Consolidated Text No. 06/VBHN-VPQH dated June 25, 2019 of the Office of the National Assembly on the Law on Insurance Business

CONSOLIDATED TEXT - THE OFFICE OF THE NATIONAL ASSEMBLY

THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness

 

LAW ON INSURANCE BUSINESS[1]

 

Law No. 24/2000/QH10 on Insurance Business of December 9, 2000, of the National Assembly, which takes effect on April 1, 2001, is amended and supplemented by:

1. Law No. 61/2010/QH12 of November 24, 2010, of the National Assembly, Amending and Supplementing a Number of Articles of the Law on Insurance Business, which takes effect on July 1, 2011;

2. Law No. 42/2019/QH14 of June 14, 2019, of the National Assembly, Amending and Supplementing a Number of Articles of the Law on Insurance Business and the Law on Intellectual Property, which takes effect on November 1, 2019.

In order to protect the lawful rights and interests of organizations and individuals participating in insurance; step up insurance business activities; contribute to promoting and maintaining the sustainable socio-economic development, and stabilizing the people’s life; and enhance the effect of the state management of insurance business activities;

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam;

This Law prescribes the insurance business.^[2]

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Law regulates the organization and operation of insurance business and define the rights and obligations of organizations as well as individuals participating in insurance.

2. This Law does not apply to social insurance, health insurance, deposit insurance and other types of insurance, which are provided by the State and not for commercial purposes.

Article 2. Application of the Law on Insurance Business, relevant laws, treaties and international practices

1. The organization and operation of insurance business in the territory of the Socialist Republic of Vietnam must comply with the provisions of this Law and other provisions of relevant laws.

2. In case the treaties to which the Socialist Republic of Vietnam has signed or acceded contain provisions different from those of this Law, the provisions of such treaties shall apply.

3. Parties participating in insurance may agree to apply international practices if such practices do not run counter to Vietnam’s laws.

Article 3.Interpretation of terms

In this Law, the terms below are construed as follows:

1. Insurance business means the operation carried out by insurance enterprises for the purpose of profit generation, whereby the insurance enterprises accept risks incurred by the insured on the basis of insurance premium payment by the insurance buyers so that the insurance enterprises pay the insurance money to the beneficiary or indemnify the insured when the insured events occur.

2. Reinsurance business means the operation carried out by insurance enterprises for the purpose of profit generation, whereby the insurance enterprises receive an amount of premium paid by other insurance enterprises for the commitment to pay compensation for the liabilities which the former have accepted for insurance.

3. Insurance agency activities mean the activities of introducing, offering and selling insurance, arranging the conclusion of insurance contracts and other activities aiming to perform the insurance contracts under authorization of insurance enterprises.

4. Insurance brokerage activities mean the provision of information and consultancy to the insurance buyers on insurance products, insurance conditions, premium rates, insurance enterprises and activities relating to the negotiation, arrangement and performance of insurance contracts at the request of the insurance buyers.

5. Insurance enterprises are those which are established, organized and operate under the provisions of this Law and other provisions of relevant laws, for insurance or reinsurance business.

6. Insurance buyers are organizations or individuals that enter into insurance contracts with insurance enterprises and pay premiums. An insurance buyer may also be the insured or the beneficiary.

7. The insured means organizations or individuals that have property, civil liabilities and/or life insured under insurance contracts. The insured may also be the beneficiary.

8. The beneficiaries mean organizations or individuals designated by the insurance buyers to receive insurance money under personal insurance contracts.

9. Insurable interests mean the rights to ownership, the rights to possession, the right to use, and the property rights; and the rights and obligations to foster and provide financial support for insured objects.

10. Insured events mean objective events mutually agreed upon by the parties or prescribed by law upon the occurrence of which the insurance enterprises shall pay the insurance money to the beneficiaries or pay indemnities to the insured.

11. Premium means a sum of money to be paid by the insurance buyers to insurance enterprises according to time limits and by modes mutually agreed upon by the parties in the insurance contracts.

12. Life insurance means a class of insurance provided in case the insured is alive or dead.

13. Endowment insurance means a class of insurance provided in case the insured lives till a certain point of time, whereby the insurance enterprises shall pay insurance money to the beneficiaries, should the insured remain alive till the time limit agreed upon in the insurance contracts.

14. Term insurance means a class of insurance provided in case the insured dies within a certain period of time, whereby the insurance enterprises shall pay insurance money to the beneficiaries, should the insured die within the time limits agreed upon in the insurance contracts.

15. Combined insurance means a class of insurance which combines endowment insurance and term insurance.

16. Whole life insurance means a class of insurance provided in case the insured dies at any time during his/her life.

17. Annuity means a class of insurance provided in case the insured lives for a certain time limit; then after such time limit the insurance enterprises shall pay insurance money periodically to the beneficiaries as agreed upon in the insurance contracts.

18. Non-life insurance means a class of property, civil liability and other insurances other than life insurance.

19.^[3] Retirement insurance means an operation of insurance in which the insurance enterprise shall pay an insurance sum to the insured when he/she reaches a specified age as agreed upon in the insurance contract.

20.^[4] Health insurance means a type of insurance in which the insurance enterprise shall pay an insurance sum to the insured when he/she is bodily injured, meets with accidents, suffers sickness or ailment or needs healthcare as agreed upon in the insurance contract.

21.^[5] Insurance auxiliary services mean a constituent of the insurance business, which are provided by insurance enterprises, insurance brokerage enterprises or other organizations or individuals for profit, including insurance consultancy, insurance risk assessment, insurance actuary, insurance loss assessment, and insurance claim settlement support.

22.^[6] Insurance consultancy means the provision of consultancy services on insurance programs, insurance products, insurance risk administration, and loss prevention and restriction.

23.^[7] Insurance risk assessment means the identification, classification, and assessment of the nature and level of risks and assessment of the administration of human, property and civil liability risks to obtain grounds for insurance participation.

24.^[8] Insurance actuary means the collection and analysis of statistical figures, calculation of insurance premiums, operational provisions, capital and solvency margin, assessment of business operation performance, and enterprise valuation so as to ensure financial safety of insurance enterprises.

25.^[9] Insurance loss assessment means the determination of the current situation, causes, and levels of loss, and allocation of responsibilities for compensation to serve as a basis for insurance claim settlement.

26.^[10] Insurance claim settlement support means the provision of support to insurance buyers, the insured, beneficiaries, or insurance enterprises in carrying out procedures for insurance claim settlement.

Article 4. The State’s guarantee for insurance business

1. The State shall protect the lawful rights and interests of organizations and individuals participating in insurance and organizations engaged in insurance business.

2. The State shall invest capital and other resources for the state enterprises engaged in insurance business to develop and play the leading role on the insurance market.

3. The State shall adopt the policies to develop the insurance market in Vietnam, the incentive policies for insurance operations serving the socio-economic development objectives, especially the programs for development of agriculture, forestry and fishery.

Article 5. International cooperation in the field of insurance business

The State shall exercise the unified management of and work out policies for expanding, the international cooperation in the field of insurance business on the basis of respect for each other’s independence, sovereignty, equality and mutual benefit along the direction of multilateralization and diversification; encourage foreign insurance enterprises and insurance brokerage enterprises to attract foreign investors to invest their capital in Vietnam and reinvest their profits earned from insurance business activities serving the cause of socio-economic development in Vietnam; create conditions for insurance enterprises and insurance brokerage enterprises to promote cooperation with foreign countries in order to raise the efficiency of insurance business.

Article 6. Basic principles in insurance activities

1.^[11] Organizations and individuals having demands for insurance may only participate in insurance at insurance enterprises operating in Vietnam; foreign-invested enterprises and foreigners working in Vietnam having demands for insurance may participate in insurance at insurance enterprises operating in Vietnam or use cross-border insurance services.

2. Insurance enterprises must satisfy all financial requirements in order to fulfill their commitments to the insurance buyers.

Article 7. Types of insurance operations^[12]

1. Life insurance, including:

a/ Whole life insurance;

b/ Term insurance;

c/ Last survivor insurance;

d/ Combined insurance;

dd/ Annuity insurance;

e/ Endowment insurance;

g/ Retirement insurance.

2. Non-life insurance, including:

a/ Property insurance and damage insurance;

b/ Insurance for cargo transported by road, sea, inland waterway, railway and airway;

c/ Aviation insurance;

d/ Motor vehicle insurance;

dd/ Fire and explosion insurance;

e/ Vessel hull and vessel owners’ civil liability insurance;

g/ Liability insurance;

h/ Credit and financial risk insurance;

i/ Business loss insurance;

k/ Agricultural insurance.

3. Health insurance, including:

a/ Human accident insurance;

b/ Medical insurance;

c/ Health care insurance.

4. Other insurance operations stipulated by the Government.

5. The Ministry of Finance shall make a detailed list of insurance products.

Article 8. Compulsory insurance

1. Compulsory insurance means a type of insurance for which the conditions, premium rates and minimum insurance sum are prescribed by law for compulsory implementation by both the organizations and individuals participating in insurance and the insurance enterprises.

Compulsory insurance shall only apply to a number of insurance types for the purpose of protecting the public interests and social safety.

2. Compulsory insurance includes:

a/ Motor vehicle owners’ civil liability insurance, insurance of air carriers’ civil liability toward passengers;

b/ Professional liability insurance for legal consultancy operations;

c/ Insurance brokerage enterprises’ professional liability insurance;

d/ Fire and explosion insurance.

3. Depending on the socio-economic development demands in each period, the Government shall submit to the National Assembly Standing Committee other types of compulsory insurance for prescription.

Article 9. Reinsurance^[13]

Insurance enterprises may provide reinsurance for other insurance enterprises, including foreign insurance enterprises and foreign reinsurance organizations. Foreign insurance enterprises and foreign reinsurance organizations must get a credit rating given by an international credit rating company designated by the Ministry of Finance.

Article 10. Cooperation, competition and bidding in insurance business^[14]

1. Insurance enterprises and insurance brokerage enterprises may cooperate with one another in reinsurance, co-insurance, loss assessment, settlement of insurance benefits, loss prevention and mitigation, human resource development, insurance product development, insurance agent training and management, and information sharing for risk administration.

2. Insurance enterprises may compete with one another in terms of insurance conditions and coverage, liability levels, premium rates, service quality, insurance capability and financial capacity.

Competition must comply with the competition law and ensure financial safety of insurance enterprises and insurance premium rates must conform with insurance conditions and coverage and liability levels.

3. Projects using state funds or assets of the State or state enterprises are subject to bidding for insurance conditions and coverage, liability levels, premium rates, service quality, insurance capability and financial capacity of insurance enterprises.

Bidding must be organized in a public and transparent manner according to this Law and the bidding law.

4. The following acts are prohibited:

a/ Establishing collusion among insurance enterprises or between insurance enterprises and insurance buyers in order to divide the insurance market or monopolize insurance services;

b/ Illegally intervening in the selection of insurance enterprises;

c/ Abusing positions or powers to designate, request, constrain or obstruct organizations or individuals to participate in insurance;

d/ Providing untruthful information or advertisement on insurance contents, operation scope and terms, causing harms to the lawful rights and interests of insurance buyers;

dd/ Fighting for customers by means of obstructing, inducing, buying off or intimidating employees or customers of other insurance enterprises, insurance agents or insurance brokerage enterprises;

e/ Conducting illegal sales promotions;

g/ Conducting other illegal acts in cooperation, competition and bidding.

Article 11. Right to join socio-professional insurance business organizations^[15]

Insurance enterprises, insurance agents, insurance brokerage enterprises, and  insurance auxiliary service-providing individuals and organizations may join socio-professional insurance business organizations operating for the purpose of developing the insurance market and protecting lawful rights and interests of members in accordance with law.

 

Chapter II

INSURANCE CONTRACTS

Section 1

GENERAL PROVISIONS ON INSURANCE CONTRACTS

Article 12. Insurance contracts

1. An insurance contract is the agreement reached between the insurance buyer and an insurance enterprise whereby the insurance buyer shall pay premiums while the insurance enterprise shall pay insurance money to the beneficiary or the indemnity to the insured upon the occurrence of the insured event.

2. Types of insurance contract include:

a/ Human insurance contracts;

b/ Property insurance contracts;

c/ Civil liability insurance contracts.

3. Maritime insurance contracts must comply with the provisions of the Maritime Code; for matters not prescribed by the Maritime Code, the provisions of this Law shall apply.

4. Matters relating to insurance contracts which are not prescribed in this Chapter must comply with the provisions of the Civil Code and relevant laws.

Article 13. Contents of insurance contracts

1. An insurance contract must contain the following details:

a/ Names and addresses of the insurance enterprise, the insurance buyer, and the insured or the beneficiary;

b/ The object of insurance;

c/ The sum insured, the value of the insured property for property insurance;

d/ The insurance scope, insurance conditions, insurance terms;

dd/ Terms on exclusion of insurance liability;

e/ Insurance duration;

g/ Premium rate, mode of premium payment;

h/ Time limit and mode of paying insurance money or indemnity;

i/ Provisions on settlement of disputes;

k/ Date of concluding the contract.

2. Apart from the contents specified in Clause 1 of this Article, an insurance contract may also contain other details agreed upon by the parties concerned.

Article 14. Forms of insurance contract

Insurance contracts must be made in writing.

The evidence of conclusion of insurance contracts includes insurance certificates, insurance applications, telegrams, telexes, faxes and other forms prescribed by law.

Article 15. Time of arising insurance liabilities^[16]

Insurance liabilities arise in any of the following cases:

1. The insurance contract has been concluded and the insurance buyer has fully paid insurance premiums;

2. The insurance contract has been concluded, containing an agreement between the insurance enterprise and the insurance buyer allowing the insurance buyer to owe insurance premiums;

3. There are proofs that the insurance contract has been concluded and the insurance buyer has fully paid insurance premiums.

Article 16. Provisions on exclusion of insurance liability

1. The provisions on exclusion of insurance liability must stipulate cases where insurance enterprises are not required to pay indemnities or insurance money when the insured events occur.

2. The provisions on exclusion of insurance liability must be clearly stated in the insurance contracts. The insurance enterprises shall clearly explain them to the insurance buyers when the contracts are concluded.

3. The provisions on exclusion of insurance liability shall not apply in the following cases:

a/ The insurance buyers breach laws unintentionally;

b/ The insurance buyers have plausible reasons for the late notification of the occurrence of the insured events to the insurance enterprises.

Article 17. Rights and obligations of insurance enterprises

1. An insurance enterprise has the following rights:

a/ To collect premiums as agreed upon in the insurance contract;

b/ To request the insurance buyer to fully and honestly provide information relating to the conclusion and performance of the insurance contract;

c/ To unilaterally suspend the performance of the insurance contract according to the provisions of Clause 2 of Article 19, Clause 2 of Article 20, Clause 2 of Article 35, and Clause 3 of Article 50, of this Law;

d/ To decline to pay the insurance money to the beneficiary or to pay indemnity to the insured for cases outside the scope of insurance liability or cases of exclusion of insurance liability as agreed upon in the insurance contract;

dd/ To request the insurance buyer to take measures to prevent or limit losses according to the provisions of this Law and other relevant laws;

e/ To request the third party to refund the insurance money which the insurance enterprise has indemnified the insured for the losses caused by the third party to the property and civil liability;

g/ To exercise other rights prescribed by law.

2. An insurance enterprise shall have the following obligations:

a/ To explain to the insurance buyer the insurance conditions and provisions; the rights and obligations of the insurance buyers;

b/ To issue to the insurance buyer the insurance certificate, the insurance policy immediately after the conclusion of the insurance contract;

c/ To pay insurance money to the beneficiary in time or the indemnity to the insured when the insured event occurs;

d/ To explain in writing the reasons for declining to pay the insurance money or the indemnity;

dd/ To coordinate with the insurance buyer in settling the third party’s claim for compensation for the losses which fall under the insured liability when the insured event occurs;

e/ To perform other obligations prescribed by law.

Article 18. Rights and obligations of insurance buyers

1. An insurance buyer shall have the following rights:

a/ To choose one from among the insurance enterprises operating in Vietnam for the purchase of insurance;

b/ To request the insurance enterprise to explain the insurance conditions and terms and issue an insurance certificate or insurance policy;

c/ To unilaterally suspend the performance of the insurance contract under Clause 3, Article 19 and Clause 1, Article 20 of this Law;

d/ To request the insurance enterprise to pay the insurance money to the beneficiary or the indemnity to the insured as agreed upon in the insurance contract when the insured event occurs;

dd/ To transfer the insurance contract as agreed upon in the insurance contract or under the provisions of law;

e/ To exercise other rights prescribed by law.

2. An insurance buyer shall have the following obligations:

a/ To pay premiums fully and according to the time limit and mode agreed upon in the insurance contract;

b/ To fully and honestly declare all details relating to the insurance contract at the request of the insurance enterprise;

c/ To notify cases which may give rise to increase of risks or of the insurance enterprise’s liability in the course of performing the insurance contract at the request of the insurance enterprise;

d/ To notify the insurance enterprise of the occurrence of the insured event as agreed upon in the insurance contract;

dd/ To apply measures to prevent or limit losses according to the provisions of this Law and other relevant laws;

e/ To perform other obligations prescribed by law.

Article 19. Responsibility to provide information

1. When entering into insurance contracts, insurance enterprises have the responsibility to fully provide information on the insurance contracts, explain insurance conditions and terms to the insurance buyers; insurance buyers have the responsibility to fully provide information on the objects of insurance to the insurance enterprises. The parties shall be accountable for the accuracy and truthfulness of such information. The insurance enterprises shall keep confidential the information provided by the insurance buyers.

2. Insurance enterprises may unilaterally suspend the performance of insurance contracts and collect the premiums to the time of suspending the performance of the insurance contracts when the insurance buyers commit one of the following acts:

a/ Intentionally providing untruthful information with a view to entering into insurance contracts in order to receive the insurance money or indemnities;

b/ Failing to fulfill the obligations to provide information to insurance enterprises as prescribed at Point c, Clause 2, Article 18 of this Law.

3. Where insurance enterprises intentionally provide untruthful information with a view to entering into insurance contracts, insurance buyers may unilaterally suspend the performance of the insurance contracts; the insurance enterprises shall pay compensation for the damage caused to the insurance buyers due to the provision of untruthful information.

Article 20. Changes in degrees of insured risks

1. When there appear changes in the factors used as a basis for premium calculation, thus leading to the reduction in the insured risks, insurance buyers may request insurance enterprises to reduce the premiums for the remaining periods of the insurance contracts. Where the insurance enterprises refuse to reduce the premiums, the insurance buyers may unilaterally suspend the performance of the insurance contracts but shall immediately notify such in writing to the insurance enterprises.

2. When there appear changes in the factors used as a basis for premium calculation, thus leading to the increase in the insured risks, insurance enterprises may recalculate the premiums for the remaining periods of the insurance contracts. Where the insurance buyers refuse to increase the premiums, the insurance enterprises may unilaterally suspend the performance of the insurance contracts, but shall immediately notify such in writing to the insurance buyers.

Article 21. Interpretation of insurance contracts

Where an insurance contract contains ambiguous clauses, such clauses shall be interpreted in favor of the insurance buyer.

Article 22. Null and void insurance contracts

1. An insurance contract shall become null and void in the following cases:

a/ The insurance buyer has no insurable interests;

b/ The object of insurance no longer exists at the time of entering into the insurance contract;

c/ The insurance buyer, at the time of entering into the insurance contract, knows that the insured event has occurred;

d/ The insurance buyer or insurance enterprise commits deceitful acts when entering into the insurance contract;

dd/ Other cases prescribed by law.

2. The handling of null and void insurance contracts must comply with the provisions of the Civil Code and relevant laws.

Article 23. Termination of insurance contracts

Apart from cases of contract termination under the provisions of the Civil Code, an insurance contract shall also be terminated in the following cases:

1. The insurance buyer no longer has the insurable interests;

2. The insurance buyer fails to fully pay the premium or fails to pay the premium within the time limit agreed upon in the insurance contract, unless otherwise agreed upon by the parties;

3. The insurance buyer fails to fully pay the premium during the extended time limit for premium payment as agreed upon in the insurance contract.

Article 24. Legal consequences of the termination of insurance contracts

1. In case an insurance contract is terminated under Clause 1, Article 23 of this Law, the insurance enterprise shall refund the premium to the insurance buyer corresponding to the remaining period of the insurance contract for which the insurance buyer has paid the premium, after subtracting the reasonable expenses related to the insurance contract.

2. In case an insurance contract is terminated under Clause 2, Article 23 of this Law, the insurance buyer shall still fully pay the premium to the time of terminating the insurance contract. This provision shall not apply to personal insurance contracts.

3. In case an insurance contract is terminated under Clause 3, Article 23 of this Law, the insurance enterprise shall still indemnify the insured when the insured event occurs within the extended time limit for premium payment; the insurance buyer shall still pay the premium to the end of the extended time limit as agreed upon in the insurance contract. This provision shall not apply to personal insurance contracts.

4. The legal consequences of the termination of insurance contracts in other cases must comply with the provisions of the Civil Code and relevant laws.

Article 25. Amendment and supplementation of insurance contracts

1. The insurance buyer and insurance enterprise may agree to amend and/or supplement the premium or the insurance conditions and terms, unless otherwise provided for by law.

2. All amendments and supplementations to insurance contracts must be made in writing.

Article 26. Assignment of insurance contracts

1. The insurance buyer may assign the insurance contract as agreed upon in the contract.

2. The assignment of an insurance contract shall be valid only when the insurance buyer notifies the assignment in writing to the insurance enterprise and the insurance enterprise accepts such assignment in writing, unless the assignment is effected according to international practices.

Article 27. Liability in case of reinsurance

1. Insurance enterprises shall be responsible only to insurance buyers under insurance contracts, including cases of reinsurance of the insured liabilities.

2. Reinsurance enterprises may not demand insurance buyers pay the premiums directly to them, unless otherwise agreed upon in insurance contracts.

3. Insurance buyers may not demand reinsurance enterprises pay the insurance money or indemnities to them, unless otherwise agreed upon in insurance contracts.

Article 28. Time limit for claiming insurance money or indemnities

1. The time limit for claiming the insurance money or indemnity under insurance contracts is one year from the date the insured event occurs. The time when the force majeure event or another objective obstacle occurs shall not be counted into the time limit for claiming the insurance money or indemnities.

2. In case insurance buyers can prove that they do not know the time when the insured events occur, the time limit prescribed in Clause 1 of this Article shall be counted from the date the insurance buyers know the occurrence of such insured events.

3. In case the third party demands the insurance buyer compensate for damage covered by the insurance as agreed upon in the insurance contract, the time limit prescribed in Clause 1 of this Article shall be counted from the date the third party makes the demand.

Article 29. Time limit for payment of insurance money or indemnities

Upon the occurrence of insured events, insurance enterprises shall pay the insurance money or indemnities within the time limit agreed upon in insurance contracts. In case of the absence of the agreement on such time limit, the insurance enterprises shall pay the insurance money or indemnities within 15 days from the date of receiving complete and valid dossiers claiming insurance money or indemnities.

Article 30. Statute of limitations for instituting a lawsuit

The statute of limitations for instituting a lawsuit about an insurance contract is three years from the time the dispute arises.

Section 2

PERSONAL INSURANCE CONTRACTS

Article 31. Objects of personal insurance contracts

1. Objects of personal insurance contracts include human age of death, life, health and accidents.

2. Insurance buyers may only buy insurance for the following persons:

a/ The insurance buyers themselves;

b/ Their spouses, children and/or parents;

c/ Their siblings; person with ties of fostering and providing alimony;

d/ Other persons, if the insurance buyers have insurable interests.

Article 32. Sums of insurance money

Sums of insurance money or modes of determining the sums of insurance money shall be agreed upon by insurance buyers and insurance enterprises in insurance contracts.

Article 33. Bases for paying insurance money for human accidents, health

1. In personal accident insurance, insurance enterprises shall pay the insurance money to beneficiaries within the limit of the insurance money amount, depending on the actual infirmity suffered by the insured and the mutual agreement in insurance contracts.

2. In personal health insurance, insurance enterprises shall pay the insurance money to the insured within the limit of the insurance money amount, depending on the expenses for medical examination and treatment, health restoration for the insured as a result of illness or accident and on the mutual agreement in insurance contracts.

Article 34. Disclosure of age in life insurance

1. Insurance buyers shall be obliged to disclose the accurate ages of the insured at the time of entering into insurance contracts for use as a basis for calculating the insurance premiums.

2. In case insurance buyers disclose inaccurate ages of the insured while the latter’s accurate ages are not included in the insurable age groups, insurance enterprises may cancel the insurance contracts and refund the paid insurance premium amounts to the insurance buyers after subtracting relevant reasonable expenses. In case the insurance contracts have taken effect for more than two years, the insurance enterprises shall return to the insurance buyers the reimbursed values of the insurance contracts.

3. In case insurance buyers disclose inaccurate ages of the insured, thus reducing the payable insurance premium amounts, but the accurate ages of the insured persons are still in the insurable age groups, insurance enterprises have the following rights:

a/ To request the insurance buyers to pay additional insurance premiums corresponding to the insurance money amounts agreed upon in the contracts;

b/ To reduce the insurance money amounts agreed in the insurance contract corresponding to the paid insurance premium amount.

4. In case insurance buyers disclose inaccurate ages of the insured, thus leading to the increase in the payable insurance premium amounts, but the accurate ages of the insured persons are still in the insurable age groups, insurance enterprises shall refund to the insurance buyers the overpaid insurance premium amounts or increase the insurance money amounts agreed upon in the insurance contracts corresponding to the paid insurance premium amount.

Article 35. Payment of life insurance premiums

1. Insurance buyers may pay insurance premiums in lump sum or in installments according to the time limit and mode agreed upon in insurance contracts.

2. In case insurance premiums are paid in installments and insurance buyers have paid the premiums in one or several installments but cannot further pay the insurance premiums in subsequent installments, insurance enterprises may, within 60 days after the extension of the time limit for premium payment, unilaterally suspend the performance of the contracts; the insurance buyers have no right to reclaim the paid insurance premium amount if the duration for which the insurance premiums have been paid is under two years, unless otherwise agreed upon by the parties.

3. In case insurance buyers have paid the insurance premiums for two years or more while insurance enterprises unilaterally suspend the performance of the contracts under Clause 2 of this Article, the insurance enterprises shall refund to the insurance buyers the returned values of the insurance contracts, unless otherwise agreed upon by the parties.

4. The parties may agree to restore the effect of insurance contracts already unilaterally suspended from their performance under Clause 2 of this Article within two years from the date the contracts are suspended and the insurance buyers have paid the outstanding insurance premium amounts.

Article 36. Cases not entitled to initiate lawsuits to demand the insurance premium payment

In personal insurance, if insurance buyers fail to pay or fully pay insurance premiums, insurance enterprises are not allowed to initiate lawsuits, demanding the insurance buyers to pay insurance premiums.

Article 37. Cases not entitled to demand refund by the third party

In case the insured dies, or gets disable or sick as a direct or indirect result of the third party’s acts, the insurance enterprises shall still be obliged to repay the insurance money amount but have no right to demand the third party refund the money amount already paid to the beneficiary. The third party shall indemnify the insured according to law.

Article 38. Entry into personal insurance contracts for cases of death

1. When insurance buyers enter into personal insurance contracts for cases of other persons’ death, they must get the latter’s written consents clearly stating the insurance money amount and the beneficiary thereof.

All cases of change of the beneficiary must be agreed upon in writing by the insurance buyers.

2. Personal insurance contracts may not be entered into for the death of the following persons:

a/ Persons under 18 years of age, unless it is agreed in writing by the fathers, mothers or guardians of such persons;

b/ Persons suffering mental diseases.

Article 39. Cases of non-payment of insurance money

1. Insurance enterprises are not required to pay the insurance money in the following cases:

a/ The insured dies of suicide within two years counting from the date the first sum of insurance premium is paid or from the date the insurance contract continues to be effective;

b/ The insured dies or suffers infirmity due to the intentional fault of the insurance buyer or the intentional fault of the beneficiary;

c/ The insured dies due to the execution of death sentence.

2. In case one or several beneficiary(ies) intentionally cause(s) death or infirmity to the insured, the insurance enterprise shall still pay the insurance money to other beneficiaries as agreed upon in the insurance contract.

3. For the cases prescribed in Clause 1 of this Article, the insurance enterprises shall return to the insurance buyers the value of the insurance contracts or the entire paid premium amounts after subtracting the relevant reasonable expenses; if the insurance buyers die, the returned amount shall be handled according to the law on inheritance.

Section 3

PROPERTY INSURANCE CONTRACTS

Article 40. Subjects of property insurance contracts

Subjects of property insurance contracts include assets, including tangible objects, currency, papers which can be valued in money and property rights.

Article 41. Insurance money amounts

The insurance money amount is the sum requested by the insurance buyer to be insured for such property.

Article 42. Over-value property insurance contracts

1. Over-value property insurance contracts mean contracts in which the insured sums are higher than the market prices of the insured property at the time of entering into contracts. Insurance enterprises and insurance buyers may not enter into over-value property insurance contracts.

2. In case an over-value property insurance contract is concluded due to unintentional faults of the insurance buyer, the insurance enterprise shall return to the insurance buyer the paid insurance premium amount corresponding to the insured sum in excess of the market price of the insured property, after subtracting relevant reasonable expenses. In case the insured event occurs, the insurance enterprise shall only pay indemnities for the damage not exceeding the market price of the insured property.

Article 43. Under-value property insurance contracts

1. Under-value property insurance contracts mean contracts in which the insured sums are lower that the market prices of the insured property at the time of concluding the contracts.

2. In case an under-value property insurance contract is concluded, the insurance enterprise shall pay the indemnities according to the proportion between the insured sum and the market price of the insured property at the time of concluding the contract.

Article 44. Coincident insurance contracts

1. A coincident insurance contract is a case where the insurance buyer concludes insurance contracts with two or more insurance enterprises to insure the same object, with the same insurance condition and insured event.

2. In case the parties enter into a coincident insurance contract, when the insured event occurs, each insurance enterprise shall only make indemnity according to the proportion of the insured sum agreed upon against the total insured sums of all contracts concluded by the insurance buyer. The total sum of indemnities of the insurance enterprises must not exceed the value of actual damage caused to the property.

Article 45. Damage due to natural tear and wear or inherent nature of the property

Insurance enterprises shall not bear responsibility in case the insured property are damaged due to natural tear and wear or their inherent nature, unless otherwise agreed upon in insurance contracts.

Article 46. Bases for indemnity

1. Indemnity amounts which insurance enterprises have to pay to the insured shall be determined on the basis of the market prices of the insured property at the time when and the place where the damage is caused and the actual damage extent, unless otherwise agreed upon in the insurance contracts. Expenses for determining the market prices and damage extent shall be borne by the insurance enterprises.

2. The indemnity amounts to be paid by insurance enterprises to the insured must not exceed the insured sums, unless otherwise agreed upon in the insurance contracts.

3. Apart from the indemnity sums, insurance enterprises shall also pay to the insured necessary and reasonable expenses for the loss prevention and limitation as well as arising expenses incurred by the insured to follow the instructions of the insurance enterprises.

Article 47. Forms of indemnity

1. Insurance buyers and insurance enterprises may agree on one of the following forms of indemnity:

a/ Repairing the damaged property;

b/ Replacing the damaged property with other property;

c/ Paying indemnity money.

2. In case insurance enterprises and insurance buyers cannot reach agreement on forms of indemnity, the compensation shall be made in money.

3. In case the indemnity is made according under Points b and c, Clause 1 of this Article, insurance enterprises may recover the damaged property after they are replaced or fully compensated at the market prices.

Article 48. Loss assessment

1. Upon the occurrence of insured events, insurance enterprises or persons authorized by the insurance enterprises shall carry out loss assessment in order to determine the cause and extent of the loss. The expenses for loss assessment shall be borne by the insurance enterprises.

2. In case the parties cannot reach agreement on the cause and extent of the loss, they can invite independent assessors, unless otherwise agreed upon in the insurance contracts. In case the parties cannot reach agreement on inviting independent assessors, one of the parties may request the court in the locality where the loss is caused or where the insured resides to designate the independent assessors. The conclusions made by the independent assessors shall be binding on all parties.

Article 49. Responsibility to transfer the right to request refund

1. In case the third party is at fault in causing damage to the insured and the insurance enterprise has paid the indemnity money to the insured, the insured shall transfer the right to request the third party to refund the indemnity sum he/she has received to the insurance enterprise.

2. In case the insured refuses to transfer such right to the insurance enterprise, fails to reserve or gives up the right to request the third party to indemnify, the insurance enterprise may deduct the indemnity sum depending on the degree of fault committed by the insured.

3. Insurance enterprises may not request parents, spouses, offspring, or siblings of the insured to refund the sums they have paid to the insured, unless these persons intentionally cause the loss.

Article 50. Regulations on safety

1. The insured shall abide by the regulations on fire prevention and fighting and occupational safety and health, and other relevant provisions in order to ensure safety for the insurance objects.

2. Insurance enterprises may inspect the conditions to ensure safety for insurance objects or propose or request the insured to apply measures to prevent and limit risks.

3. In case the insured fails to take measures to ensure safety for the insurance objects, insurance enterprises may set a time limit for the insured to apply such measures; past such time limit, if the safety measures are not applied, the insurance enterprises may raise the insurance premiums or unilaterally suspend the performance of the insurance contracts.

4. Insurance enterprises may apply preventive measures to ensure safety for insurance objects when so agreed by the insurance buyers or competent state agencies.

Article 51. Cases not entitled to abandon insured property

In case losses are caused, the insured may not abandon the insured property, unless otherwise provided for by law or agreed upon by the parties.

Section 4

CIVIL LIABILITY INSURANCE CONTRACTS

Article 52. Subjects of civil liability insurance contracts

Subjects of civil liability insurance contracts include the insured’s civil liability toward the third party as prescribed by law.

Article 53. Responsibility of insurance enterprises

1. Insurance enterprises’ responsibility shall arise only if the third party requests the insured to pay compensations for damage caused to the third party during the insurance period by such persons who are at fault.

2. The third party shall not be entitled to directly request insurance enterprises to pay the indemnities, unless otherwise provided for by law.

Article 54. Insurance money amounts

Insurance money amounts mean the amounts of money insurance enterprises shall pay to the insured as agreed upon in the insurance contracts.

Article 55. Limits of insured liability

1. Within the limits of the insurance sums, insurance enterprises shall pay the insured the amounts which, under the provisions of law, the insured has to indemnify the third party.

2. Apart from paying the indemnities under in Clause 1 of this Article, insurance enterprises shall also pay for expenses related to the settlement of disputes over the liability for the third party and the interests to be paid to the third party as the insured defer the payment of damages under the instructions of the insurance enterprises.

3. The total indemnities of insurance enterprises prescribed in Clauses 1 and 2 of this Article must not exceed the insurance sums, unless otherwise agreed upon in the insurance contracts.

4. In case the insured have to pay deposits or collaterals in order to have the property not kept in custody or to avoid lawsuits at courts, insurance enterprises, at the request of the insured, shall provide guarantee or collateral within the limits of the insurance amounts.

Article 56. Right to represent the insured

Insurance enterprises may represent insurance buyers in negotiations with the third party on the levels of compensation for damage, unless otherwise agreed upon in insurance contracts.

Article 57. Mode of indemnification

At the insured’s request, insurance enterprises may pay indemnities directly to the insured or victims being the third party.

Chapter III

INSURANCE ENTERPRISES

Section 1

GRANT OF ESTABLISHMENT AND OPERATION LICENSES

Article 58. Establishment and operation of insurance enterprises

insurance enterprises shall be established and operate under the provisions of this Law and other relevant laws.

Article 59. Insurance business organizations^[17]

Insurance business organizations include:

1. Joint-stock insurance company;

2. Limited-liability insurance company;

3. Insurance cooperative;

4. Mutual support insurance organization.

Article 60. Contents of operation of insurance enterprises

1. The operation of insurance enterprises must cover the following contents:

a/ Insurance business, reinsurance business;

b/ Risk and loss prevention and limitation;

c/ Loss assessment;

d/ Loss assessment agency, consideration of indemnity settlement, request for refund by the third party;

dd/ Fund management and capital investment;

e/ Other activities as prescribed by law.

2. Insurance enterprises may not concurrently carry out life insurance business and non-life insurance business, unless life insurance enterprises conduct health insurance and personal accident insurance business operations in support of life insurance.

Article 61. Contents of reinsurance business

The reinsurance business must cover:

1. Transferring part of the insured liability to one or several other insurance enterprise(s);

2. Accepting the reinsurance of part or entire liability already insured by other insurance enterprises.

Article 62. Competence to grant establishment and operation licenses

1. The Ministry of Finance shall grant establishment and operation licenses to insurance enterprises according to the provisions of this Law and other relevant laws.

2. The grant of establishment and operation licenses to insurance enterprises must be in line with the master plans and plans on orientations for the development of the insurance market and financial market of Vietnam.

Article 63. Conditions for grant of establishment and operation licenses

Conditions for an insurance enterprise to be granted an establishment and operation license:

1. Having the contributed legal capital not lower than the legal capital amount prescribed by the Government;

2. Having the dossier of application for an establishment and operation license made according to Article 64 of this Law.

3. Taking the type of enterprise and having the charter compatible with the provisions of this Law and other laws;

4. The administrators executive officers have insurance-related managerial, professional and operational capabilities.

5.^[18] Organizations and individuals that contribute capital to establish insurance enterprises or insurance brokerage enterprises must be financially capable and have evidence proving their lawful financial sources for contributing capital to establish insurance enterprises.

Article 64. Dossiers of application for establishment and operation licenses

A dossier of application for an establishment and operation license must comprise:

1. An application for an establishment and operation license;

2. The draft charter of the enterprise;

3. A plan for operation in the first five years, clearly stating the modes of deduction for setting up operational provisions, reinsurance program, capital investment, business efficiency, solvency of the insurance enterprise and economic benefits of the establishment of the enterprise;

4. The list, curricula vitae and diplomas evidencing the capabilities as well as professional qualifications, of the administrators and executive officers of the enterprise;

5. The contributed capital level and mode of capital contribution, the list of organizations and individuals that hold 10% or more of the charter capital; the financial situation and other information relating to such organizations and individuals;

6. Insurance rules, terms, charge and commission rates of the insurance products planned for implementation.

Article 65. Licensing time limit

Within 60 days after the receipt of a complete dossier of application for an establishment and operation license, the Ministry of Finance shall grant or refuse to grant the license. In case of refusal, the Ministry of Finance shall clearly explain in writing the reasons.

Establishment and operation licenses are also valid as business registration certificates.

Article 66. Licensing fees

Insurance enterprises which are granted establishment and operation licenses shall pay the licensing fees according to the provisions of law.

Article 67. Disclosure of operation contents

After being granted establishment and operation licenses, insurance enterprises shall disclose the business operation contents according to the provisions of law.

Article 68. Revocation of establishment and operation licenses

1. Insurance enterprises may have their establishment and operation licenses revoked in one of the following cases:

a/ The dossier of application for an establishment and operation license contains intentionally falsified information;

b/ Past 12 months after being granted the establishment and operation licenses, the insurance enterprises fail to start their operation;

c/ They are dissolved under Article 82 of this Law;

d/ They are divided, separated, merged, bankrupt, or transformed;

dd/ They operate for the wrong purposes or in contravention of the contents prescribed in their establishment and operation licenses;

e/ They fail to meet the financial requirements for the fulfillment of their commitments with insurance buyers.

2. In case of having their establishment and operation licenses revoked under Point a, b, c, dd or e, Clause 1 of this Article, the insurance enterprises shall immediately stop the conclusion of new insurance contracts, but shall still pay the insurance money to the beneficiaries or the indemnities to the insured and perform the insurance contracts concluded before the date of revocation of their establishment and operation licenses.

In case of revocation of an establishment and operation license under Point d, Clause 1 of this Article, the rights and obligations of the parties must comply with the provisions of law.

3. Decisions to revoke establishment and operation licenses of insurance enterprises shall be announced by the Ministry of Finance in the mass media.

Article 69. Changes requiring approval

1. Insurance enterprises shall get the Ministry of Finance’s approval when changing one of the following contents:

a/ The enterprises’ names;

b/ The charter capital;

c/ Setting up or closing branches and/or representative offices;

d/ Locations of head offices, branches or representative offices;

dd/ Operation contents, scope and duration;

e/ Transfer of shares or contributed capital representing 10% or more of the charter capital;

g/^[19] Chairperson of the Board of Directors, director general (director) and actuaries;

h/^[20] Division, separation, merger, consolidation, dissolution or transformation of enterprises and offshore investment.

2. Within 30 days from the date the Ministry of Finance approves the changes prescribed in Clause 1 of this Article, insurance enterprises shall make public the approved changes in accordance with law.

Section 2

MUTUAL SUPPORT INSURANCE ORGANIZATIONS

Article 70. Mutual support insurance organizations

Mutual support insurance organizations are those having the legal person status, which are established to conduct insurance business for the purpose of providing mutual support and assistance among members. Members of mutual support insurance organizations are the owners and also the insurance buyers.

Article 71. Members of mutual support insurance organizations

1. Vietnamese organizations and citizens aged full 18 years or older, who have full civil act capacity, that operate in the same field, the same occupation and have the demand for insurance may all join in founding mutual support insurance organizations in the capacity as the founding members.

2. Only organizations and individuals that enter into insurance contracts with mutual support insurance organizations can become members of the mutual support insurance organizations.

Article 72. Limit of liability of mutual support insurance organizations

Mutual support insurance organizations shall only be liable to their debts and other property obligations within their property.

Article 73. Establishment, organization and operation of mutual support insurance organizations

The establishment, organization and operation of mutual support insurance organizations shall be stipulated by the Government.

Section 3

TRANSFER OF INSURANCE CONTRACTS

Article 74. Transfer of insurance contracts      

1. The transfer of the entire insurance contract on one or several insurance operation(s) between insurance enterprises shall be effected in the following cases:

a/ The insurance enterprise is in danger of insolvency;

b/ The insurance enterprise is split up, separated, consolidated, merged or dissolved;

c/ It is so agreed upon between insurance enterprises.

2. In case the insurance enterprise is in danger of insolvency or dissolution and cannot reach agreement on the transfer of insurance contracts to another insurance enterprise, the Ministry of Finance shall designate an insurance enterprise to be the transferee.

Article 75. Conditions for transfer of insurance contracts

The transfer of an insurance contract shall be carried out under the following conditions:

1. The transferee is dealing in the insurance operations to be transferred;

2. The rights and obligations under the contract do not alter till the expiry of the contract;

3. The transfer of the insurance contract must be made together with the transfer of funds and operational provisions related to the entire contract.

Article 76. Procedures for transfer of insurance contracts

The transfer of an insurance contract must comply with the following procedures:

1. The insurance enterprise transferring the insurance contract must file its application proposing the transfer of the insurance contract to the Ministry of Finance, clearly stating the reasons and plans of transfer, together with the contract. The transfer of the insurance contract shall be carried out only after it is approved in writing by the Ministry of Finance;

2. Within 30 days from the date the Ministry of Finance approves the transfer of the insurance contract, the contract-transferring enterprise shall make public the transfer and notify it in writing to the insurance buyer.

 

Section 4

RESTORATION OF SOLVENCY, DISSOLUTION AND BANKRUPTCY OF INSURANCE ENTERPRISES

Article 77. Solvency

1. Insurance enterprises shall always maintain their solvency throughout the process of their insurance business activities.

2. Insurance enterprises are considered solvent when they fully set up through deductions the operational provisions under Article 96 of this Law and have the solvency amplitude not lower than the minimum solvency amplitude prescribed by the Government.

3. The solvency amplitude of an insurance enterprise is the difference between the property value and the payable debts of such insurance enterprise.

Article 78. Reporting on insolvency danger

1. An insurance enterprise is in danger of insolvency when its solvency amplitude is lower than the minimum solvency amplitude prescribed by the Government.

2. When being in danger of insolvency, insurance enterprises shall immediately report to the Ministry of Finance on their real financial status, the causes leading to the danger of insolvency and remedial measures.

Article 79. Insurance enterprises’ liability in case of insolvency danger

When being in danger of insolvency, insurance enterprises shall apply the following measures:

1. Drawing up plans for restoration of their solvency, consolidation of their organization and operation, reporting them to the Ministry of Finance and implementing the plans approved by the Ministry of Finance;

2. Complying with the Ministry of Finance’s request for restoration of solvency.

Article 80. Control of insurance enterprises being in danger of insolvency

1. In case an insurance enterprise cannot restore its solvency according to the approved plan, the Ministry of Finance shall issue a decision to set up the solvency control board for the application of measures to restore the solvency of such insurance enterprise.

2. The solvency control board has the following tasks and powers:

a/ To direct and supervise the application of measures for solvency restoration according to the approved plan;

b/ To notify the concerned state agencies of the application of measures to restore the solvency for coordinated implementation;

c/ To restrict the scope and domain of operation of the insurance enterprise;

d/ To suspend the activities which may lead to the insolvency of the insurance enterprise;

dd/ To request the insurance enterprise to transfer the entire insurance contract on one or several insurance operation(s) to another insurance enterprise;

e/ To suspend the administrative and executive rights and request the insurance enterprise to replace members of the Board of Directors, general director (director), or deputy general director (deputy director) if deeming it necessary;

g/ To request the Board of Directors or the general director (director) to discharge from position or work persons who commit violations or fail to abide by the approved solvency restoration plan;

h/ To propose the Ministry of Finance to continue or terminate the solvency restoration measures;

i/ To report to the Ministry of Finance on the application of solvency restoration measures and the results thereof.

3. The solvency control board shall bear responsibility for its decisions as provided for by law in the course of applying measures to restore the solvency of the insurance enterprise.

4. The insurance enterprise shall implement the requests and decisions of the solvency control board.

Article 81. Termination of the application of solvency restoration measures

1. The application of solvency restoration measures shall terminate in the following cases:

a/ The time limit for application of solvency restoration measures has expired;

b/ The insurance enterprise’s operation has returned to normal;

c/ The insurance enterprise has been consolidated or merged before the expiry of the time limit for application of solvency restoration measures;

d/ The insurance enterprise falls into the state of bankruptcy.

2. The termination of application of solvency restoration measures must comply with the Minister of Finance’s decisions. Such decisions shall be notified to concerned agencies.

Article 82. Dissolution of insurance enterprises

1. An insurance enterprise shall be dissolved in the following cases:

a/ It voluntarily applies for dissolution if it is solvent;

b/ Its operation duration prescribed in the establishment and operation license has expired without any decision on the extension thereof;

c/ Its establishment and operation license is revoked under Point a, b, dd or e, Clause 1, Article 68 of this Law;

d/ Other cases prescribed by law.

2. The dissolution of insurance enterprises must be approved in writing by the Ministry of Finance.

Article 83. Bankruptcy of insurance enterprises

In case an insurance enterprise is incapable of paying its due debts and becomes insolvent even after the application of measures to restore its solvency, the bankruptcy of the insurance enterprise must comply with the law on bankruptcy of enterprises.

 

Chapter IV

INSURANCE AGENTS, INSURANCE BROKERAGE ENTERPRISES, INSURANCE AUXILIARY SERVICES^[21]

Section 1

INSURANCE AGENTS

Article 84. Insurance agents

Insurance agents are organizations and individuals that are authorized by insurance enterprises on the basis of insurance agency contracts to carry out the insurance agency activities according to the provisions of this Law and other relevant laws.

Article 85. Contents of insurance agency activities

Insurance agents may be authorized by insurance enterprises to carry out the following activities:

1. Making introduction or sale offer of insurance;

2. Arranging the conclusion of insurance contracts;

3. Collecting insurance premiums;

4. Arranging the payment of indemnities or insurance money when insured events occur;

5. Carrying out other activities relating to the performance of insurance contracts.

Article 86. Conditions for insurance agency activities

1. Individuals who conduct insurance agency activities must fully meet the following conditions:

a/ Being Vietnamese citizens permanently residing in Vietnam;

b/ Being full 18 years of age or older, having full civil act capacity;

c/^[22] Having insurance agent’s certificates, granted by a training institution accredited by the Ministry of Finance.

The Ministry of Finance shall stipulate training programs, contents and forms and the grant of insurance agent’s certificates.

2. Organizations which conduct insurance agency activities must fully meet the following conditions:

a/ Being organizations lawfully established and operating;

b/ The agency organizations’ personnel directly performing the insurance agency activities must satisfy all conditions prescribed in Clause 1 of this Article.

3. Persons who are being examined for penal liability or serving their imprisonment sentences or being deprived by the court of the right to professional practice due to their commission of the crimes prescribed by law are not allowed to sign insurance agency contracts.

Article 87. Contents of insurance agency contracts

An insurance agency contract must contain the following major details:

1. Name and address of the insurance agent;

2. Name and address of the insurance enterprise;

3. Rights and obligations of the insurance enterprise and insurance agent;

4. Contents and scope of operation of the insurance agent;

5. Insurance agency commission;

6. Term of the contract;

7. Principles for settlement of disputes.

Article 88. Responsibility of insurance agents

In case insurance agents breach insurance agency contracts, causing damage to the lawful rights and interests of the insured, insurance enterprises shall still bear the responsibility for the insurance contracts concluded by the insurance agents; the insurance agents shall refund to the insurance enterprises the amounts the latter have paid to the insured.

Section 2

INSURANCE BROKERAGE ENTERPRISES

Article 89. Insurance brokerage enterprises

Insurance brokerage enterprises are those which perform the insurance brokerage activities under the provisions of this Law and other relevant laws.

Article 90. Contents of insurance brokerage activities

Insurance brokerage activities must cover the following contents:

1. Providing information on insurance types, conditions, terms, premiums and/or insurance enterprises to insurance buyers;

2. Advising insurance buyers on the evaluation of risks, selection of insurance types, conditions, terms, premium rate index, and insurance enterprises;

3. Negotiating, and arranging the conclusion of insurance contracts between insurance enterprises and insurance buyers;

4. Performing other jobs relating to the performance of insurance contracts at the request of insurance buyers.

Article 91. Rights and obligations of insurance brokerage enterprises

1. Insurance brokerage enterprises are entitled to insurance brokerage commissions. Insurance brokerage commissions shall be calculated into insurance premiums.

2. Insurance brokerage enterprises shall have the following obligations:

a/ To conduct brokerage in an honest manner;

b/ Not to disclose or provide information, causing damage to the  lawful rights and interests of the insured;

c/ To pay compensations to insurance buyers for the damage caused by their brokerage activities.

Article 92. Professional liability insurance

Insurance brokerage enterprises shall buy professional liability insurance for their insurance brokerage activities at insurance enterprises operating in Vietnam.

Article 93. Grant of establishment and operation licenses

The grant of licenses for the establishment and operation of insurance brokerage enterprises must comply with the provisions in Article 62, Article 63, Clauses 1, 2, 3 and 4 of Article 64, and Articles 65, 66, 67, 68 and 69, of this Law.

Section 3

INSURANCE AUXILIARY SERVICES^[23]

Article 93a. Provision of insurance auxiliary services

1. Principles of provision of insurance auxiliary services:

a/ Honesty, objectivity, and transparency; assurance of lawful rights and interests of related parties;

b/ Compliance with standards and technical regulations on insurance auxiliary services;

c/ Compliance with codes of professional ethics and conduct issued by socio-professional organizations.

2. Individuals and organizations satisfying the conditions prescribed in Article 93b of this Law may provide insurance auxiliary services according to the following regulations:

a/ Individuals may provide insurance consultancy services;

b/ Insurance enterprises, insurance brokerage enterprises and other organizations having  the legal person status may provide insurance auxiliary services (below referred to as insurance auxiliary service-providing organizations).

3. Responsibilities of individuals and insurance auxiliary service-providing organizations:

a/ To keep secret customer information; to use customer information for the proper purposes and refrain from providing the information to any third parties without customers’ consent, except the cases prescribed by law;

b/ Individuals providing insurance consultancy services are required to buy professional liability insurance for the provision of insurance consultancy services; insurance auxiliary service-providing organizations are required to buy professional liability insurance compatible to each type of insurance auxiliary services they provide;

c/ Insurance auxiliary service-providing organizations may not provide insurance loss assessment and insurance claim settlement support services for the insurance contracts in which they are insurance buyers, the insured or beneficiaries;

d/ Insurance brokerage enterprises may not provide the insurance loss assessment service for the insurance contracts for which they arrange the conclusion.

4. Contracts for provision of insurance auxiliary services must be made in writing.

Article 93b. Conditions for provision of insurance auxiliary services

1. An individual providing insurance consultancy services must satisfy the following conditions:

a/ Being aged full 18 years or older, having full civil act capacity;

b/ Possessing a university or higher degree in insurance business. Those who do not possess such a degree must possess a university or higher degree in another discipline and an insurance consultant certificate granted by a training institution lawfully established and operating at home or abroad.

2. An insurance auxiliary service-providing organization must satisfy the following conditions:

a/ Having the legal person status and being lawfully established and operating;

b/ Its staff members who directly perform insurance auxiliary activities must satisfy the conditions prescribed at Point a, Clause 1 of this Article; possess degrees and certificates on auxiliary insurance compatible to the type of insurance auxiliary services they perform, which are granted by training institutions lawfully established and operating at home or abroad.

Persons directly performing insurance loss assessment must also satisfy the criteria on assessors in accordance with the commercial law.

Persons directly performing insurance actuary must also satisfy the criteria on law observance, ethical and professional qualifications, experience in insurance actuary, and membership status of the International Actuarial Association.

The Government shall detail this Point.

3. The Minister of Finance shall prescribe contents of training programs, testing and grant of insurance auxiliary certificates for domestic training institutions, and recognition of insurance auxiliary certificates granted by foreign training institutions.

Chapter V

FINANCE, COST ACCOUNTING AND FINANCIAL STATEMENTS

Article 94. Legal capital, charter capital

1. The Government shall stipulate the levels of legal capital of insurance enterprises and insurance brokerage enterprises.

2. In the course of operation, insurance enterprises and insurance brokerage enterprises must always maintain the contributed charter capital at the level not lower than the legal capital level.

Article 95. Escrow account

1. Insurance enterprises shall use part of their charter capital for escrow account at commercial banks operating in Vietnam.

2. The Government shall prescribe the escrow account amounts and the ways of using the escrow account money.

Article 96. Operational provisions

1. Operational provisions are the money amounts which must be set up with deductions by insurance enterprises for the purpose of paying for insured liabilities, which have been pre-determined and arisen from the concluded insurance contracts.

2. Operational provisions must be set up separately for each insurance operation and must correspond to the proportion of liability of insurance enterprises.

3. The Ministry of Finance shall specify the levels and methods of deduction for establishment of operational provisions for each insurance operation.

Article 97. Reserve funds and insured person protection funds ^[24]

1. An insurance enterprise or insurance brokerage enterprise shall set up a compulsory reserve fund in order to supplement its charter capital and ensure its solvency. The annual deduction level for setting up this compulsory reserve fund is 5% of after-tax profits. The maximum level of this fund shall be stipulated by the Government.

2. In addition to the compulsory reserve fund prescribed in Clause 1 of this Article, an insurance enterprise or insurance brokerage enterprise may set up other reserve funds from after-tax profits earned in the fiscal year as provided in its charter.

3. The insured person protection fund shall be set up to protect the insured’s interests in case an insurance enterprise falls bankrupt or becomes insolvent.

The insured person protection fund shall be set up with deductions at a certain percentage of insurance premiums from all insurance contracts.

The Government shall stipulate the deduction for setting up, management and use of the insured person protection fund.

Article 98. Capital investment

1. The investment of capital by insurance enterprises must ensure safety and efficiency, and satisfy the requirements of regular payment for the commitments under insurance contracts.

2. Insurance enterprises may only use their idle capital for investment in Vietnam in the following domains:

a/ Buying government bonds;

b/ Buying shares or corporate bonds;

c/ Dealing in real estates;

d/ Contributing capital to other enterprises;

dd/ Providing loans according to the provisions of the Law on Credit Institutions;

e/ Making deposits at credit institutions.

3. The Government shall specify the portfolio of investment in the domains prescribed in Clause 2 of this Article and the percentage of idle capital allowed for investment in each investment portfolio in order to ensure that insurance enterprises can always maintain their solvency.

Article 99. Financial revenues and expenditures

1. Financial revenues and expenditures of insurance enterprises and insurance brokerage enterprises must comply with the provisions of law.

2. The Ministry of Finance shall guide and inspect the implementation of the financial regimes by insurance enterprises and insurance brokerage enterprises.

Article 100. Fiscal year

The fiscal year of insurance enterprises and insurance brokerage enterprises commences on January 1 and ends on December 31 of a calendar year. The first fiscal year of insurance enterprises and insurance brokerage enterprises shall start from the date they are granted the establishment and operation licenses and end on the last day of the same year.

Article 101. The accounting regime

Insurance enterprises and insurance brokerage enterprises shall observe the financial regimes applicable to insurance business according to the provisions of the accounting law.

Article 102. Auditing

Annual financial statements of insurance enterprises and insurance brokerage enterprises must be certified by independent auditing organizations.

Article 103. Financial statements

1. Insurance enterprises and insurance brokerage enterprises must observe the financial reporting regimes as prescribed by the accounting law and make periodical reports on their operational activities as stipulated by the Ministry of Finance.

2. Apart from the periodical reports, insurance enterprises shall also report to the Ministry of Finance in the following cases:

a/ When abnormal developments occur in the enterprises’ business operations;

b/ When they fail to meet the prescribed financial requirements for the fulfillment of commitments to insurance buyers.

Article 104. Disclosure of financial statements

After the end of a fiscal year, insurance enterprises and insurance brokerage enterprises shall disclose their financial statements in accordance with law.

 

Chapter VI

FOREIGN-INVESTED INSURANCE ENTERPRISES AND INSURANCE BROKERAGE ENTERPRISES; CROSS-BORDER SERVICE PROVISION^[25]

Article 105. Forms of operation^[26]

1. Foreign insurance enterprises and insurance brokerage enterprises shall be licensed to operate in Vietnam in the following forms:

a/ Limited-liability insurance company, limited-liability insurance brokerage company;

b/ Branches of foreign non-life insurance enterprises.

2.^[27] Foreign insurance enterprises and insurance brokerage enterprises providing cross-border insurance services; foreign organizations providing cross-border insurance auxiliary services, and foreign individuals providing the cross-border insurance consultancy service under the Government’s regulations.

3. Foreign insurance enterprises and insurance brokerage enterprises may set up their representative offices in Vietnam. Such representative offices are not allowed to conduct insurance business in Vietnam.

Article 106. Conditions for grant of establishment and operation licenses

Conditions for insurance enterprises and insurance brokerage enterprises to be granted establishment and operation licenses:

1. The conditions prescribed in Article 63 of this Law;

2. Foreign insurance enterprises and insurance brokerage enterprises are operating lawfully and in the normal financial state;

3. Foreign insurance enterprises and insurance brokerage enterprises are permitted by competent foreign authorities to conduct insurance business or insurance brokerage activities in the domains planned to be carried out in Vietnam.

Article 107. Conditions for grant of licenses to set up representative offices in Vietnam

Conditions for foreign insurance enterprises and insurance brokerage enterprises to be granted licenses for setting up their representative offices in Vietnam:

1. The foreign insurance enterprises and insurance brokerage enterprises have operated for five years or more;

2 The foreign insurance enterprises and insurance brokerage enterprises have cooperative ties with Vietnamese agencies or organizations.

Article 108. Licensing competence^[28]

The Ministry of Finance shall grant establishment and operation licenses to foreign-invested insurance enterprises and insurance brokerage enterprises and branches of foreign non-life insurance enterprises; and licenses for setting up Vietnam-based representative offices of foreign insurance enterprises and insurance brokerage enterprises.

Article 109. Dossiers of application for establishment and operation licenses

1. Apart from the contents prescribed in Article 64 of this Law, a dossier of application for an establishment and operation license for joint-venture insurance enterprises or insurance brokerage enterprises must also comprise:

a/ The charter, and the establishment and operation licenses of the parties to the joint venture;

b/ The joint venture contract;

c/ The annual balance sheets and financial statements, certified by independent auditing organizations about the situation of operation of the joint venture parties for the latest three years.

2. Apart from the contents prescribed in Article 64 of this Law, a dossier of application for a license for the establishment and operation of an insurance enterprise or insurance brokerage enterprise with 100% foreign investment capital must also comprise:

a/ The charter, and the establishment and operation license of the foreign insurance enterprise or the foreign insurance brokerage enterprise in the country where it is headquartered;

b/ The letter of authorization for the general director (director) in Vietnam;

c/ The annual balance sheet and financial statement, certified by the independent auditing organization of the situation of operation of the foreign insurance enterprise or insurance brokerage enterprise in the country where it is headquartered for the latest three years.

Article 110. Dossiers of application for licenses to set up representative offices

A dossier of application for a license to set up a representative office must comprise:

1. An application for setting up a representative office;

2. The establishment and operation license of the foreign insurance enterprise or insurance brokerage enterprise in the country where it is headquartered;

3. The annual balance sheet and financial statement, certified by the independent auditing organization of the situation of operation of the foreign insurance enterprise or insurance brokerage enterprise for the latest three years;

4. The full names and curricula vitae of the chiefs of the representative offices in Vietnam;

5. The written introduction of the foreign insurance enterprise or insurance brokerage enterprise as well as its cooperation with Vietnamese agencies and/or organizations.

Article 111. Licensing time limits, licensing fees and announcement of operation contents

The licensing time limits, licensing fees and announcement of operation contents for foreign-invested insurance enterprises and insurance brokerage enterprises, representative offices of foreign insurance enterprises or insurance brokerage enterprises must comply with the provisions in Articles 65, 66 and 67 of this Law.

Article 112. Revocation of licenses

1. Apart from the provisions in Article 68 of this Law, foreign-invested insurance enterprises and insurance brokerage enterprises may have their establishment and operation licenses revoked when the foreign insurance enterprises or insurance brokerage enterprises in the countries where they are headquartered have their establishment and operation licenses revoked.

2. Representative offices of foreign insurance enterprises or insurance brokerage enterprises shall have their licenses for setting up their representative offices revoked when the foreign insurance enterprises or insurance brokerage enterprises in the countries where they are headquartered have their establishment and operation licenses revoked.

Article 113. Changes requiring approval

Changes requiring approval for foreign-invested insurance enterprises or insurance brokerage enterprises must comply with the provisions in Article 69 of this Law.

Article 114. Operation contents

The contents of operation of foreign-invested insurance enterprises or insurance brokerage enterprises, or representative offices of foreign insurance enterprises or insurance brokerage enterprises must comply with the provisions of this Law and other provisions of Vietnam’s law.

Article 115. Funds, reserve funds and financial revenues and expenditures of foreign-invested insurance enterprises and insurance brokerage enterprises

1. The Government shall prescribe the legal capital levels for foreign-invested insurance enterprises and insurance brokerage enterprises.

2. The deductions for setting up compulsory reserve funds and other reserve funds of foreign-invested enterprises or insurance brokerage enterprises must comply with the provisions in Article 97 of this Law.

3. Financial revenues and expenditures of foreign-invested insurance enterprises and insurance brokerage enterprises must comply with the provisions of Vietnam’s law.

Article 116. Solvency, escrow account, operational provisions and capital investment of foreign-invested insurance enterprises

1. Foreign-invested insurance enterprises shall maintain their solvency as provided for in Article 77 of this Law.

2. Foreign-invested insurance enterprises must make escrow account and deductions for establishment of operational provisions as provided for in Articles 95 and Article 96 of this Law.

3. Foreign-invested insurance enterprises may invest their capital as provided for in Article 98 of this Law.

Article 117. Regimes of accounting, auditing and financial statements

1. Foreign-invested insurance enterprises and insurance brokerage enterprises shall observe the regimes of accounting, auditing and financial statements as provided for in Articles 101, 102, 103 and 104 of this Law.

2. Within 180 days after the end of a fiscal year, foreign-invested insurance enterprises and insurance brokerage enterprises as well as representative offices of foreign-invested insurance enterprises or insurance brokerage enterprises shall send annual financial statements of the foreign insurance enterprises and insurance brokerage enterprises to the Ministry of Finance.

Article 118. Transfer of profits and property abroad

1. Insurance enterprises or insurance brokerage enterprises with 100% foreign investment capital may transfer abroad the remaining amounts of profits under their ownership after making deductions for offsetting up funds and fulfilling all financial obligations as provided for by Vietnam’s laws.

2. Foreign parties to joint-venture insurance enterprises or insurance brokerage enterprises may transfer abroad the divided profit amounts after the joint-venture insurance enterprises or insurance brokerage enterprises have made deductions for offsetting up funds and fulfilled all the financial obligations as provided for by Vietnam’s laws.

3. Insurance enterprises with 100% foreign capital and foreign parties to joint-venture insurance enterprises; insurance brokerage enterprises with 100% foreign capital and foreign parties to joint-venture insurance brokerage enterprises may transfer abroad the remainder of their property after liquidation, or after termination of their operation in Vietnam.

4. The transfer abroad of money and other assets as provided for in Clauses 1, 2 and 3 of this Article must comply with the provisions of Vietnam’s laws.

Article 119. Other provisions

The Government shall specify the contents, scopes and areas of operation of foreign-invested insurance enterprises and insurance brokerage enterprises as well as Vietnam-based representative offices of foreign insurance enterprises or insurance brokerage enterprises.

 

Chapter VII

STATE MANAGEMENT OF INSURANCE BUSINESS

Article 120. Contents of the state management of insurance business

The contents of the state management of insurance business include:

1.^[29] Promulgating, and guiding the implementation of, legal documents on insurance business and insurance auxiliary services; formulating strategies, plans and policies on development of the insurance market of Vietnam;

2. Granting and revoking licenses for establishment and operation of insurance enterprises or insurance brokerage enterprises; licenses for setting up Vietnam-based representative offices of foreign insurance enterprises or insurance brokerage enterprises;

3. Promulgating, ratifying, and guiding the implementation of, insurance regulations, terms, premium and commission rate index;

4. ^[30]Overseeing insurance business activities through operational activities, financial situation, corporate governance, risk administration, and law observance by insurance enterprises or insurance brokerage enterprises; applying necessary measures so that insurance enterprises ensure financial requirements and fulfill their commitments to insurance buyers.

Overseeing the provision of insurance auxiliary services through compliance with standards and technical regulations on insurance auxiliary, responsibilities of individuals and insurance auxiliary service-providing organizations, and conditions for provision of insurance auxiliary services and cross-border insurance auxiliary services;

5. Organizing briefings and forecasting the situation on the insurance market;

6. Conducting international cooperation in the field of insurance;

7. Approving the overseas operation of insurance enterprises or insurance brokerage enterprises;

8. Managing the operation of Vietnam-based representative offices of foreign insurance enterprises or insurance brokerage enterprises;

9. Organizing the training and building up of the contingent of insurance-related managerial and professional personnel;

10. Inspecting and examining the insurance business activities; settling complaints and denunciations about, and handling violations of the law on, insurance business.

Article 121. State management agencies

1. The Government shall perform the uniform state management of insurance business.

2. The Ministry of Finance shall take responsibility to the Government for the performance of the state management of insurance business.

3. Ministries, ministerial-level agencies and government-attached agencies shall, within the ambit of their respective tasks and powers, perform the state management of insurance business according to the provisions of law.

4. People’s Committees at all levels shall, within the ambit of their respective tasks and powers, perform the state management of insurance business in the localities according to the provisions of law.

Article 122. Specialized insurance inspectorate^[31]

1. The state management agency in charge of insurance business shall perform the function of the specialized insurance inspectorate.

2. The organization and operation of the specialized insurance inspectorate must comply with this Law and the inspection law.

Chapter VIII

COMMENDATION, REWARD, AND HANDLING OF VIOLATIONS

Article 123. Commendation and reward

Organizations and individuals that make merits in insurance business, or detect acts of violating the law on insurance business shall be commended and/or rewarded according to the provisions of law.

Article 124. Acts of violating the law on insurance business

Acts of violating the law on insurance business include:

1. Conducting insurance business without establishment and operation licenses or in contravention of the contents of establishment and operation licenses;

2. Breaching regulations on the grant of establishment and operation licenses, or on inspection, examination and supervision, issued by competent state bodies;

3. Going into illegal competition;

4. Compelling the conclusion of insurance contracts;

5. Breaching the regulations on compulsory insurance;

6. Breaching the duty to keep secret insurance contract-related information provided by insurance buyers;

7. Providing false information, data and/or reports;

8. Conducting business under conditions where the financial requirements are not met, or while violating the regulations on legal capital, reserves, collateral, deductions for setting up, management and use of operational provisions;

9. Breaching regulations on capital investment;

9a.^[32] Violating technical regulations on insurance auxiliary; responsibilities of individuals and insurance auxiliary service-providing organizations; conditions for provision of insurance auxiliary services; provision of different types of insurance auxiliary services; and provision of cross-border insurance auxiliary services;

10. Other acts of violating the law on insurance business.

Article 125. Handling of violations

1. Those who breach the provisions of this Law shall, depending on the nature and severity of their violations, be administratively sanctioned or examined for penal liability; if causing damage, they shall pay compensations according to the provisions of law.

2. Those who abuse their positions and powers and breach the regulations on the grant of establishment and operation licenses, or licenses for setting up Vietnam-based representative offices of foreign insurance enterprises or insurance brokerage enterprises, regulations on the state management of insurance business and other provisions of this Law shall, depending on the nature and severity of their violations, be disciplined or examined for penal liability; if causing damage, they shall pay compensations according to the provisions of law.

Article 126. Complaints and lawsuits about decisions on sanctioning administrative violations

1. Organizations and individuals that are handled for administrative violations may lodge complaints to competent state agencies or initiate lawsuits at courts according to the provisions of law.

2. During the period of complaint or lawsuit, the organizations and individuals that are handled for administrative violations shall still execute the decisions on handling the administrative violations. Where there are complaint settlement decisions of competent state agencies or the court’s legally effective judgments or decisions, such decisions or judgments or decisions shall be complied with.

 

Chapter IX

IMPLEMENTATION PROVISIONS^[33]

Article 127. Regulations for insurance enterprises, insurance brokerage enterprises, and representative offices established and operating; and insurance contracts concluded, before the effective date of this Law

1. Insurance enterprises and insurance brokerage enterprises, which have been established and are operating under the establishment decisions, establishment licenses, investment licenses, certificates of full eligibility and qualifications for insurance business; and representative offices of foreign insurance enterprises or insurance brokerage enterprises, which have operated under the licenses for setting up representative offices, granted before the effective date of this Law are not required to carry out procedures for re-grant of licenses.

2. The insurance contracts which have been concluded before this Law takes effect shall continue to be performed in accordance with the law effective at the time of concluding the contracts.

3.^[34] Insurance agency training certificates granted before the effective date of this Law remain valid and are not required to be converted into insurance agent’s certificates.

Article 128. Effect

1. This Law takes effect on April 1, 2001.

2. The previous regulations contrary to this Law shall all be annulled.

Article 129. Implementation guidance

The Government shall detail and guide the implementation of this Law.-

 

THE OFFICE OF THE NATIONAL ASSEMBLY	THE CONSOLIDATED TEXT IS AUTHENTICATED BY
No. 06/VBHN-VPQH	Hanoi, June 25, 2019   Chairman of the Office of the National Assembly NGUYEN HANH PHUC