporate agent must:
a) Have at least 3 employees directly performing insurance operations;
b) Have its process to supervise the compliance with agent principles as specified in the Law on Insurance Business of its employees who perform insurance operations.
3. Any corporate agent must maintain its satisfaction of and comply with the requirements to act as an insurance agent throughout its duration of operation. In the case where it fails to satisfy any of the requirements, such corporate agent shall not act as an insurance agent until it fully satisfies the statutory requirements and must send a notice about such failure to the insurer or branch of the foreign non-life insurer, or mutual organizations providing microinsurance within 5 business days after the date of failure. After 6 months from the notice date, if such corporate agent cannot satisfy the condition, the insurer, branch of the foreign non-life insurer or mutual organization providing microinsurance must terminate the agency agreement.
4. Active corporate agents must satisfy the requirements specified in Clause 1 and Clause 2 of this Article within 01 year after the effective date of this Decree.
Section 2
INSURANCE BROKERS
Article 63. Financial requirements for any insurance broker to be granted an establishment and operation license
An organization that wishes to contribute capital to establish an insurance broker must satisfy the following requirements:
1. Any organization that wishes to contribute 10% or more of the charter capital must have conducted profitable business for 3 consecutive years preceding the year in which the application dossier for a license is submitted.
2. Any capital-contributing organization that operates in a line of business subject to the minimum (legal/charter) capital requirement shall ensure that the shareholders’ equity, which is stated in the audited financial statement of the year preceding the year on which the application dossier is submitted, minus the required minimum (legal/charter) capital is greater than or equal to its estimated capital contribution.
3. If the capital-contributing organization is established and operated in accordance with the Law on Credit Institutions, the Law on Insurance Business, and the Law on Securities, it must maintain and satisfy the requirements of financial safety and be permitted to contribute capital by a competent authority in accordance with the law. If the applicable law does not require it to obtain written permission from a competent authority, the capital contributing organization must have a document proving this.
4. In the case where the capital-contributing organization is established under the foreign law and has any of its subsidiaries that conducts insurance brokerage, such organization shall not have an accumulated loss as of the time the dossier is submitted and have its total assets of not less than USD 2 million in the fiscal year immediately preceding the year in which the application for a license is submitted.
5. The organization that contribute 10% or more of the charter capital must make financial statements, which must be audited and given unqualified opinions. The organization that contribute less than 10% of the charter capital must make the financial statement, which must be audited and given unqualified opinions, in the year preceding the year in which the application dossier for the license is submitted.
Article 64. The application dossier for an establishment and operation license of an insurance broker
1. An application for grant of the License, made using the form provided in Appendix I to this Decree.
2. The draft charter of the company as specified in the Law on Enterprises.
3. A plan on the first 05 years’ operation suitable to the line of business to be licensed, in which the operations to be performed and the business efficiency of the insurance broker to be established.
4. A true copy of the citizen identity card/people’s identity card/passport; a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law; the curriculum vitae, true copies of diplomas, certificates and other documents proving the qualifications and eligibility of the person to be appointed as Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/General Director, or at-law representative.
5. A list of shareholders or members whose capital contribution makes up 10% or more of the charter capital, enclosed with:
a) A true copy of the establishment decision or the business registration certificate or another equivalent paper;
b) A true copy of the company’s charter;
c) The decision by the authorized person of the capital-contributing organization on such organization’s contribution of capital to establish the insurance broker;
d) The power of attorney and a copy of the citizen identity card, people’s identity card or passport of the duly authorized representative of the capital-contributing organization;
dd) True copies of the audited financial statements in 03 consecutive years preceding the year in which the application dossier for the establishment and operation license is submitted, which must satisfy the requirements specified in Claus 5, Article 63 of this Decree;
e) Documentary proof of the compliance of such organization’s capital contribution with Point a, Clause 5, Article 133 of the Law on Insurance Business.
6. Profiles of institutional shareholders or members contributing less than 10% of the charter capital, each consists of:
a) Documents specified at Points a, b, c, and d, Clause 5 of this Article;
b) A true copy of the audited financial statement in the year immediately preceding the year in which the application dossier for the establishment and operation license is submitted, which must satisfy the requirements specified in Claus 5, Article 63 of this Decree.
7. In the case where the organization is established under the foreign law and has any of its subsidiaries that conducts insurance brokerage, a true copy of the establishment decision, business registration certificate or another equivalent paper of the subsidiary and a true copy of such subsidiary’s audited financial statement in the fiscal year immediately preceding the year in which the application for a license is submitted, which must satisfy the requirements specified in Claus 5, Article 63 of this Decree.
8. Documents related to each individual shareholder or member:
a) A true copy of the citizen identity card/people’s identity card/passport; and a criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law;
b) A bank’s certification of his/her deposit balance in VND or a freely convertible currency.
9. A certification by a bank licensed to operate in Vietnam of the charter capital deposited at a frozen account opened at the bank, which must not be less than the minimum charter capital, as specified in Article 81 of this Decree. The amount each shareholder/member has contributed, the frozen amount, the purpose of freezing, the frozen period, and requirements for unfreezing shall be specified therein.
10. The minutes of the meeting of capital-contributing organizations and individuals which records:
a) Their agreement to contribute capital to establish the limited liability or joint-stock insurance broker, enclosed with a list of shareholders or members and a list of founding shareholders or members;
b) Adoption of the company’s charter.
11. A written authorization for an individual or organization to carry out licensing procedures on behalf of the shareholders or members.
12. In the case where the organization is established under the foreign law and directly conducts insurance brokerage, it shall obtain a written confirmation by a competent authority of the country where it is headquartered that:
a) It is permitted to establish an insurance broker in Vietnam. If such permission is not required by such country, the organization shall obtain a statutory written confirmation of such non-requirement by a competent authority;
b) It is conducting insurance brokerage;
c) It has not seriously violated the law on insurance brokerage of the country where it is headquartered for 03 consecutive years before the application dossier for the establishment and operation license is submitted.
13. In the case where the organization is established under the foreign law and has any of its subsidiaries conducts insurance brokerage, it shall obtain a written confirmation by a competent authority of the country where it is headquartered that:
a) It is permitted to establish an insurance broker in Vietnam. If such permission is not required by such country, the organization shall obtain a statutory written confirmation of such non-requirement by a competent authority;
b) It is in a sound financial state and fully satisfies the management requirements in the country where it is headquartered;
c) It has not seriously violated the law on insurance brokerage of the country where it is headquartered for 03 consecutive years before the application dossier for the license is submitted.
14. Written commitments of the capital-contributing organizations or individuals on their eligibility for being granted the license in accordance with Article 63 of this Decree and Article 133 of the Law on Insurance Business.
15. A relevant State authority’s written confirmation that the Vietnamese capital-contributing organization satisfies the requirements of financial safety and is permitted to contribute capital to establish an insurance broker in accordance with the law. If the applicable law does not require it to obtain written permission, the capital contributing organization must have a written certification thereof.
16. A document proving that the capital-contributing organization operating in a line of business subject to the minimum (legal/charter) capital requirement satisfies the requirements specified in Clause 2, Article 63 of this Decree.
Article 65. Standards of application dossiers, documents, process and procedures for granting establishment and operation licenses to insurance brokers
The general standards for the submission and supplementation of dossiers and documents, sequence and procedures for granting establishment and operation licenses to insurance brokers shall comply with Articles 15 and 16 of this Decree.
Article 66. Change of the name or location of an insurance broker’s head office
1. An application dossier for change of the name or location of any insurance broker’s head office consists of:
a) A written request to change the head office’s name or location, made using to the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter on the change of the head office’s name or location;
c) Evidence indicating the right to use the new location of the head office (in case of change the head office’s location).
2. Within 07 business days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 67. Increase of charter capital
1. Any insurance broker that wishes to increase its charter capital must satisfy the following requirements:
a) The increase in charter capital shall be made in VND;
b) Shareholders or members are not allowed to use loans lent, or investments entrusted, by other organizations and individuals to increase the charter capital of the insurance broker;
2. The application dossier for the Ministry of Finance’s in-principle approval of the insurance broker’s increase of charter capital consists of:
a) A written request to increase the charter capital, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter on the increase of the charter capital. The increased amount as well as the method and time of increasing shall be specified therein;
c) A plan on capitalization and use of the charter capital;
d) A list of expected shareholders or members to hold 10% or more of the insurance broker’s charter capital after the increase thereof; documentary proof of such shareholders’/members’ satisfaction of the requirements specified in Clauses 1, 2, and 5, Article 133 of the Law on Insurance Business and Article 63 of this Decree. This requirement is not applicable to shareholders or members that already hold 10% or more of the insurance broker’s charter capital before the increase thereof as well as to charter capital raised by public offerings or listed and public joint-stock companies’ issues.
3. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. In case of raising charter capital by public offerings or listed and public joint-stock companies’ issues, after obtaining the Ministry of Finance’s in-principle approval, the insurance broker shall conduct the issues in accordance with the Law on Securities.
5. Within 6 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital increase, the insurance broker shall complete such increase and submit to the Ministry of Finance a dossier consisting of:
a) A brief report on the result of the change of the charter capital increase under the capital-raising plan approved by the Ministry of Finance;
b) A bank’s certification that shareholders or members have fully paid the additional capital contributions to the insurance broker into a frozen account; or the Vietnam Securities Depository and Clearing Corporation’s confirmation that additional securities have been registered in case of increasing the charter capital through bonus issue of shares from shareholders’ equity;
c) The documents mentioned at Point d, Clause 2 of this Article, in case of raising charter capital by public offerings or listed and public joint-stock companies’ issues.
6. Within 20 days after receiving a complete dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to the insurance broker. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
7. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital increase, if the insurance broker fails to implement the approved capital change plan, it shall report a remedial plan to the Ministry of Finance.
Article 68. Reduction of charter capital
1. Any insurance broker that wishes to reduce its charter capital must satisfy the following requirements:
a) The reduced charter capital shall satisfy the required minimum charter capital specified in Article 81 of this Decree;
b) Its shareholders’ equity by the time of making the latest financial statement is not lower than the minimum charter capital required by the law;
2. The application dossier for the Ministry of Finance’s in-principle approval of the insurance broker’s reduction of charter capital consists of:
a) A written request to reduce the charter capital, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter on the reduction of the charter capital; the reduced amount as well as the method and time of reducing shall be specified therein;
c) A plan to reduce the charter capital, which proves that the insurance broker satisfies the financial requirements specified in Clause 1 of this Article.
d) Documentary proof of the insurance broker’s satisfaction of the requirements specified at Clause 1 of this Article.
3. Within 20 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. Within 6 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital reduction, the insurance broker shall complete such reduction and submit to the Ministry of Finance a dossier consisting of:
a) A brief report on the result of the charter capital reduction under the plan approved by the Ministry of Finance. The financial indicators after the charter capital reduction is completed shall be specified therein;
b) Evidence indicating that the insurance broker has completed the payment of the reduced amount to its shareholders or members.
5. Within 20 days after receiving a complete dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to the insurance broker. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
6. Within 06 months after obtaining the Ministry of Finance’s in-principle approval of its charter capital increase, if the insurance broker fails to implement the approved capital-reducing plan, it shall report a remedial plan to the Ministry of Finance.
7. Single-member limited liability companies may not decrease their charter capital.
Article 69. Change of the operations, business scope and operational duration
1. Any insurance broker that wishes to expand the operations, business scope and operational duration stated in its establishment and operation license must satisfy the following requirements:
a) The head of the operational department to be expanded must satisfy the standards specified in Article 80 of this Decree (for the expansion of the content and scope of operation);
b) It has not been imposed any administrative sanction in relation to insurance business within 12 months before the application dossier for expansion of the operations, business scope and operational duration is submitted;
c) Its shareholders’ equity by the time of making the latest financial statement is not lower than the required minimum charter capital specified in Article 81 of this Decree.
2. An insurance broker that wishes to narrow the operations, business scope and operational duration stated in its establishment and operation license shall ensure that such action does not cause any damage to its current obligations toward the State or to the interests of policyholders and other related entities.
3. The application dossier for changing the operations, business scope and operational duration consists of:
a) A written request to change the content, scope and duration of operation, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person stated in the company’s Charter on the change of the operations, business scope and operational duration;
c) Documentary proof of the insurance broker’s satisfaction of the requirements specified at Clauses 1 and 2 of this Article.
4. Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to the insurance broker. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 70. Transfer of shares or capital contributions making shareholders or members hold 10% or more or less than 10% of the charter capital
1. The transfer of shares or capital contributions, making any or several of the shareholders or members hold 10% or more or less than 10% of the charter capital must satisfy the following requirements:
a) Cause no damage to lawful rights and interests of policyholders, employees and the State;
b) It complies with the regulations of applicable laws;
c) Any organization or individual that receives transferred shares or capital contributions must satisfy the requirements specified in Clauses 1, 2, 5, Article 133 of the Law on Insurance Business and Article 63 of this Decree.
2. The application dossier for transfer of shares or capital contributions making any or several of the shareholders or members hold 10% or more or less than 10% of the charter capital consists of:
a) A written request to transfer shares/capital contributions, made using the form provided in Appendix IV to this Decree;
b) A document by the authorized person as stated in the company’s Charter on the transfer of the shares or capital contributions;
c) A list of shareholders (or members), the charter capital of the insurance broker after the shares or capital contributions are transferred and the structure thereof;
d) An original duplicate or certified copy of the principle contract on transfer of shares and capital contributions (unless the insurance broker is an organization listed, or registered for trading, on the stock market);
dd) Documentary proof of the capital-contributing organizations’/individuals’ satisfaction of the requirements specified at Clause 1 of this Article.
3. Within 30 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. Within 14 days after the transfer of the shares or capital contributions is completed under the approved plan, the insurance broker must submit the results thereof to the Ministry of Finance. The report dossier on the completion of the transfer of shares or capital contributions consists of:
a) A report on the completion of the transfer of shares or capital contributions;
b) A report on the fulfillment of tax obligations arising from the transfer of shares or capital contributions.
5. If it fails to implement the approved plan, the insurance broker shall report a remedial plan to the Ministry of Finance.
6. Within 14 days after receiving the report on the results of the transfer of shares or capital contributions from the insurance broker, the Ministry of Finance shall grant an adjustment license, made using the template provided in Appendix V to this Decree, to such insurance broker. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 71. Corporate split-up, separation, consolidation, merger, and transformation
1. The corporate split-up, separation, consolidation, merger, or transformation of any insurance broker shall satisfy the following requirements:
a) Cause no damage to lawful rights and interests of policyholders, employees and the State;
b) It complies with the regulations of applicable laws;
c) Organizations and individuals that plan to contribute capital to any insurance broker after its separation, split-up, consolidation, merger or transformation must satisfy the requirements specified in Clauses 1, 2, and 5, Article 133 of the Law on Insurance Business and Article 63 of this Decree;
d) Any insurance broker formed after the corporate separation, split-up, consolidation, merger or transformation must satisfy the requirements specified in Article 133 of the Law on Insurance Business.
2. The application dossier for corporate split-up, separation, consolidation, merger or transformation consists of:
a) A written request for the license for corporate split-up, separation, consolidation, merger or transformation, made using the form provided in Appendix VI to this Decree;
b) A document by the authorized person stated in the company’s Charter on the corporate split-up, separation, consolidation, merger or transformation;
c) A report on the plan to split and deal with valid policies of customers, liabilities and obligations to the State, commitments to employees when the insurance broker is split up, spun off, or transformed or involves in a consolidation or merger;
d) A list of shareholders (or members), the charter capital of the insurance broker formed after the corporate split-up, separation, consolidation, merger or transformation, and the structure thereof;
dd) An original duplicate or certified copy of the principle contract on split-up, separation, consolidation, merger or transformation;
e) Written opinions of a valuation agency explicitly determining the conversion rate of shares or the valuation of capital contributions (in case of consolidation or merger), or the values of assets split to the parties (in case of split-up or separation);
g) Original duplicates or certified copies of the audited financial statements in 03 consecutive years preceding the year on which the target organization(s) applies for being merged or consolidated with the insurance broker;
h) Documentary proof of the satisfaction of the requirements specified in Clause 1 of this Article by capital-contributing organizations or individuals, managers and executive officers and the insurance broker to be formed after the split-up, separation, consolidation, merger or transformation.
3. Within 30 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of in-principle approval. In case of disapproval, the Ministry of Finance shall give the reasons why.
4. Within 14 days after the split-up, separation, consolidation, merger or transformation is completed under the approved plan, the insurance broker must submit the results thereof to the Ministry of Finance. If it fails to implement the approved plan, the insurance broker shall report a remedial plan to the Ministry of Finance.
5. Within 14 days after receiving the report on the results of the split-up, separation, consolidation, merger or transformation from the insurance broker, the Ministry of Finance shall grant an adjustment license made using the template provided in Appendix V to this Decree or an establishment and operation license made using the template provided in Appendix II to this Decree, to such insurance broker. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 72. Requirements, application dossier, process and procedures for dissolution of an insurance broker
1. Any insurance broker may dissolve itself only if it has fulfilled all liabilities, and other asset-related obligations and is not undergoing dispute settlement by any Court or Arbitration. The relevant manager and the insurance broker shall be jointly and severally liable for the debts of such insurance broker.
2. Debts of a bankrupt insurance broker shall be repaid following the below order of priority:
a) Outstanding salaries, severance allowances, social insurance, health insurance, unemployment insurance as specified by the law and other benefits owed to employees under executed collective bargaining agreement and employment contracts;
b) Tax arrears;
c) Other debts.
3. After paying all the debts as specified in Clause 2 of this Article, the insurance broker shall submit to the Ministry of Finance the application dossier for dissolution consisting of:
a) An application for dissolution signed by the at-law representative, which explicitly indicates the reasons for dissolution, made using the form provided in Appendix XIX to this Decree;
b) A decision by the authorized person as stated in the company’s Charter;
c) Evidence indicating that the insurance broker has fulfilled all liabilities and asset-related obligations and undertakes that it is not undergoing dispute settlement by any court or arbitration, including the following documents: A report on performance of obligations to employees as specified by the law; A report on performance of obligations to the State and other creditors; A notarized copy of the tax agency’s written certification of the fulfillment of tax obligations; Other evidentiary documents (if any).
d) The establishment and operation license.
4. Members of the Board of Directors, members of the Members’ Council, the Director or General Director, and the at-law representative of the insurance broker shall be liable for the truthfulness and accuracy of the dossier.
5. Within 20 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a decision to dissolve the insurance broker.
6. If the application dossier for dissolution is inaccurate or forged, the persons specified in Clause 4 of this Article shall be jointly and severally liable for paying the outstanding benefits for employees, unpaid tax arrears, and other unpaid debts as well as take personal accountability before the law for the consequences arising therefrom within 5 years after the application dossier for dissolution is submitted to the Ministry of Finance.
Article 73. Appointment and change of Chairperson of the Board of Directors (Chairperson of the Members’ Council), or General Director (Director)
1. Any insurance broker business shall obtain the Ministry of Finance’s written approval for appointment or replacement of the following titles:
a) Chairperson of the Board of Directors, or Chairperson of the Members’ Council;
b) General Director (Director).
2. The application dossier for appointing or replacing any title specified in Clause 1 of this Article consists of:
a) A written request to appoint or change the title, made using the form provided in Appendix III to this Decree;
b) A document by the authorized person as stated in the company’s Charter;
c) A criminal record certificate or equivalent foreigner’s paper specified by the applicable foreign law as specified at Point dd, Clause 2, Article 15 of this Decree; a true copy of the citizen identity card/people’s identity card/passport or another lawful identity document; the curriculum vitae as specified at Point e, Clause 2, Article 15 of this Decree, notarized copies of diplomas, certifications, documentary proof of qualifications, work experience, and professional capacity of the person to be appointed as or to replace the Chairperson of the Board of Directors (Chairperson of the Members’ Council), or General Director (Director);
d) The tentative employment contract between the insurance broker and the person to be appointed as the General Director (Director);
dd) A written commitment of the candidate to working for the insurance broker once his/her appointment is approved by the Ministry of Finance;
e) The application dossier for appointment and change of the Chairperson of the Board of Directors (Chairperson of the Members’ Council) or the General Director (Director) shall satisfy the requirements specified at Points a, b, d, h, Clause 2, Clause 3 and Clause 4, Article 15 of this Decree.
3. Within 07 business days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
Article 74. Opening of a branch/representative office/another form of commercial presence by any insurance broker
1. Any insurance broker that wishes to open a branch/representative office/another form of commercial presence in any foreign country shall satisfy the following requirements:
a) Its shareholders’ equity by the time of making the latest financial statement is not lower than the minimum charter capital specified in Article 81 of this Decree;
b) It has not been imposed any administrative sanction within 12 months before the application dossier for opening its branch/representative office is submitted;
c) There are organization and operation regulations of the branch/representative office/another form of commercial presence;
d) It complies with the applicable law of the country where the branch/representative office/another form of commercial presence is opened.
2. The application dossier for the Ministry of Finance’s approval of the opening of the branch/representative office/another form of commercial presence consists of:
a) A written request to open the branch/representative office/another form of commercial presence, made using to the form provided in Appendix XVII to this Decree;
b) A written approval by the authorized person stated in the company’s Charter on the opening of the overseas branch/representative office/another form of commercial presence;
c) The draft organization and operation regulations of the branch/representative office/another form of commercial presence, made in accordance with the law;
dd) The application dossier for the approval of the opening of the branch/representative office/another form of commercial presence must satisfy the requirements specified at Points a, b, d, and h, Clause 2, Clauses 3 and 4, Article 15 of this Decree.
3. Within 14 days after receiving a complete and valid application dossier, the Ministry of Finance shall issue a written notice of approval of the insurance broker’s opening of the branch/representative office/another form of commercial presence. In case of disapproval, the Ministry of Finance shall send a written notice of disapproval giving the reasons why.
4. After opening the branch/representative office/another form of commercial presence, the insurance broker must notify the Ministry of Finance as specified in Clause 1, Article 75 of this Decree.
Article 75. Notification dossier of opening or close-down of a branch/representative office in Vietnam or change of the location thereof, and sequence and procedures for recognition of such notification
1. The notification dossier of the opening or close-down of a branch/representative office in Vietnam or change of the location thereof consists of:
a) A report on the insurance broker’s opening or close-down of a branch/representative office in Vietnam or change of the location thereof, including: name and address of the branch/representative office; operations the branch/representative office; information about the director of the branch or the head of the representative office, or changes in relation to the branch/representative office;
b) A written approval by the authorized person stated in the insurance broker’s Charter on the opening or close of the branch/representative office, or change of the location thereof;
c) Evidence indicating the right to use the location of the branch/representative office (if any).
2. Within 07 business days after receiving a complete and valid dossier specified in Clause 1 of this Article, the Ministry of Finance shall issue a written recognition of the insurance broker’s opening or close-down of the branch/representative office in Vietnam, or change of the location thereof.
Article 76. General standards of managers of insurance brokers
1. The incumbent has the right to corporate management as specified by the Law on Enterprises.
2. The incumbent has been imposed neither administrative sanctions in relation to insurance business nor disciplinary termination of employment due to misconduct against internal processes within 03 consecutive years before he/she is appointed; has not been prosecuted by a competent authority in accordance with the law by the time he/she is elected or appointed.
Article 77. Standards of a member of the Board of Directors or the Members’ Council
1. The general standards specified in Article 76 of this Decree.
2. The incumbent has a university degree or any higher degree.
3. The incumbent has directly worked in any or many of the fields including insurance, finance, and banking for at least 05 years, if he/she is the Chairperson of the Board of Directors or Chairperson of the Members’ Council; or at least 03 years if he/she is a member of the Board of Directors or member of the Members’ Council.
4. The incumbent shall not concurrently serve as a member of the Board of Directors or member of the Members’ Council of any other insurance broker in Vietnam.
Article 78. Standards of the Director or General Director, or the at-law representative
1. The general standards specified in Article 76 of this Decree.
2. The incumbent has a university degree or any higher degree.
3. He/she obtains an insurance certification or insurance brokerage certification issued by any lawfully established training institution at home and abroad. This requirement is not applicable where the incumbent has a university degree or any higher degree.
4. He/she has at least 05 years of direct working experience in any or many of the fields including insurance, finance, and banking, including at least 03 years holding managerial/supervisory tittle(s) of any insurer/reinsurer or any Vietnam-based foreign branch or managerial title(s) of any insurance broker.
5. He/she shall reside in Vietnam during his/her incumbency.
6. The Director or General Director shall satisfy the following incumbency standards:
a) The incumbent shall neither concurrently work for any other insurance broker in Vietnam nor serve as a member of the Board of Directors or member of the Members’ Council of any other insurance broker in Vietnam;
b) He/she shall concurrently act as the director of only 01 branch/representative office/operational department of the insurance broker;
c) The incumbent shall neither concurrently work for any insurer/Vietnam-based foreign branch nor serve as a member of the Board of Directors or member of the Members’ Council of any insurer/Vietnam-based foreign branch.
Article 79. Standards of the Deputy Director or Deputy General Director, Chief Accountant
1. The general standards specified in Article 76 of this Decree.
2. The incumbent has a university degree or any higher degree.
3. He/she has at least 03 years of working experience in any or many of the fields including insurance, finance, and banking.
4. He/she obtains an insurance certification or insurance brokerage certification issued by any lawfully established training institution at home and abroad. This requirement is not applicable where the incumbent has a university degree or any higher degree.
5. A chief accountant, in addition to the standards specified in Clauses 1 and 2 of this Article, must satisfy the requirements and standard for the position specified in legal documents on accounting.
Article 80. Standards of the head of an operational department
1. The general standards specified in Article 76 of this Decree.
2. The incumbent has a university degree or any higher degree.
3. He/she has at least 03 years of direct working experience in any or many of the fields including insurance, finance, and banking.
4. He/she obtains an insurance certification or insurance brokerage certification issued by any lawfully established training institution at home and abroad. This requirement is not applicable where the incumbent has a university degree or any higher degree.
Article 81. Capital of an insurance broker
1. The minimum charter capital of an insurance broker:
a) If it engages in either direct insurance brokerage or reinsurance brokerage: VND 05 billion;
b) If it engages in both direct insurance brokerage and reinsurance brokerage: VND 10 billion.
2. While conducting business, any insurance broker shall ensure that its equity capital satisfies the following requirements:
a) For any insurance broker licensed before January 1, 2023: before January 1, 2028, its charter capital and shareholders’ equity must not be lower than the legal capital as specified in Clause 6, Article 10 of Decree No. 73/2016/ND-CP; from January 1, 2028 onwards, its charter capital and shareholders’ equity shall not be lower than the minimum charter capital as specified in Clause 1 of this Article;
b) For any insurance broker licensed from January 1, 2023 onwards, its charter capital or shareholders’ equity must not be lower than the minimum charter capital as specified in Clause 1 of this Article.
3. On a quarterly basis, the insurance broker must re-evaluate its shareholders’ equity. In the case where the shareholders’ equity does not satisfy the requirements specified in Clause 2 of this Article, the insurance broker must carry out the procedures to obtain a license to increase its capital within 03 months and complete such capital increase as specified in Clause 2 of this Article within 06 months from the end of such quarter.
4. Any insurance broker that has been established before the effective date of this Decree and has its charter capital lower than the minimum charter capital specified in Clause 1 of this Article must replenish its charter capital to satisfy the requirement specified in Clause 1 of this Article before January 1, 2028.
Article 82. Revenues of an insurance broker
1. Revenues of an insurance broker are all accounts receivable incurred in the period, including:
a) Direct insurance and reinsurance brokerage commissions;
b) Service charges from the rendering of auxiliary insurance services;
c) Service charges from other activities related to insurance policies at the request of policyholders;
d) Revenue from financing activities: Revenue from trading securities; Interests from deposits and loans; Revenue from property lease; Other revenues as specified by the law.
dd) Revenues from other activities: Revenue from transfer, sale or liquidation of fixed assets; Bad debts which have been written off and are now recovered; Other revenues as specified by the law.
2. The rules to calculate revenue of an insurance broker:
a) The insurance broker shall record insurance brokerage fees in the respective revenue account by the time the insurer/reinsurer/Vietnam-based foreign branch conducts accounting of premium income.
Accounts payable to reduce revenues such as reduction or refund of insurance brokerage fees: shall be recorded in revenue 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;
b) The insurance broker shall record the service charges from the rendering of auxiliary insurance services and from the performance of other activities related to insurance policies at the request of the policyholders in the revenue account when the services are completely or partially rendered, regardless of whether the charges thereof have been received or not;
c) Revenue from financing activities: Comply with the general regulations on corporate accounting for revenue from financing activities;
d) Revenue from other activities: Comply with the general regulations on corporate accounting for other income.
Article 83. Expenses of an insurance broker
Expenses of an insurance broker are all accounts payable in the period in relation to its operations, which are indicated on lawful invoices and supporting documents, including:
1. Insurance brokerage expenses:
a) Direct insurance and reinsurance brokerage expenses:
b) Expenses for the rendering of auxiliary insurance services;
c) Expenses for other activities related to insurance policies at the request of policyholders;
d) Expenses for purchase of professional liability insurance;
dd) Other expenses and set aside amounts as specified by law.
2. Expenses for financing activities:
a) Expense for property lease;
b) Banking fee and loan interest;
c) Other expenses and amounts set aside as specified by the law.
3. Expenses for other activities:
a) Expenses for transfer, sale or liquidation of fixed assets;
b) Expenses for the recovery of bad debts which have been written off and are now recovered;
c) Other expenses and amounts set aside as specified by the law.
Section 3
INSURANCE AUXILIARY SERVICES
Article 84. Required diplomas and certifications of and standards for any person directly performing insurance auxiliary activities in an insurance auxiliary service provider
1. Any person directly performing insurance consulting tasks must obtain any of the following diplomas and certifications:
a) A university degree or any higher degree specialized in insurance;
b) A university degree or any higher degree specialized in any other discipline as well as an insurance consulting certification issued by any insurance training institution legally established and operated in Vietnam or abroad for the respective type of insurance.
2. Any person directly performing insurance risk assessment tasks must obtain any of the following diplomas and certifications:
a) A university degree or any higher degree specialized in insurance;
b) A university degree or any higher degree specialized in any other discipline as well as a risk assessment certification issued by any insurance training institution legally established and operated in Vietnam or abroad for the respective type of insurance.
3. Any person directly performing insurance actuarial tasks for any insurer/reinsurer/foreign branch must satisfy the requirements and standards in Clauses 2 and 3, Article 29 and Clause 2, Article 30 of this Decree.
4. Any person directly performing insurance damage survey tasks must obtain the following diplomas and certifications and satisfy the following standard:
a) An associate degree or any higher degree meeting the requirements of the respective damage survey;
b) A certification in damage surveying issued by any insurance training institution legally established and operated in Vietnam and abroad for the respective type of non-life insurance subject to damage surveying;
c) At least 03 three years working in damage surveying.
5. Any person directly performing third-party administration services must obtain the following diplomas and certifications:
a) An associate degree or any higher degree;
b) A certification in third-party administration issued by any insurance training institution legally established and operated in Vietnam and abroad for the respective type of insurance for which the third-party administration services is provided.
Chapter IV
SUPPLY AND USE OF CROSS-BORDER INSURANCE SERVICES
Article 85. Providers and users of cross-border insurance services and insurance brokerage services
1. Providers of cross-border insurance services and insurance brokerage services (below referred to as cross-border insurance service providers) are foreign insurers and insurance brokers that are headquartered in a country or territory with which Vietnam has concluded trade treaties containing agreements on provision of cross-border insurance services in Vietnam.
2. Users of cross-border insurance services are foreign-invested economic organizations and foreigners working in Vietnam.
3. Reinsurance, international maritime insurance, international aviation insurance, international reinsurance brokerage shall be provided in accordance with applicable laws and best practices.
Article 86. Requirements for providing cross-border insurance services
Any foreign insurer/insurance broker providing cross-border insurance services in Vietnam must satisfy the following requirements:
1. General requirements:
a) Obtaining a license granted by an insurance regulatory authority of the country where the enterprise is headquartered with respect to the type of insurance services expected to be provided across the border to Vietnam, and evidence indicating that the enterprise has operated for at least 10 years by the time it provides cross-border insurance services in Vietnam;
b) Obtaining a document by an insurance regulatory authority of the country where the enterprise is headquartered permitting the enterprise to provide cross-border insurance services in Vietnam and certifying that it has not violated the law regulations on insurance business and insurance brokerage and other relevant foreign regulations for 03 consecutive years prior to the year in which it provides cross-border insurance services in Vietnam.
2. Financial capability requirements:
a) Having its total assets worth at least USD 2 billion, if it is a foreign insurer, or at least USD 100 million, if it is a foreign insurance broker, in the fiscal year prior to the year in which it provides cross-border insurance services in Vietnam;
b) Being 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 prior to the year in which it provides cross-border insurance services in Vietnam;
c) Having conducted profitable business for 03 fiscal years prior to the year in which it provides cross-border insurance services in Vietnam.
3. Loss management ability requirements:
a) Any foreign insurer shall deposit at least VND 100 billion at a licensed bank in Vietnam and obtain a letter of guarantee of such bank to pay the excess thereof if its aggregated liability under cross-border insurance service agreements in Vietnam exceeds the compulsory deposit. The deposit may only be used to fulfill the commitments toward policyholders when the foreign insurer becomes insolvent under a decision of a regulatory authority in the country where such insurer is headquartered. The deposit may bear an interest as agreed with the bank where it is made. The foreign insurer may withdraw the deposit in whole when its liabilities ceases upon termination of cross-border insurance service agreements in Vietnam;
b) Any foreign insurer must have its claim settlement process explicitly specifying the procedures and process of loss management and turnaround time for making insurance payouts to policyholders in Vietnam. In any case, the foreign insurer or its authorized representative must be present at the place where the damage occurs within 48 hours after receiving a notice of such damage. The turnaround time for claim settlement is specified in Article 31 of the Law on Insurance Business;
c) Any foreign insurance broker shall purchase professional liability insurance for its cross-border insurance brokerage services provided in Vietnam.
Article 87. Requirements for providing cross-border insurance auxiliary services
1. Any foreigner providing cross-border insurance consulting services in Vietnam must satisfy the requirements specified in Clause 1, Article 143 of the Law on Insurance Business.
2. Any foreign organization providing cross-border insurance auxiliary services in Vietnam must satisfy the requirements specified in Clause 2, Article 143 of the Law on Insurance Business.
Article 88. Methods of providing cross-border insurance services and cross-border insurance auxiliary services in Vietnam
1. Any foreign insurer shall provide cross-border insurance services in Vietnam through licensed insurance brokers that are granted establishment and operation licenses in Vietnam.
2. Any foreign insurance broker shall provide cross-border insurance services in Vietnam for insurers or branches of foreign non-life insurers that are granted establishment and operation licenses in Vietnam.
3. Foreigners and foreign organizations are allowed to provide cross-border insurance auxiliary services for insurers, foreign branches and insurance brokers in Vietnam.
Any foreigner or foreign organization providing cross-border insurance auxiliary services to persons and organizations other than insurers, foreign branches or insurance brokers in Vietnam must cooperate with an insurance auxiliary service provider legally established and operated in Vietnam.
Article 89. Responsibilities of any provider of cross-border insurance services or cross-border insurance auxiliary services
1. Providing documentary proof of its satisfaction of the requirements for providing cross-border insurance services as specified in Article 86 of this Decree to the licensed insurers, foreign branches and insurance brokers in Vietnam involved in the provision of cross-border insurance services as specified in Article 88 of this Decree.
Providing documentary proof of the foreigner’s/foreign organization’s satisfaction of the requirements specified in Article 87 of this Decree to insurers, foreign branches, insurance brokers in Vietnam using cross-border insurance auxiliary services as well as domestic organizations involved in the provision of cross-border insurance auxiliary services.
2. Any foreigner/foreign organization providing cross-border insurance auxiliary services in Vietnam shall comply with the regulations on provision of insurance auxiliary services as specified in Article 141 and Article 142 of the Law on Insurance Business.
3. Within 120 days after the end of a fiscal year, any foreign insurer/insurance broker providing cross-border insurance services shall send to the Ministry of Finance the financial statement of the preceding year certified by an independent auditing firm and written remarks on its law observance by the insurance regulatory authority in the country where it is headquartered.
4. Foreign insurers/insurance brokers providing cross-border insurance services; foreigners/foreign organizations providing cross-border insurance auxiliary services shall pay taxes and perform other financial obligations in connection to the provision of cross-border insurance services and insurance auxiliary services in Vietnam in accordance with tax laws.
Article 90. Responsibilities of entities and persons related to the provision of cross-border insurance services and insurance auxiliary services
Any licensed insurer/foreign branch/insurance broker in Vietnam that is involved in the provision of cross-border insurance services as specified Article 88 of this Decree shall:
1. Retain documentary proof of the satisfaction of the requirements specified in Article 86 of this Decree by the providers of cross-border insurance services in Vietnam together of which it is involved in the provision; retain documentary proof of the satisfaction of the requirements specified in Article 87 of this Decree by any foreigner/foreign organization providing cross-border insurance auxiliary services in Vietnam and provide such proof to authorities when so requested.
2. Report on a quarterly basis to the Ministry of Finance its involvement in the provision of cross-border insurance services, or its employment and involvement in the provision of cross-border insurance auxiliary services in Vietnam in the period within 30 days after the end of such quarter. The report form shall be provided by the Ministry of Finance.
3. Employ, or involve itself in the provision of, cross-border insurance auxiliary services provided by any foreigner/foreign organization that satisfies the requirements specified in Article 86 of this Decree.
Chapter V
COORDINATION IN MANAGEMENT, SUPERVISION, INSPECTION AND EXAMINATION OF VIETNAM-BASED FOREIGN BRANCHES
Article 91. Mechanism for coordination in management and supervision of Vietnam-based foreign branches
1. The Ministry of Finance shall coordinate with foreign insurance regulatory authorities by sharing supervisory information about foreign branches in Vietnam in order to protect the legitimate rights and interests of the parties involved in insurance business and to ensure the healthy and sustainable development of Vietnam’s insurance market.
2. Information shall be shared with foreign insurance regulatory authorities upon written request in each specific case or under a coordination mechanism under international cooperation and information exchange agreements acceded to or signed with foreign insurance regulatory authorities in the countries where foreign non-life insurers or reinsurers, which have their branches in Vietnam, are headquartered.
3. The information to be share and the scope of information sharing between the Ministry of Finance and foreign insurance regulatory authorities shall comply with the following regulations:
a) Depending on supervisory requirements in each specific case, the Ministry of Finance shall explicitly determine the information needed and request the foreign insurance regulatory authorities to provide such information, which can be related to operations, financial situation, corporate governance, risk management and compliance with the Law on Insurance Business of foreign non-life insurers or foreign reinsurers which have their branches in Vietnam;
b) Upon receiving a request for information from any foreign insurance regulatory authority, the Ministry of Finance shall evaluate and clearly determine the extent and content of information that can be shared at each specific request in order to ensure the objectives of State governance and comply with the law regulations on protection of state secrets, personal privacy, personal secrets, family secrets and business secrets.
c) In the case where any Vietnam-based foreign branch fails to maintain the statutory capital adequacy ratio, the Ministry of Finance may take the initiative to inform and share information with the respective foreign insurance regulatory authority in order to take early intervention measures or controls against such Vietnam-based foreign branch.
4. The Vietnamese regulatory authority can sign international cooperation and information exchange agreements with foreign insurance regulatory authorities in a bilateral, multi-party or multilateral manner within regional and international cooperation frameworks of the International Association of Insurance Supervisors (IAIS) and in compliance with the Law on International Agreements.
5. An international cooperation and information exchange agreement with foreign insurance regulatory agencies must include the following provisions:
a) Principles and scope of cooperation and information exchange;
b) Methods for requesting information;
c) process and procedures for settlement of information requests by the parties to the agreement;
d) Information to be provided in some special cases, including where foreign non-life insurers, foreign reinsurers or their Vietnam-based foreign branches fail to maintain the capital adequacy ratio; and financial crises;
dd) Information confidentiality; consultation and periodic review of the agreement.
Article 92. Inspection and examination of Vietnam-based foreign branches
The inspection and examination of insurance business of Vietnam-based branches shall be conducted as follows:
1. The Ministry of Finance of Vietnam shall inspect and supervise operations of Vietnam-based branches in accordance with the law.
2. Foreign insurance regulatory authorities in the countries where the foreign insurers are headquartered shall inspect and supervise operations of Vietnam-based branches of such insurers as follows:
a) Before any inspection or examination, the foreign regulatory authorities shall notify their inspection or examination plans to the Ministry of Finance of Vietnam;
b) After the inspection or examination is completed, the foreign regulatory authorities shall provide the outcomes thereof to the Ministry of Finance of Vietnam.
Chapter VI
INSURANCE GUARANTY FUND
Article 93. Principles of management and use of the Insurance Guaranty Fund
1. The Insurance Guaranty Fund shall be managed and administered by the Ministry of Finance in a secured and efficient manner for the proper purposes.
2. The Insurance Guaranty Fund shall be managed and administered for each type of insurance: Life insurance, non-life insurance and health insurance.
3. Investments from the Insurance Guaranty Fund shall be made as follows:
a) The idle money of the Insurance Guaranty Fund may only be invested in government bonds and government-guaranteed corporate bonds, or be deposited at commercial banks.
Within 03 years from the effective date of the Law on Insurance Business, the entire balance of the Insurance Guaranty Fund may be invested in Government bonds in Vietnam;
b) The Ministry of Finance may invest by itself or entrust an institution to invest the idle money of the Insurance Guaranty Fund. In case of entrustment, the entrusted institution must be granted by a competent authority an investment entrustment license suitable to entrusted investments.
4. In the case where it is necessary to disburse the Insurance Guaranty Fund as specified in Clause 5 of this Article, the Ministry of Finance shall establish a Claim Review Council which shall be staffed and tasked as follows:
a) The Claim Review Council shall consist of: a representative of the Ministry of Finance, a representative of the Insurance Association of Vietnam, a representative of the insurer accepting the transfer of the insurance policy portfolio (in the case where the Ministry of Finance appoints an insurer to accept the insurance policy portfolio from a bankrupt or insolvent insurer);
b) The Claim Review Council shall: check the claim documentation; develop a plan on the Fund disbursement and submit it to the Ministry of Finance for approval (including the plan on payouts for insurance policies of the bankrupt or insolvent insurer and the plan to use the Fund’s assets to perform the assigned tasks).
The Claim Review Council may employ outsourced services to perform the assigned tasks;
c) The Claim Review Council is allowed to use the seal of the State authority assigned to manage it when performing its duties.
5. The Insurance Guaranty Fund may be disbursed in the following cases:
a) Any insurer/branch of any foreign non-life insurer that has become insolvent and taken different measures to recover its solvency but failed may be entitled to the Insurance Guaranty Fund under a decision of Ministry of Finance on termination of such remedies;
b) Any insurer that falls bankrupt may be entitled to the Insurance Guaranty Fund after the judge issues a decision to declare such insurer bankrupt;
c) In the case where the insurer accepts the transfer of the insurance policy portfolio from the bankrupt or insolvent insurer, the Insurance Guaranty Fund shall be disbursed to make up for the shortfall between insurance assets and liabilities as well as the lack of respective technical reserves.
6. The Insurance Guaranty Fund is used to cover the sum insured and surrender value; insurance indemnities; premium refunds under insurance policies at the request of insolvent insurers or branches of foreign non-life insurers or bankrupt insurers and shall be disbursed only once for each claim or request. It is also used to make up for the shortfall between insurance assets and liabilities as well as the lack of respective technical reserves for the insurers designated to accept the transfer of the insurance policy portfolio from the bankrupt or insolvent insurers.
7. Regarding insurers and branches of foreign non-life insurers owed to the Insurance Guaranty Fund:
a) Any insurer/branch of any foreign non-life insurer shall pay a late payment penalty at the rate of 0.03% per day of the overdue contributory amount to the Fund and the late payment period shall be counted consecutively from the effective date of this Decree to the immediately preceding day before the day on which such overdue amount is paid to the State budget.
b) The insurer/branch of the foreign non-life insurer must fully pay the contributory amount to the Fund and the late payment penalty as specified at Point a of this Clause before January 1, 2024. After this deadline, if the insurer/branch of the foreign non-life insurer has not yet fully the contributory amount to the Fund and the late payment penalty, the Ministry of Finance shall request the credit institutions at which such insurer/branch of the foreign non-life insurer opens its account to freeze such account in order to recover the contributory amount to the Fund and the late payment penalty.
Article 94. Disbursements of the Insurance Guaranty Fund
1. The Insurance Guaranty Fund may be disbursed to cover:
a) The sum insured, surrender value, insurance indemnities or premium refunds under insurance policies in the case where any insurer/branch of any foreign non-life insurer becomes insolvent and by the time the Ministry of Finance issues a decision on termination of solvency recovery measures (as in the case of any insolvent insurer/branch of any foreign non-life insurer) or by the time a judge issues a decision to declare the insurer bankrupt (as in the case of any bankrupt insurer);
b) Shortfall between insurance assets and liabilities as well as the lack of respective technical reserves for the insurers designated to accept the transfer of the insurance policy portfolio from the bankrupt or insolvent insurers;
c) Management expenses for the Insurance Guaranty Fund, including: Repairs and maintenance expenses, service expenses, entrustment service charges and other expenses. Such expenses shall be paid in accordance with the applicable law;
d) Expenses for the Claim Review Council to perform its tasks, as decided by the Ministry of Finance in the plan for using the Fund’s assets to perform the assigned tasks specified at Point b, Clause 4, Article 93 of this Decree.
2. The Insurance Guaranty Fund shall be disbursed under Points a and b, Clause 1 of this Article on the following principles:
a) The Fund only cover direct insurance policies and is only disbursed once for each insurance claim or each request for payment of surrender value, insurance indemnities, or premium refund;
b) In the case where an insolvent insurer/foreign branch of a foreign non-life insurer or a bankrupt insurer transfers its insurance policy portfolio to another insurer/branch of another foreign non-life insurer, amounts disbursed from the fund within the limits specified in Article 95 of this Decree shall be directly transferred to the transferee;
c) In the case where an insurer/branch of a foreign non-life insurer becomes insolvent, the Fund shall only cover the difference between the payout that must be made by the insurer/branch of the foreign non-life insurer under the insurance policy and the payment that the insured actually receives from such insurer/branch of a foreign non-life insurer;
d) In the case where an insurer falls bankrupt, the Fund shall only cover the difference between the payout that must be made by the insurer under the insurance policy and the payment that the insured actually receives under the law regulations on bankruptcy;
dd) In the case where the insured has payable obligations to an insurer/branch of a foreign non-life insurer as agreed upon in the insurance policy and as specified by the law, the Fund shall only cover the difference between the payment receivable by the insured within the limits specified in Article 95 of this Decree and the obligations payable by the insured to the insurer/branch of the foreign non-life insurer.
Article 95. Disbursement limits of the Insurance Guaranty Fund
1. For any life insurance policy, the Fund shall cover up to 90% of the insurance limit covered by the life insurer which, however, must not exceed VND 200 million per insured person per policy. The insurance limit covered by a life insurer in each respective case is specified as follows:
a) For an insurance policy under which an insured event has occurred but the insurance benefit(s) has not yet been paid, the insurance limit covered by the insurer shall be equal to the insurance benefit(s) enjoyable under the policy;
b) For an insurance policy of savings type which generates a surrender value and is in effect, the insurance limit covered by the insurer shall be equal to the surrender value of the policy as of the time a State authority declares the insurer insolvent or bankrupt;
c) For an insurance policy of solely protective type, which generates no surrender value and is in effect, the insurance limit covered by the insurer shall be equal to the premiums already paid for the remaining policy term;
d) For an investment-linked insurance policy which is in effect, the insurance limit covered by the insurer shall be equal to the cash value of the customer as of the time a State authority declares the insurer insolvent or bankrupt;
dd) In the case where a life insurance policy covers many insured persons, the maximum disbursement limit of the Fund as specified at Point a, b, c or d, Clause 1 of this Article may be applicable to each insured person, unless otherwise agreed upon by the insured persons and the insurer in the policy.
2. For any health insurance policy, the Fund shall cover up to 90% of the insurance limit covered by the insurer/branch of the foreign non-life insurer, which, however, must not exceed VND 200 million per insured person per policy. The insurance limit covered by an insurer/branch of a foreign non-life insurer in each respective case is specified as follows:
a) For an insurance policy under which an insured event has occurred but the insurance benefit(s) has not yet been paid, the insurance limit covered by the insurer/branch of the foreign non-life insurer shall be equal to the insurance benefit(s) enjoyable under the policy;
b) For an insurance policy which is in effect, the insurance limit covered by the insurer/branch of the foreign non-life insurer shall be equal to the premiums already paid for the remaining policy term;
c) In the case where a health insurance policy covers many insured persons, the maximum disbursement limit of the Fund may be applicable to each insured person, unless otherwise agreed upon by the insured persons and the insurer/branch of the foreign non-life insurer in the policy.
3. For any non-life insurance policy:
a) For a motor vehicle owner’s civil liability insurance policy, the Fund shall cover the coverage limit of the insurer/branch of the foreign non-life insurer within the coverage as specified by the applicable laws;
b) For any policy of other types of insurance as specified by the law, the Fund shall cover up to 80% of the insurance limit covered by the insurer Writing/branch of the foreign non-life insurer, which, however, must not exceed VND 100 million per insured person per;
c) The insurance limit of a non-life insurance policy covered by the non-life insurer/branch of the foreign non-life insurer shall include the insurance benefits agreed upon in the insurance policy and the premiums already paid for the remaining policy term.
Article 96. Procedures for disbursement of the Insurance Guaranty Fund
1. Any insurer/branch of any foreign non-life insurer that goes bankrupt or becomes insolvent shall send to the Ministry of Finance 01 dossier consisting of:
a) A written request for disbursement of the Fund, made using the form provided in Appendix XVIII to this Decree;
b) A written certification by a competent agency that the plan on division of the asset value of the insurance business has been completely implemented (for bankrupt insurance businesses);
c) A list of the insured person(s) enclosed with their sum insured or surrender value claims, insurance benefit claims or premium refund requests as agreed upon in the insurance policies which the insurer/branch of the foreign non-life insurer is unable to pay; the receivable retrocession recoveries; and the reimbursements from subrogation claims by the time the Ministry of Finance issues a decision on termination of solvency recovery measures (as in the case of any insolvent insurer/branch of any foreign non-life insurer) or by the time a judge issues a decision to declare the insurer bankrupt (as in the case of any bankrupt insurer).
d) Statistical documents on technical reserves and respective assets of the policy portfolio to be transferred by the insolvent or bankrupt insurer/branch of the foreign non-life insurer, and the amount to make up for the shortfall between insurance assets and liabilities as well as the lack of respective technical reserves by the insurer designated to accept the insurance policy portfolio from the bankrupt or insolvent insurer.
2. Within 14 days after receiving the dossier from the insurer/branch of the foreign non-life insurer, the Ministry of Finance shall set up a Claim Review Council as specified in Clause 4, Article 93 of this Decree;
3. Within 150 days after receiving a complete and valid dossier specified in Clause 1 of this Article, the Claim Review Council shall:
a) Examine the adequacy and validity of the sum insured or surrender value claims; insurance benefit claims; premium refund requests of the insurer/branch of the foreign non-life insurer in order to accurately determine the amount to be disbursed; examine the records of technical reserves and respective assets in case of designation of insurance policy portfolio transfer;
b) Formulate a plan to disburse the sum insured, surrender value; insurance indemnities.
4. After the disbursement plan is adopted by the Ministry of Finance, within 05 business days thereafter, the Claim Review Council shall publicly announce such disbursement to the insured persons on 3 consecutive issues of any Vietnamese-language dailies (at least one central-level newspaper or one of local newspapers of the localities where the head office, branches and transaction offices of the insurer/branch of the foreign non-life insurer are located) and at the same time display the list of payees at the head office, branches and transaction offices of the insurer/branch of the foreign non-life insurer as well as post it on websites of the Ministry of Finance and the insurer/branch of the foreign non-life insurer. Such announcement must explicitly indicate the location, time and methods to collect payments disbursed from the Fund.
5. The Claim Review Council shall make payments disbursed from the Insurance Guaranty Fund under the disbursement plan adopted by the Ministry of Finance.
6. Any person entitled to the sum insured, surrender value; indemnities or premium refund covered by the Fund must:
a) Be on the list enclosed with their claims/requests for which the payments have been approved by the Ministry of Finance;
b) Produce papers proving his/her lawful entitlement to the payments, including: citizen identity card, people’s identity card, passport or another lawful identity document; insurance policy; authorization letter to collect the payments (if any).
Chapter VII
INVESTMENT-LINKED INSURANCE AND PENSION OPERATIONS
Section 1
GENERAL PROVISIONS
Article 97. General principles
1. Throughout the period it provides investment-linked insurance or pension, an insurer must:
a) Maintain a solvency margin higher than the minimum solvency margin, which is equal to: VND 200 billion (for investment-linked insurance); or VND 300 billion (for pension);
b) Operate an information technology system that satisfies the requirements specified in Clause 2 of this Article.
2. The information technology system of an insurer providing investment-linked insurance/pension must enable:
a) The monitoring and management in detail of each transaction of the investment-linked insurance policy (in case of investment-linked insurance), or each pension pot (in case of pension);
b) The timely and accurate policy data connectivity among the insurer’s operational departments; the technical reserving and recording revenues and expenses;
c) In order to provide unit-linked insurance, the information technology system must support checking cash value and fund units of each unit-linked fund; comparing the premiums pending for allocation with the premium paid by the customers as of the end of the fiscal year and the policy year; tracking details of the sale and purchase of fund units of the unit-linked insurance policy.
3. Any insurer providing investment-linked insurance/pension must ensure that the information about the performance of the universal life insurance fund/voluntary pension fund and unit-linked insurance funds is updated publicly, explicitly and regularly on the website of such insurer, including at least the following:
a) Announced investment results and investment interest rates of universal life insurance fund/voluntary pension fund and unit-linked insurance funds in the last 05 consecutive years;
b) The selling and buying prices of unit-linked insurance fund units; net asset value per unit of the unit-linked insurance fund on the business day immediately following the valuation date (in case the insurer provides unit-linked insurance products).
The insurer must ensure that information about the selling and buying prices of the fund units is retained and can be looked up on its website within 3 years.
4. The insurer must develop on its website an insurance calculator and provide instructions so that customers can formulate their own insurance plans for each insurance product such insurer is providing. The insurance calculator must satisfy at least the following requirements:
a) For each universal life insurance product: It shall allow the customers to select the basic premium and top-up premium (if any) with at least 02 illustrative investment interest rates (including the committed interest rate and the presumed interest rate selected by policyholder by his/herself), and the expected premium payment term for them to evaluate the cash value during the policy term or a minimum period of 20 years;
b) For each unit-linked insurance product: It shall allow the customer to select the basic premium and top-up premium (if any), the expected premium payment term, the expected interest rate, the unit-linked insurance funds in which the investment is expected to be made for them to evaluate the cash value in a minimum period of 20 years;
c) For each pension product: It shall allow for the customers to formulate their individual pension plans by selecting inputs such as the illustrative investment interest rate, the expected future pensions, the expected premium payment term, and the expected regular payout phase;
dd) The expected interest rate to be used in the insurance calculator shall not exceed the maximum interest rate stated in the sales illustration of the respective investment-linked insurance/pension product;
dd) Illustrative figures used in the insurance calculator shall explicitly indicate the following: insurance benefits of the policy, charges/fees levied on the customer and premium for each policy year.
Insurers must comply with this Clause within 01 year from the effective date of this Decree.
Article 98. Premiums of an investment-linked insurance/pension policy
1. Premiums of an investment-linked insurance/pension policy include:
a) Basic premium specified in Clause 2 of this Article;
b) Top-up premium specified in Clause 3 of this Article.
2. Basic premium:
a) Basic premium, which means the premium calculated on the sum insured decided by the customer and specified in the investment-linked insurance/pension policy. Basic premium is paid regularly or one time as agreed in the insurance;
b) For any investment-linked insurance policy of which the basic premium is paid regularly, if the compulsory minimum premium payment term is required, it shall not exceed 04 years. During the compulsory minimum premium payment term, the insurer must ensure that the investment-linked insurance policy will not lapse if the customer fully pays the basic premium and there is no partial withdrawal of the cash value.
3. Top-up premium:
a) In addition to the basic premium, the policyholder may pay an additional premium to invest in the universal life insurance fund (as for a universal life insurance product) or to purchase unit-linked insurance fund units (as for a unit-linked insurance product);
b) In each policy year of any investment-linked insurance policy, the total top-up premium must not be more than 05 times greater than the annual basic premium equivalent of the current policy year (as for a regular premium policy) or must not exceed the basic premium (as for a single premium policy).
Article 99. Charges levied on the policyholder
1. Charges levied on the policyholder include:
a) Premium load: used to cover expenses related to the execution of the insurance policy and capital costs incurred by the insurer. The premium load shall be levied as a percentage (%) of the premium paid by the policyholder. The remainder after the premium load is deducted shall be invested in and allocated to the investment-linked fund (as for an investment-linked insurance policy) or the voluntary pension fund (as for a pension policy) within no more than 30 days from the date the insurer receives the premium;
b) Policy administration charge: used to cover the administrative expenses incurred in maintaining the policy and providing policy-related information to the policyholder. Policy administration charge shall be deducted against the cash value of the policyholder;
c) Cost of insurance: used to provide insurance protection against the risks committed in the insurance policy. Cost of insurance shall be deducted against the cash value of the policyholder;
d) Fund management charge: used to cover investment, asset valuation, fund supervision and management expenses. Fund management charge shall be levied as a percentage (%) of the net asset value of the investment-linked fund (as for an investment-linked insurance policy) or the voluntary pension fund (as for a pension policy). Fund management charge shall be deducted before the investment results of the investment-linked fund (as for an investment-linked insurance policy) or the voluntary pension fund (as for a pension policy) are determined;
dd) Surrender charge (applicable to any investment-linked insurance product): used to cover reasonable expenses related to the policyholder’s premature termination of the insurance policy. Surrender charge shall be deducted against the cash value of the policyholder;
e) Unit-linked fund conversion charge (applicable to any unit-linked insurance product): is charged to the policyholder when converting investment assets between unit-linked funds;
g) Pension transfer fee (applicable to any pension product): is payable by a policyholder to the insurer currently managing his/her pension pot when he/she transfers such pension pot to another insurer.
2. The insurer is responsible for calculating the accurate, fair, and reasonable charges payable by the policyholder in accordance with the rate-making methodology and considerations registered with the Ministry of Finance.
3. The charges payable by the policyholder must be explicitly indicated in the insurance policy. During the performance of the policy, in the case where the insurer changes the rates or the percentages of charges payable by the policyholder, the insurer shall send written notice to the policyholder at least 03 months before such changes become official. The changed rates or percentages must not exceed the maximum limits agreed in the insurance policy.
Article 100. Fund management companies
1. Insurers providing universal life insurance/pension products may manage and invest assets of universal life insurance funds/voluntary pension funds by themselves or entrust fund management companies to invest assets of universal life funds/voluntary pension funds or hire fund management companies to manage asset portfolios of universal life funds/voluntary pension funds.
2. Any insurer that provides unit-linked insurance products must entrust a fund management company with experience in managing member funds or open-ended funds to invest assets from unit-linked insurance funds.
3. The entrusted assets shall be registered for ownership and deposited in a depository account in the name of the insurer. The fund management company must separately manage investment assets from the investment-linked fund/voluntary pension fund of the insurer with other funds of the insurer and other customers. The fund management company may not use the assets of the investment-linked fund/voluntary pension fund to perform any transaction or purpose other than those specified in the entrustment agreement signed with the insurer.
4. When participating in trusteeship to invest assets from unit-linked insurance funds, at least weekly or after a shorter period as agreed in the entrustment agreement and before the next valuation date, the fund management company shall provide information and value of investment assets to the insurer. The fund management company shall coordinate with the custodian bank and the insurer to periodically evaluate the net asset value of the unit-linked insurance funds and the net asset value per unit thereof and report on the investment portfolio, valuation and performance of the unit-linked insurance funds.
The insurer shall compare the investments of the fund management company and the depository account at the bank. The insurer must ensure the data specified at Points a and b of this Clause matches with each other on the valuation date, including:
a) The total value of the insurance premium allocated to the unit-linked insurance fund (the number of fund units held by the policyholder on the valuation date multiplied by the buying price of the fund unit) and the value of the shareholders’ contribution to the unit-linked insurance fund (the number of fund units held by the shareholders on the valuation date multiplied by the buying price of the fund unit);
B) Net asset value of the unit-linked.
5. Upon being entrusted or hired to manage the investment portfolio of any voluntary pension fund, the fund management company must have at least 03 employees with at least 03 years of experience in managing pension funds or policyholders’ funds or experience in managing investment portfolios with an average investment term of more than 05 years. These employees must have practicing certificates for fund management granted by the State Securities Commission or be members of the CFA Institute or obtain university, master, or doctorate degrees on finance or investment.
6. The fund management company shall take accountability for any errors or losses caused by the misvaluation under the insurer’s entrustment agreement for unit-linked insurance fund management or losses resulting from the entrustment or management of asset portfolio of the voluntary pension fund or the universal life insurance fund.
Section 2
INVESTMENT-LINKED INSURANCE
Subsection 1
CHARACTERISTICS, INSURANCE BENEFITS OF INVESTMENT-LINKED INSURANCE
Article 101. Characteristics of investment-linked insurance
1. Investment-linked insurance comprises universal life insurance and unit-linked insurance.
2. Investment-linked insurance products have the following characteristics:
a) Benefits of an investment-linked policy are separated into insurance coverage and investment components. The policyholder may not choose a policy that solely has investment components without insurance coverage;
b) Premiums are separated into the premium to be invested and the premium load as specified at Point a, Clause 1, Article 99 of this Decree;
c) The policyholder is entitled to all investment results from the investment premium after deducting the costs specified at Points b, c, and d, Clause 1, Article 99 of this Decree;
d) A policyholder may flexibly determine the premium and the sum insured as agreed in the insurance policy.
3. The minimum term of a regular premium investment-linked insurance policy is 10 years and that of a single premium investment-linked insurance policy is 5 years.
Article 102. Benefits of an investment-linked insurance policy
1.Benefits of an investment-linked insurance policy include:
a) Insurance coverage specified in Clause 2 of this Article;
b) Investment components specified in Clause 3 of this Article;
c) Other bonuses (if any) to increase the cash value of the investment-linked insurance policy.
2. Insurance coverage:
a) Insurance coverage comprises the death benefit and the total permanent disability benefit;
b) The insurance coverage must be equal to at least:
VND 50,000,000 or 125% of the lump-sum premium, whichever is greater for any single premium insurance policy;
VND 50,000,000 or five (05) times greater than the annual premium, whichever is greater for any regular premium insurance policy;
Any insurer may provide the death benefit with the sum insured lower than the foregoing for any insured person aged 60 years or older, but not less than VND 50,000,000.
3. Investment benefits: mean all results from the investment of the policyholder’s premium less the fund management charges as agreed in the insurance policy.
4. Within 02 years from the effective date of this Decree, insurers may continue to provide benefits of investment-linked insurance policies in accordance with the rules and terms of investment-linked insurance products approved by the Ministry of Finance before the effective date of this Decree.
Subsection 2
UNIVERSAL LIFE INSURANCE
Article 103. Name and design of universal life insurance products
1. The name of any universal life insurance product must be consistent with the nature of such insurance product and contain the phrase "universal life insurance product".
2. The cash value of the universal life insurance policy is formed from the part of the premium that is invested in the universal life insurance fund and other benefits as agreed in the insurance policy.
3. Insurers must commit to the minimum investment interest rate in universal life insurance policies. In the case where the investment interest rate of the universal life insurance fund is lower than the committed minimum interest rate, the insurer shall use the assets of the shareholders’ fund to compensate for the deficit of each account of the universal life insurance fund compared to the committed interest rate.
4. The surrender value of a universal life insurance policy is equal to the cash value of such policy on the date of policy termination minus the surrender charge.
Article 104. Establishment and management of a universal life insurance fund
1. An insurer must establish a universal life insurance fund for all universal life insurance policies and ensure that the assets formed from such universal life insurance fund are segregated and managed separately from the shareholders’ fund and other policyholders’ funds.
2. The universal life insurance fund shall be established before the first universal life insurance policy is entered into and shall have a total maintenance value of not less than VND 50 billion.
3. The insurer is entitled to the investment results in proportion to the amount contributed to establish the universal life insurance fund at the announced interest rate applicable to universal life insurance policyholders. The insurer may be refunded part or all of the amount contributed if the total value of the universal life insurance fund is still not lower than VND 50 billion.
4. The policyholder is entitled to investment results in proportion to his/her cash value in the universal life insurance fund in each financial year at the interest rate not less than the minimum committed interest rate specified in the policy.
5. Universal life funds shall be managed and invested in accordance with the financial regime applicable to insurers.
Subsection 3
UNIT-LINKED INSURANCE
Article 105. Name and design of unit-linked insurance products
1. The name of any unit-linked insurance product must be consistent with the nature of such insurance product and contain the phrase "unit-linked insurance product".
2. Policyholders may decide to invest in unit-linked insurance funds established by insurers, enjoy all investment results and bear all investment risks from such decision.
3. The cash value of a unit-linked insurance policy shall be determined based on the buying price of unit-linked insurance fund units and the quantity of such unit-linked insurance fund units on the valuation date.
4. The surrender value of a unit-linked insurance policy is equal to the cash value of the unit-linked insurance fund at the next valuation date after the date on which the policyholder requests to surrender the policy minus the surrender charge.
5. As for a single premium unit-linked insurance policy, the policyholder’s premium can only be used to buy units of any unit-linked fund that has no less than 60% of its total asset value invested in the bank deposit portfolio and other fixed-income securities.
Article 106. Establishment of a unit-linked insurance fund
1. An insurer must ensure there are at least 02 unit-linked insurance funds for each unit-linked insurance product. The unit-linked insurance funds shall have their own investment policies, investment objectives and investment limits so that the policyholders can distinguish the unit-linked insurance funds provided by the insurer.
2. The names of the unit-linked insurance funds must be express and consistent with the investment policies and objectives of each unit-linked insurance fund.
3. Before the first unit-linked insurance policy is entered into, the insurer must use part of the shareholders’ fund to form the unit-linked insurance fund’s assets in accordance with the investment policy, objectives, and limits of each unit-linked insurance fund and must ensure that the value of each unit-linked insurance fund is not lower than VND 50 billion.
4. In the case where the insurer adds new unit-linked insurance funds and such unit-linked insurance funds are directly managed by the fund management company, the insurer must ensure the value of each of such new unit-linked insurance funds is not lower than VND 50 billion.
5. The insurer is entitled to investment results in proportion to the amount contributed to the unit-linked insurance fund. The insurer may be refunded part or all of the amount contributed if the value of the unit-linked insurance fund is greater than VND 50 billion. In the case where the net asset value of the fund falls below VND 30 billion on the valuation date, the insurer must use the shareholders’ fund to ensure that the net asset value is not lower than VND 30 billion within 30 days.
6. The insurer must ensure that assets formed from any unit-linked insurance fund must be segregated and managed separately from the shareholders’ fund and other policyholders’ funds. In the case where an insurer establishes unit-linked insurance funds that are directly managed by a fund management company, the insurer must ensure the assets formed from such unit-linked insurance funds must be segregated and managed separately from other unit-linked insurance funds.
7. In any case, unit-linked insurance funds must be managed and invested in accordance with investment policies, investment limits specified in Article 108 of this Decree.
Article 107. Investment objectives of unit-linked funds
1. The investment objectives of any unit-linked insurance fund must be express and detailed so that the policyholders can objectively evaluate the operational status of such unit-linked insurance fund and the risks that it can face.
2. Investment objectives must be fully and explicitly stated in product brochures and insurance policies.
Article 108. Investment limits of unit-linked insurance funds
1. The limit of investment in each portfolio of investment assets of any unit-linked insurance fund must be consistent with the investment policy and investment objectives specified in the product’s rate-making methodology and considerations registered with the Ministry of Finance and specified in Clause 2 of this Article. The investment of assets of unit-linked insurance fund must comply with general provisions on investment principles specified in Clause 2, Article 99 of the Law on Insurance Business No. 08/2022/QH15.
2. Investment limits of a unit-linked insurance fund:
a) Government debt instruments: Unlimited;
b) Outstanding securities of issuers: up to 100% of the total asset value of the unit-linked insurance fund;
c) Outstanding securities of an issuer: up to 10% of the total value of outstanding securities of such issuer and up to 20% of the total asset value of the unit-linked insurance fund;
d) Direct investment in real estate, gold, silver, precious metals, gems: 0% of the total asset value of the unit-linked insurance fund;
dd) Investment in companies in the same group of companies that control or being controlled by the following: holding company, subsidiaries; companies owning more than 35% of each other’s shares and contributed capital; group of subsidiaries controlled by the same holding company: up to 30% of the total asset value of the unit-linked insurance fund;
e) Investment in securities or stock investment funds of securities investment companies being established and operating in Vietnam: 0% of the asset value of the unit-linked insurance fund.
3. Investment limits of any unit-linked fund may be discrepant with those specified in Clauses 1 and 2 of this Article as a result of an increase or decrease in the value of investment assets, legitimate payments of the unit-linked fund, and the split-up, separation, consolidation and merger of the issuer. In this case, the unit-linked fund is not allowed to invest in assets with deviations and within 03 months from the date the deviations arise, the insurer must request the fund management company to adjust the investment portfolio in order to maintain the investment limits specified in Clauses 1 and 2 of this Article.
The insurer must notify in writing the Ministry of Finance and disclose information to the policyholders about the causes of the above deviations, the remedial measures and the results of such remedies.
4. In the case where the discrepancies are caused due to the insurer’s or the fund management company’s failure to satisfy the investment limits specified in Clauses 1 and 2 of this Article or the investment policies and objectives of the unit-linked insurance fund as mentioned in the rate-making methodology and considerations for insurance products, the insurer must request the fund management company to readjust its investment portfolio within 15 days from the date the discrepancies arise.
5. The insurer shall compensate for damage caused to the policyholders and the unit-linked insurance fund in the following cases:
a) It fails to comply with the investment policies and investment objectives specified in the rate-making methodology and considerations registered with the Ministry of Finance;
b) It invests in restricted assets or the investments exceed the limits specified in Clauses 1 and 2 of this Article.
6. Levels of compensation to the policyholders and the unit-linked insurance fund shall be determined on the basis of actual damages incurred. In the case where the investments specified in Clause 5 of this Article generate profits, the insurer must account all profits to the unit-linked insurance fund.
7. Investment limits must be fully and explicitly indicated in product brochures and insurance policies.
Article 109. Valuation of unit-linked insurance funds
1. The insurer must value the unit-linked insurance fund’s assets periodically at least once a week, according to the market value or fair value (in the case where there is no market value) of the assets. in the investment portfolio of the unit-linked insurance fund. The insurer must specify the valuation date in the terms and conditions of the insurance product in order to carry out the purchase and sale of unit-linked insurance fund units. In the case where the valuation date coincides with any non-business day or holiday as specified by the law, the insurer shall determine the valuation date as the business day immediately following such non-business day or holiday.
2. The determination of the net asset value of the unit-linked insurance fund must comply with the principles of determining the net asset value of the open-ended fund in accordance with the applicable law.
3. A custodian bank that is legally established and operate in Vietnam shall approve the determination of the net asset value of the unit-linked insurance fund.
4. The insurer, the fund management company and the custodian bank must have a mechanism and process for comparing, reviewing, examining and supervising the determination of the fund’s net asset value in order to ensure its accuracy and suitability.
5. The insurer must take full responsibility in case of errors in valuing units of the unit-linked fund and must compensate the policyholders and the unit-linked fund for discrepancies arising from the purchase and sale of fund units due to errors if the fund’s net asset value is misvalued with the following discrepancy:
a) At least 0.5% or more of the net asset value, for a unit-linked insurance fund that invests in shares. The unit-linked insurance fund invests in shares with the policy of investing no less than 70% of the total asset value in the shares portfolio;
a) At least 0.75% or more of the net asset value, for a unit-linked insurance fund that invests in bonds. The unit-linked insurance fund invests in bonds with the policy of investing no less than 70% of the total asset value in the bond portfolio;
a) At least 1.00% or more of the net asset value, for any other unit-linked insurance fund of the insurer.
6. In the case where the net asset value per fund unit is misvalued with the discrepancy as specified in Clause 5 of this Article, the insurer shall formulate a remedial and compensation plan as follows:
a) Re-determining the net asset value at each transaction day of the unit-linked insurance fund during the time the fund is misvalued;
b) Determining misvalued amount of the fund’s assets, which is compensable to the fund and for policyholders on each trading day. The insurer is not required to compensate the policyholders for any discrepancy of less than VND 100,000, but the discrepant amount of VND 100,000 must be included in the fund.
7. The compensation to the policyholders and the unit-linked insurance fund from the purchase and sale of fund units in case of errors in valuing the unit-linked insurance fund units shall be determined as follows:
a) In the case where the fund is undervalued, the compensation for the policyholder and the unit-linked insurance fund shall be determined as follows:
If the premium is allocated to purchase fund units before the time the fund is misvalued, and the fund units have been sold during the period when the fund is misvalued: The compensation for the policyholders shall be determined based on the deviation and the quantity of fund units that the policyholders have sold;
If the premium is allocated to purchase fund units during the time the fund is misvalued, and the fund units are held after the fund is misvalued: The insurer is responsible for compensating the unit-linked insurance fund and the compensation shall be determined based on the extent of the error and the quantity of fund units that the policyholders have purchased and hold after the fund is misvalued.
b) In the case where the fund is overvalued, the compensation for the policyholder and the unit-linked insurance fund shall be determined as follows:
If the premium is allocated to purchase fund units before the time the fund is misvalued, and the fund units have been sold during the period when the fund is misvalued: The insurer shall compensate the unit-linked insurance fund based on the extent of the error and the quantity of fund units that the policyholders have sold after the fund is misvalued;
If the premium is allocated to purchase fund units during the time the fund is misvalued, and the fund units are held after the fund is misvalued: The compensation to the policyholders shall be determined based on the extent of the error and the quantity of fund units that the policyholders have purchased and hold after the fund is misvalued.
c) All expenses for compensation to the policyholders and the unit-linked insurance fund must not be accounted into the insurer’s expenses for the unit-linked insurance fund.
8. Within 07 business days from the date the misvaluation is detected, the insurer must report to the Ministry of Finance the plan to correct errors in valuing the fund units and the plan to compensate for damage to the fund and the policyholders, in which the causes of the misvaluation, the time the fund is misvalued, the extent of damage to the fund and the policyholders shall be explicitly stated, attached with a list of affected policyholders expected to be compensated and the compensation of each policyholder. Within 15 business days after sending the report to the Ministry of Finance, the insurer must compensate the damage incurred by the policyholders and the unit-linked insurance fund.
Article 110. Determination of the selling and buying price of unit-linked insurance fund units
1. Selling price means the price per unit of the unit-linked insurance fund when the insurer sells it to the policyholder on the valuation date.
2. Buying price means the price per unit of the unit-linked insurance fund when the insurer buys it from the policyholder on the valuation date.
3. Unit-linked fund units mean assets of the unit-linked insurance fund divided into equal parts.
4. The selling price and buying price of unit-linked insurance fund units shall be determined based on the net asset value of each unit-linked insurance fund unit on the valuation date immediately following the date on which the insurer receives the request to buy or sell the unit-linked insurance fund units. The difference between the selling price and the buying price of a unit-linked insurance fund unit must not exceed 5% of the selling price.
5. The net asset value of each unit-linked insurance fund unit shall be equal to the total asset value of the unit-linked insurance fund minus related liabilities divided by the total quantity of unit-linked insurance fund units.
Article 111. Purchase and sale of unit-linked insurance fund units
1. The policyholders reserve the right to purchase additional units or resell unit-linked insurance fund units to the insurer.
2. A policyholder can purchase additional unit-linked insurance fund units when the following requirements are satisfied:
a) The insurance policy of such policyholder is still valid and the quantity of units to be additionally purchased;
b) He/she sends request to purchase additional unit-linked insurance fund units made using the insurer’s form, in which the quantity of additional unit-linked insurance fund units to be purchased and the percentage thereof to be allocated to each unit-linked insurance fund shall be specified and confirmed.
3. A policyholder can resell unit-linked insurance fund units when the following requirements are satisfied:
a) The insurance policy of such policyholder is still valid and the quantity of fund units to be sold satisfies the minimum sale of unit-linked insurance fund units by the policyholder as required by the insurer;
b) He/she sends a request to resell unit-linked fund units made using the insurer’s form, in which the quantity of unit-linked fund units to be sold and the percentage thereof from each unit-linked fund and the amounts to be withdrawn from the unit-linked fund shall be specified and confirmed.
4. The insurer shall settle the request to purchase additional units or resell unit-linked fund units on the next valuation date. The buying or selling price of a unit-linked fund unit shall be determined in accordance with Article 110 of this Decree.
5. The cash value of a unit-linked insurance policy of a policyholder that changes, depending on the request to purchase additional units or resell units of the unit-linked insurance fund, from when the insurer determines the buying or selling price and complete the purchase and sale of unit-linked insurance fund units at the request of such policyholder. The insurer must explicitly specify the sale and purchase transactions from the unit-linked insurance policy.
6. An insurer may not refuse the policyholder’s purchase of additional units or resale of units of the unit-linked insurance funds when the policyholder satisfies the requirements specified in Clause 2 and Clause 3 of this Article.
Article 112. Unit-Linked Fund Investment Council
1. An insurer must establish an Investment Council to:
a) Approve the investment policy and process of each unit-linked fund on the most prudent basis to ensure the safety of the unit-linked fund’s assets and in line with the investment objectives and investment policy of each unit-linked fund announced to customers. Approve and uniformly use a sole valuation manual when more than 01 unit-linked insurance fund management company is employed. Any changes in investment mechanism, policy and process of each unit-linked insurance fund must be approved by the Investment Council before the application thereof;
b) Decide on closing the unit-linked insurance fund to convert assets into a new unit-linked insurance fund with the same investment objectives; change the name of the unit-linked insurance fund; split or merge existing unit-linked insurance fund units or stop valuing unit-linked insurance fund units and transactions related to insurance policies in special cases specified in the insurance policies in order to ensure the interests of the policyholders;
c) Approve the selection of investment assets in accordance with the investment limits specified in Article 108 of this Decree;
d) Perform other tasks at the request of competent authorities and as specified by the law.
2. The Investment Council has at least 03 members, including:
a) 01 member who is the Appointed Actuary of the insurer;
b) 01 member who is an employee of the insurer or the holding company controlling the insurer or a fund management company with a certificate of Chartered Financial Analyst (CFA) or a certificate for practicing fund management granted by the State Securities Commission or any equivalent professional qualification, and has at least 03 years of experience in managing open-ended funds or unit-linked insurance funds;
c) 01 member who is the legal counsel of the insurer or the holding company controlling the insurer; has professional qualifications in investment law or at least 5 years of experience directly working in the fields of insurance, finance or banking;
3. The Investment Council must hold meetings quarterly and may hold extraordinary meetings at the request of the insurer. Decisions of the Investment Council are passed by voting at in-person meetings, teleconferences, online meetings and meetings via audio-visual media, or in the form of written opinions.
Article 113. Custodian banks for unit-linked insurance funds
1. The insurer must employ the custodian bank to:
a) Deposit assets of unit-linked insurance funds in compliance with current regulations on the establishment and management of open-ended funds;
b) Supervise the asset management of unit-linked insurance funds of the insurer or the fund management company authorized by the insurer in accordance with the investment limits, objectives and policies, structure of the insurer’s investment portfolio and regulations of the applicable law at all times. In the case where any violations of legal regulations and breach of the investment entrustment agreement is detected, the custodian bank must immediately report to the Ministry of Finance (via the Insurance Supervisory Authority) and notify the fund management company within 24 hours from the time of detection and request correction thereof or performance of remedial actions against such violations within the specified time limit;
c) Supervise and ensure the legitimacy of and use the fund’s assets to pay the expenses in accordance with the law and the fund’s investment objectives;
d) Coordinate with the insurer and the fund management company to periodically review the net asset value, the valuation of the unit-linked insurance fund, the net asset value per unit of the unit-linked insurance fund in order to ensure these values are calculated correctly, accurately and in accordance with the law;
dd) Supervise the organization, implementation and appraisal of results of consolidation, mergers, dissolution and liquidation of unit-linked insurance fund assets in the case where the insurer is allowed to take such actions.
2. The assets of the unit-linked insurance fund held at the custodian bank, of which the ownership is registered under the name of the insurer, are assets owned by the unit-linked insurance fund, not the custodial bank or the fund management company. The custodian bank may not use the assets of the unit-linked insurance fund to pay, or guarantee payment of, debts of itself or any third party.
3. The custodian bank shall make and store in 10 years the paper records and evidentiary documents, and electronic data files to confirm the compliance in the investment activities of the fund management company and the insurer in comparison with the investment objectives of the unit-linked fund and the regulations of the law. These documents must be provided upon request in writing by the Ministry of Finance.
Section 3
PENSION
Article 114. Characteristics of pension
1. Pension includes:
a) Individual pension;
b) Group personal pension (group pension): The policyholder is the employer and the employees will receive all benefits of the insurance policy after a certain period as agreed between the parties and recorded in the insurance policy.
2. A pension product is characterized as follows:
a) Based on the premiums paid by the policyholder, the insured persons shall start receiving pensions when they reach the age agreed upon in the insurance policy, but not lower than the retirement ages specified in the applicable legal documents;
b) Premiums of the pension product are separated into the premium to be invested and the premium load as specified at Point a, Clause 1, Article 99 of this Decree;
c) Each person insured under an individual pension policy or a group pension policy has a separate pension pot as specified in Article 118 of this Decree.
Article 115. Basic insurance benefits of a pension policy
1. Insurers may design pension products on their own, but must include regular pensions as specified in Clause 2 of this Article and insurance coverage as specified in Clause 3 of this Article.
2. As for regular pensions, the insurer must ensure that:
a) Pensions are paid regularly until the death of the insured persons or for at least 10 years, depending on the agreement in the insurance policy;
b) The insurer and the policyholder agree on the amount of receivable pension in each period and the quantity of periods in which pensions are receivable;
c) Accrued interests from the pension benefits unpaid to the policyholder are calculated but not lower than the minimum committed investment interest rate agreed upon in the insurance policy.
3. The insurer must ensure that the policyholder is entitled to insurance coverage during the premium payment term and can continue to provide such coverage during the period pensions are paid, depending on the agreement in the insurance policy. Insurance coverage includes at least the following:
a) Funeral grant:
Upon receipt of a death benefit claim, regardless of whether it is covered by insurance or not, the insurer must immediately pay the funeral grant to the beneficiary as agreed upon in the insurance policy.
b) Death benefit and total permanent disability benefit:
Upon the insured person’s death or total permanent disability covered by insurance within the specified term, the insurer shall pay the beneficiary the sum insured as agreed in the insurance policy;
The policyholder may decide on the sum insured when entering into the insurance policy and may adjust such amount during the policy term as agreed in the insurance policy.
Article 116. Establishment and management of a voluntary pension fund
1. When providing pension products, an insurer must establish a voluntary pension fund as well as monitor, segregate and record into accounts separately the revenues, expenses, assets and capital sources of the voluntary pension fund from other policyholders’ funds and shareholders’ funds.
2. A voluntary pension fund shall be formed from premiums and contributions of the life insurer as specified in Clause 3 of this Article.
3. When establishing a voluntary pension fund, the insurer must use the shareholders’ fund to make a contribution of no less than VND 200 billion to such fund and must maintain at least VND 200 billion therein. The insurer is entitled to investment interests in proportion to such contribution at the announced investment interest rate of the voluntary pension fund.
4. The voluntary pension fund shall be invested in accordance with regulations on the investment limits specified in Article 117 of this Decree.
5. Insurers may not use the assets of the voluntary pension funds to pay fines for law violations, debts and transactions irrelevant to such voluntary pension funds.
6. All assets formed from the premiums allocated to the policyholders of the voluntary pension fund belong to the insured persons.
Article 117. Investment limits of voluntary pension funds
1. The limit of investment in each portfolio of investment assets of any voluntary pension fund must be consistent with the investment policy and investment objectives specified in the product’s rate-making methodology and considerations registered with the Ministry of Finance and specified in Clause 2 of this Article. The asset investment of any voluntary pension fund must comply with the general regulations on investment principles in Clause 2, Article 99 of the Law No. 08/2022/QH15 on Insurance Business.
2. Investment limits of a voluntary pension fund:
a) Deposits at credit institutions: Unlimited, but no more than 20% of the total value of assets invested by the voluntary pension fund in a credit institution;
b) Government debt instruments: Unlimited, ensure at least 40% of the total value of assets invested by the voluntary pension fund;
c) Government-guaranteed bonds, local government bonds, secured corporate bonds: Up to 25% of the total value of assets invested by the voluntary pension fund;
d) Stocks (other than shares of securities companies, finance companies, finance leasing companies), unsecured corporate bonds, capital contributed to other enterprises: Up to 20% of the total value of assets invested by the voluntary pension fund;
dd) Investment in issued shares of an enterprise, corporate bonds: Up to 5% of the volume per issue and up to 5% of the total value of assets invested by the voluntary pension fund;
e) Investment assets other than those specified at Points a, b, c, d, and dd of this Clause: 0% of the total value of assets invested by the voluntary pension fund.
Article 118. Pension pot
1. Pension pot means a collection of premiums paid less the premium load, which is opened, monitored and managed separately by the insurer for each insured person.
2. The insurer must commit to the minimum investment interest rate of the pension pots in the insurance policy. At the end of each fiscal year, the insurer shall announce the investment interest rate and accumulated cash value as of that time. The insurer shall use the assets of the shareholders’ fund to make up for the deficit compared to the committed interest rate for each pension pot. In the case where the accumulation of insurance benefits into the pension pot is agreed upon in the insurance policy, such benefits shall be entitled to accumulated interests as specified at Point c, Clause 2, Article 115 of this Decree.
3. The insured persons may not withdraw the pension pot before its maturity if they do not reach the age agreed in the insurance policy, unless otherwise specified in Article 119 this Decree.
Article 119. Pre-mature withdrawal of pension pots
An insured person may request for pre-mature withdrawal and the insurer shall pay part or all of the pension pot in the following cases:
1. The insured person suffers a decline of 61% or more in physical work capacity as specified by the applicable law.
2. The insured person suffers from serious illnesses as specified by the law.
3. The insured person is a Vietnamese citizen permitted by competent authorities to legally reside in foreign countries.
4. The insured person is allowed to withdraw his/her pension pot before maturity to pay off personal loans (other than consumer loans) at banks, provided that the loan agreements must be valid for at least 24 months before the pension pot is withdrawn.
Article 120. Pension transfer
1. When an insured person terminates the employment contract or loses his/her job and is no longer a member of the group pension policy, he/she has the following rights:
a) To transfer the pension pot from the group pension policy to the individual pension policy of the same value at the same insurer; or
b) Transfer the pension pot to the group pension policy of the new enterprise. The new group pension policy may be provided by the same insurer or another insurer, depending on the new enterprise.
2. In case of transfer of the pension pot to the same insurer, based on the written premium payment certificate by the policyholder and the written pension transfer request of the insured person, the insurer shall transfer such pension pot at the request of such insured person. The insurer may not levy the pension transfer fee.
3. In case of transfer to a group pension policy provided by a new insurer, within 05 business days after receiving the pension transfer request and the proof that the insured person does not continue to participate in the group pension policy at the former enterprise and is a member of the new group pension policy, the insurer must transfer the entire pension pot, accumulated until the time the pension transfer request is received, less the pension transfer fee (if any) to the new insurer.
4. The transferred pension pot will accrue as agreed upon in the new group pension policy.
5. The transferee may not deduct the premium load from the transferred pension pot.
Article 121. Temporary closure of pension
1. The policyholder and the insurer may agree to temporarily close the pension in case of inability to pay premiums.
2. During the temporary closure of the pension, the insurer may not levy any charge from the policyholder. The pension pot is accumulated at the investment rate announced annually by the insurer as agreed in the insurance policy. The insurer is not obliged to pay insurance benefits during this period, except for the regular pensions when the insured persons reaches a certain age or the entire pension pot accumulated by the time of death or total permanent disability of the insured person.
3. The policyholder can request the insurer to resume the pension and continue to pay premiums.
Chapter VIII
ORGANIZATION OF IMPLEMENTATION
Article 122. Effect
1. This Decree takes effect from the date of its signing, except for the cases specified in Clause 2 of this Article.
2. Article 33 and Articles in Section 6, Chapter II, Articles 81, 82, 83, Clauses 1, 2, 3, 4, 5 and 6 of Article 93 of this Decree takes effect from January 1, 2023.
3. In the case where an insurer/reinsurer/Vietnam-based foreign branch has invested in corporate bonds issued with the purpose of restructuring the debts of the issuer before January 1, 2023, it shall not extend such investment.
4. This Decree supersedes the following regulations:
a) Decree No. 73/2016/ND-CP dated July 1, 2016, of the Government detailing implementation of the Law on Insurance Business and the Law Amending and Supplementing a Number of Articles of the Law on Insurance Business, except for Articles 10, 61, 62, 63, 64, 65, 66, 67 which remains effective until December 31, 2027;
b) Chapter III of Decree No. 151/2018/ND-CP dated November 7, 2018, of the Government on amendments to some Decrees on business conditions under the management of the Ministry of Finance;
c) Article 1 of Decree No. 80/2019/ND-CP dated November 1, 2019, of the Government amending and supplementing a number of articles of the Government’s Decree No. 73/2016/ND-CP dated July 1, 2016, detailing the Law on Insurance Business and the Law amending and Supplementing a Number of Articles of the Law on Insurance Business; and the Government’s Decree No. 98/2013/ND-CP dated August 28, 2013, on sanctioning of administrative violations in insurance business and lottery business, of which a number of articles were amended and supplemented under the Government’s Decree No. 48/2018/ND-CP dated March 21, 2018;
Article 123. Responsibilities for implementation
Ministers, Heads of Ministerial-level agencies, Heads of Government-attached agencies, Chairpersons of provincial-level People’s Committees and the subjects of application hereof shall be responsible for implementing this Decree.
| ON BEHALF OF THE GOVERNMENT FOR THE PRIME MINISTER THE DEPUTY PRIME MINISTER Le Minh Khai |
* All Appendices are not translated herein.
Vietnamese
Decree 46/2023/NĐ-CP DOC (Word)
Decree 46/2023/NĐ-CP PDF (Original)
