Law 08/2022/QH15 on insurance business

LAW

ON INSURANCE BUSINESS^[1]

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Insurance Business.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Law provides the organization and operation of insurance business; rights and obligations of organizations and individuals participating in insurance; and state management of insurance business activities.

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

Article 2. Subjects of application

1. Insurance enterprises, reinsurance enterprises, insurance agents, insurance brokerage enterprises, organizations and individuals providing insurance auxiliary services, and mutual organizations providing microinsurance.    

2. Branches of foreign non-life insurance enterprises and branches of foreign reinsurance enterprises (below collectively referred to as Vietnam-based foreign branches).

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

4. Insurance buyers, the insured and the beneficiaries.

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

6. Organizations and individuals involved in insurance business activities.

Article 3. Application of the Law on Insurance Business, relevant laws and international practices

1. In case another law promulgated after the effective date of this Law needs to provide differently from this Law insurance contracts, establishment, operation organization, operational activities, finance, cost accounting and financial statements, solvency, and intervention measures for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, mutual organizations providing microinsurance and insurance brokerage enterprises, it is required to specifically determine contents to be regulated or not to be regulated by this Law.

2. The parties to insurance, reinsurance or insurance brokerage contracts may reach agreement on application of international practices in case at least one of them is a foreign organization or individual or they are Vietnamese organizations or citizens but the objects of insurance are based or the contracts are performed overseas. If the application of international practices contravenes the basic principles of Vietnam’s law, the latter shall prevail.

Article 4. Interpretation of terms

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

1. Insurance business activities include insurance business, reinsurance business, retrocession, and activities related to insurance business activities, including insurance agency, insurance brokerage and insurance auxiliary services.

2. Insurance business means activities carried out by an insurance enterprise, a foreign non-life insurance enterprise’s branch or a mutual organization providing microinsurance that assumes risks incurred by the insured on the basis that the insurance buyer pays insurance premiums to have the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance paying the indemnity or making a payout when the insured event occurs as agreed upon in the insurance contract.

3. Reinsurance business means activities carried out by an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch that receives an amount of reinsurance premium from another insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch or from a foreign insurance enterprise, foreign reinsurance enterprise or foreign insurance institution to make the commitment to pay indemnity for the liabilities which the former has assumed for insurance.

4. Retrocession means activities carried out by an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch that transfers part of the liabilities which it has assumed for reinsurance to another insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch or a foreign insurance enterprise, foreign reinsurance enterprise or foreign insurance institution on the basis of payment of retroceded premiums.

5. Insurance agency activities mean one or more than one activity authorized by an insurance enterprise, a foreign non-life insurance enterprise’s branch or a mutual organization providing microinsurance, covering: providing consultancy on insurance products; introducing insurance products; offering insurance products for sale; arranging the conclusion of insurance contracts; collecting premiums; and gathering dossiers to serve the settlement of insurance claims and making of insurance payouts.

6. Insurance brokerage activities means the provision of information and consultancy to insurance buyers regarding insurance types, insurance products, insurance plans, insurance conditions and clauses, premium rates, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches; and activities related to the negotiation, arrangement for conclusion, and performance, of insurance and reinsurance contracts.

7. Insurance auxiliary services include provision of insurance consultancy, insurance risk assessment, insurance actuary, insurance loss assessment, and support for settlement of insurance claims. Insurance auxiliary services do not include activities carried out by insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches or mutual organizations providing microinsurance to organize insurance business or reinsurance business activities of their own.

8. Consultancy means the provision of consultancy services on insurance plans, insurance products, insurance risk management, and insurance loss prevention and limitation.

9. Insurance risk assessment means the identification, classification, assessment of the nature and level of risks, and assessment of the management of human, property and civil liability risks to obtain grounds for participation in insurance or reinsurance.

10. Insurance actuary means the collection and analysis of statistics, calculation of premiums, operational provisions, capital, solvency, assessment of business operation performance, and enterprise valuation so as to ensure financial prudence of insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches and mutual organizations providing microinsurance.

11. Insurance loss assessment means the determination of the current situation, causes and levels of loss, and determination and division of responsibilities for indemnity payment to serve as a basis for settlement of insurance claims.

12. Insurance claim settlement support means the provision of support to insurance buyers, the insured, beneficiaries, or insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches or mutual organizations providing microinsurance in carrying out procedures for settlement of insurance claims and making of insurance payouts.

13. Life insurance means a type of insurance provided in case the insured is alive or dead.

14. Non-life insurance means a type of insurance for property damage and other losses or civil liability for a third party.

15. Health insurance means a type of insurance provided in case the insured is bodily injured, suffers accident, sickness or ailment, or needs healthcare.

16. Insurance contract means an agreement between an insurance buyer and an insurance enterprise, a foreign non-life insurance enterprise’s branch or a mutual organization providing microinsurance under which the insurance buyer has to pay premiums while the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance has to pay indemnity or make insurance payout as agreed upon therein.

17. Insurance enterprise means an enterprise which is established, organized and operates in accordance with this Law and other relevant laws for conducting insurance business, reinsurance business or retrocession. Insurance enterprises include life insurance enterprises, non-life insurance enterprises and health insurance enterprises.

18. Reinsurance enterprise means an enterprise which is established, organized and operates in accordance with this Law and other relevant laws for conducting insurance business or retrocession.

19. Foreign non-life insurance enterprise’s branch means a dependent unit of a foreign non-life insurance enterprise which has no legal person status and for which the foreign non-life insurance enterprise provides guarantee and takes responsibility for all liabilities and commitments during its operation in Vietnam.

20. Foreign reinsurance enterprise’s branch means a dependent unit of a foreign reinsurance enterprise which has no legal person status and for which the foreign reinsurance enterprise provides guarantee and takes responsibility for all liabilities and commitments during its operation in Vietnam.

21. Insurance brokerage enterprise means an enterprise which is established, organized and operates in accordance with this Law and other relevant laws for carrying out insurance brokerage activities.

22. Microinsurance means insurance targeting low-income individuals and households with a view to protecting them against life, health or property risks.

23. Mutual organization providing microinsurance means an organization that has the legal person status, conducts independent cost-accounting, and is established by members or members’ representative organization to provide microinsurance not for profit purpose with a view to providing mutual support and assistance to members participating in insurance on the basis of voluntariness, financial autonomy and self-responsibility before law within the scope of assets formed from microinsurance activities.

24. Insurance buyer means an organization or individual that enters into an insurance contract with an insurance enterprise, a foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance and pays premiums.

25. The insured means an organization or individual that has its/his/her property, civil liability, health, life, obligations or economic benefits insured under an insurance contract.

26. Beneficiary means an organization or individual that is designated by the insurance buyer or the insured to receive the insurance payout as agreed upon in the insurance contract.

27. Insured event means an objective event as agreed upon by the parties or prescribed by law upon the occurrence of which the concerned insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance has to pay indemnity or make insurance payout as agreed upon in the insurance contract.

28. Premium means a money amount to be paid by the insurance buyer to the concerned insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance as prescribed by law or as agreed upon by the parties in the insurance contract.

29. Co-insurance means a case in which insurance enterprises or foreign non-life insurance enterprises’ branches agree to enter into an insurance contract with the insurance buyer under which the insurance enterprises or foreign non-life insurance enterprises’ branches receive premiums and pay indemnity or make insurance payout at the ratio agreed upon in the contract.

Article 5. Policies on development of insurance business activities

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

2. The State shall encourage and create conditions for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches and mutual organizations providing microinsurance to research and develop insurance products and services and apply advanced technologies to insurance business activities.

3. The State shall encourage and create conditions for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches and mutual organizations providing microinsurance to invest back in the economy, make reinvestment or build the insurance market.

4. The State shall promote and facilitate the organization of and participation in provision of agro-forestry-fisheries insurance products, microinsurance products and insurance products for social security objectives.

Article 6. Principles of provision and use of insurance services

1. Organizations and individuals in Vietnam that have the demand for participation in insurance may only participate in insurance at insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance that are granted licenses for establishment and operation in Vietnam, except cases of use of trans-boundary insurance services under treaties to which the Socialist Republic of Vietnam is a contracting party.

2. The Government shall provide in detail the provision and use of trans-boundary insurance services, trans-boundary insurance brokerage services and trans-boundary insurance auxiliary services in conformity with treaties to which the Socialist Republic of Vietnam is a contracting party.

Article 7. Types of insurance

1. Types of insurance include:

a/ Life insurance;

b/ Health insurance;

c/ Non-life insurance.

2. The Government shall provide in detail lines of insurance corresponding to the types of insurance mentioned in Clause 1 of this Article.

Article 8. Compulsory insurance

1. Compulsory insurance means an insurance product aiming at protecting public interests, the environment and social safety.

2. Compulsory insurance includes:

a/ Compulsory insurance for motor vehicle owners’ civil liability;

b/ Compulsory fire and explosion insurance;

c/ Compulsory insurance in construction investment activities;

d/ Compulsory insurance provided in other laws and complying with Clause 1 of this Article.

3. Organizations and individuals subject to compulsory insurance are obliged to buy compulsory insurance and may opt to participate in compulsory insurance at insurance enterprises or foreign non-life insurance enterprises’ branches licensed to sell compulsory insurance.

4. Insurance enterprises or foreign non-life insurance enterprises’ branches licensed to sell compulsory insurance may not refuse to sell compulsory insurance when organizations and individuals fully satisfy the law-specified conditions for buying compulsory insurance.

5. The Government shall provide in detail insurance conditions, premium rates and minimum sums insured for compulsory insurance mentioned in Clause 2 of this Article.

Article 9. Prohibited acts

1. Conducting insurance business, reinsurance business, retrocession or insurance brokerage without establishment and operation licenses.

2. Conducting insurance business, reinsurance business, retrocession or insurance brokerage beyond the scope of licensed activities.

3. Carrying out insurance agency activities or providing insurance auxiliary services without satisfaction of the law-specified conditions.

4. Committing fraudulent acts, including:

a/ Colluding with the beneficiaries to pay indemnity or make insurance payout in contravention of law;

b/ Forging documents or intentionally falsifying information in dossiers of claim for indemnity or insurance payout;

c/ Forging documents or intentionally falsifying information in order to refuse to pay indemnity or make insurance payout when the insured events have occurred;

d/ Causing property or health damage by oneself to enjoy insurance benefits.

5. Threatening or coercing the conclusion of insurance contracts.

Article 10. Socio-professional organizations in insurance business activities

1. Socio-professional organizations in insurance business activities shall be established and operate in accordance with the law on associations, and comply with the law on insurance business activities and submit to the Ministry of Finance’s supervision.

2. Socio-professional organizations in insurance business activities shall issue their codes of professional ethics as well as rules and standards for application to their members; and coordinate with the state management agency in charge of insurance business activities in popularizing the law on insurance business.

Article 11. Database on insurance business activities

1. The State shall invest in building a database on insurance business activities. The Ministry of Finance shall build, manage and operate the database on insurance business activities in order to serve state management activities and protect the lawful rights and interests of the parties in insurance business activities.

2. Insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance brokerage enterprises, organizations providing insurance auxiliary services, and mutual organizations providing microinsurance shall provide information on insurance buyers, the insured, objects of insurance and insurance agents and other relevant information for building the database on insurance business activities.

3. The collection, use, storage and provision of information for/to the database on insurance business activities must ensure information confidentiality and security and comply with regulations on protection of privacy, personal secrets, family secrets and trade secrets.

State agencies, other organizations and individuals shall use information provided to them for proper purposes and may not provide such information to  third parties without the consent of insurance buyers or the insured, except cases of provision of information in accordance with law.

4. The database on insurance business activities shall be connected to national databases and other specialized databases.

5. The Government shall provide in detail the building of, and the collection, use, storage, management and provision of information for/to, the database on insurance business activities, and the connection of the database on insurance business activities with national databases and other specialized databases.

Article 12. Application of information technology in insurance business activities

1. The application of information technology in insurance business activities aims for the following purposes:

a/ To raise the efficiency of insurance business activities, covering: building and designing of insurance products, risk assessment, appraisal and conclusion of contracts, management of contracts, loss assessment, and settlement of claims for indemnity and insurance payout; corporate governance and methods of provision of insurance services and products;

b/ To modernize the statistical and reporting work; to reduce administrative procedures; to build the information technology system and database on insurance business activities to serve management, supervision, analysis and forecasting of the insurance market and prevention and control of insurance frauds.

2. The application of information technology in insurance business activities must comply with this Law, the laws on e-transactions, information technology, cyber security, and money laundering prevention and combat, and other relevant laws.

3. The Government shall provide regulations on emerging issues related to application of information technology in insurance business activities.

Article 13. Requirements on application of information technology in insurance business activities

Insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches and insurance brokerage enterprises shall take the initiative in establishing, maintaining and operating their information technology systems which must conform to their operation scale and meet the following essential requirements:

1. Having server systems, software systems and technical solutions to facilitate information updating, statistics, processing and storage meeting the requirements on management of insurance business activities as well as on cyber security and cyberinformation security;

2. Having information technology systems facilitating risk administration and control by the enterprises and inspection and supervision by management agencies.

3. Having information technology solutions to respond to catastrophes and ensure uninterrupted business activities.

Article 14. Provision of insurance services and products in the cyberspace

1. Organizations and individuals permitted to provide insurance services and products in the cyberspace include:

a/ Insurance enterprises, foreign non-life insurance enterprises’ branches and mutual organizations providing microinsurance;

b/ Insurance agents;

c/ Insurance brokerage enterprises.

2. Organizations and individuals providing insurance services and products in the cyberspace shall comply with the following provisions:

a/ Insurance enterprises, foreign non-life insurance enterprises’ branches, insurance brokerage enterprises and mutual organizations providing microinsurance may themselves select forms of provision of insurance services and products in the cyberspace;

b/ Insurance agents may only provide insurance services and products in the cyberspace within the scope of insurance agency contracts;

c/ Insurance enterprises, foreign non-life insurance enterprises’ branches, insurance agents, insurance brokerage enterprises and mutual organizations providing microinsurance that provide insurance services and products in the cyberspace shall take responsibility to insurance buyers if the provision of such insurance services and products affects the lawful rights and interests of insurance buyers;

d/ Organizations and individuals that conclude insurance contracts in the cyberspace shall provide truthful and accurate information in accordance with Article 22 of this Law.

3. The Minister of Finance shall detail this Article.

Chapter II

INSURANCE CONTRACTS

Section 1

GENERAL PROVISIONS ON INSURANCE CONTRACTS

Article 15. Insurance contracts

1. Types of insurance contracts:

a/ Life insurance contract;

b/ Health insurance contract;

c/ Property insurance contract;

d/ Damage insurance contract;

dd/ Liability insurance contract.

The insurance contracts mentioned at Points c, d and dd of this Clause belong to the type of non-life insurance.

2. Insurance enterprises, foreign non-life insurance enterprises’ branches and insurance buyers may agree to conclude contracts of one type or contracts of a combination of the types specified in Clause 1 of this Article, ensuring compliance with Clause 3, Article 63 of this Law.

3. Marine insurance contracts must comply with the Maritime Code; matters not provided in the Maritime Code must comply with this Law.

4. Insurance contract-related matters not provided in this Law must comply with the Civil Code.

Article 16. Principles of conclusion and performance of insurance contracts

The conclusion and performance of insurance contracts must adhere to the basic principles of the civil law and the following principles:

1. Principle of utmost good faith: The parties to an insurance contract shall provide information, exercise the rights and perform the obligations in the utmost faith manner on the basis of mutual absolute trust during the conclusion and performance of the contract;

2. Principle of insurable interest: Insurance buyers must have insurable interests depending on each type of insurance contract as provided in this Law;

3. Principle of indemnity: The indemnity amount to be received by the insured must not exceed the value of actual damage in the insured event, unless otherwise agreed upon in the insurance contract;

4. Principle of subrogation: The insured shall transfer to the concerned insurance enterprise or foreign non-life insurance enterprise’s branch the right to request a third party that commits damage-causing act to make refund within the indemnity amount. This principle does not apply to life insurance contracts and health insurance contracts;

5. Principle of random risk: The insured risks must be sudden and unforeseeable risks.

Article 17. Contents of insurance contracts

1. An insurance contract must have the following principal contents:

a/ The insurance buyer, the insured, the beneficiary (if any), the insurance enterprise or foreign non-life insurance enterprise’s branch;

b/ The object of insurance;

c/ The sum insured or value of the insured property or limit of the insured liability;

d/ Scope of insurance or insurable interests; insurance rules, conditions and terms;

dd/ Rights and obligations of the insurance enterprise or foreign non-life insurance enterprise’s branch and the insurance buyer;

e/ The period of insurance, effective time of the contract;

g/ Premium rate, mode of premium payment;

h/ Mode of paying indemnity or making insurance payout;

i/ Dispute settlement method.

2. The Minister of Finance shall detail Clause 1 of this Article with regard to life insurance contracts and health insurance contracts.

Article 18. Forms of insurance contracts, evidence of conclusion of insurance contracts

Insurance contracts must be made in writing. The evidence of conclusion of an insurance contract includes the insurance contract, insurance certificate, insurance application, and other forms prescribed by law.

Article 19. Terms on exclusion of insurance liability

1. The terms on exclusion of insurance liability list cases in which insurance enterprises or foreign non-life insurance enterprises’ branches are not required to pay indemnities or make insurance payouts.

2. In case of availability of the terms on exclusion of insurance liability, the insurance enterprises or foreign non-life insurance enterprises’ branches shall interpret these terms in insurance contracts in an explicit and full manner and obtain evidence certifying that, upon conclusion of contracts, the insurance buyers have been provided by insurance enterprises or foreign non-life insurance enterprises’ branches with full interpretation of, and clearly understand these terms.

3. In case a force majeure event or external obstacle occurs, resulting in the insurance buyer delaying the notification of the insured event, the concerned insurance enterprise or foreign non-life insurance enterprise’s branch may not apply the terms on exclusion of insurance liability with respect to the delay of notification.

Article 20. Rights and obligations of insurance enterprises and foreign non-life insurance enterprises’ branches

1. An insurance enterprise or a foreign non-life insurance enterprise’s branch 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 all information relating to the conclusion and performance of the insurance contract;

c/ To cancel the insurance contract under Clause 2, Article 22 or unilaterally terminate the insurance contract under Article 26 of this Law;

d/ To refuse to pay the indemnity or make insurance payout in cases falling beyond the scope of insurance liability or in cases of exclusion of insurance liability as agreed upon in the insurance contract;

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

e/ To request the third party to refund the amount which the enterprise or branch has indemnified the insured for property damage; economic benefits or contract performance obligation or law-specified obligations; and civil liability caused by the third party;

g/ To exercise other rights provided by law.

2. An insurance enterprise or a foreign non-life insurance enterprise’s branch has the following obligations:

a/ To provide the insurance buyer with an application for insurance, a questionnaire related to the insured risks, objects of insurance, and insurance rules, conditions and terms;

b/ To provide the insurance buyer with explicit and full interpretation of insurable interests, terms on exclusion of insurance liability, and rights and obligations of the insurance buyer upon conclusion of the insurance contract;

c/ To provide the insurance buyer with the evidence of conclusion of the insurance contract under Article 18 of this Law;

d/ To issue to the insurance buyer the premium receipt as agreed upon in the insurance contract and under relevant regulations;

dd/ To pay the indemnity or make insurance payout when the insured event occurs;

e/ To explain in writing the reasons for refusing to pay the indemnity or make insurance payout;

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

h/ To retain dossiers of insurance contracts in accordance with law;

i/ To ensure confidentiality of information provided by the insurance buyer and the insured, unless the provision of such information is at the request of a competent state agency or consented to by the insurance buyer and the insured;

k/ To perform other obligations provided by law.

Article 21. Rights and obligations of insurance buyers

1. Insurance buyers have the following rights:

a/ To choose insurance enterprises or foreign non-life insurance enterprises’ branches for conclusion of insurance contracts;

b/ To request insurance enterprises or foreign non-life insurance enterprises’ branches to provide applications for insurance, questionnaires related to the insured risks, objects of insurance, and insurance rules, conditions and terms, and explain insurance conditions and terms;

c/ To request insurance enterprises or foreign non-life insurance enterprises’ branches to provide evidence of the conclusion of insurance contracts under Article 18 of this Law;

d/ To request insurance enterprises or foreign non-life insurance enterprises’ branches to issue premium receipts as agreed upon in insurance contracts and under relevant regulations;

dd/ To cancel insurance contracts under Clause 3, Article 22, and Article 35, or unilaterally terminate insurance contracts under Article 26, of this Law;

e/ To request insurance enterprises or foreign non-life insurance enterprises’ branches to pay the indemnity or make insurance payout when the insured event occurs;

g/ To transfer insurance contracts as agreed upon in the contracts or under law;

h/ To exercise other rights provided by law.

2. Insurance buyers have the following obligations:

a/ To fully and honestly declare all information relating to insurance contracts at the request of insurance enterprises or foreign non-life insurance enterprises’ branches;

b/ To read for well understanding insurance conditions and terms as well as rights and obligations of insurance buyers upon conclusion of insurance contracts and other contents of the contracts;

c/ To pay premiums fully and in time as agreed upon in the insurance contracts;

d/ To notify insurance enterprises or foreign non-life insurance enterprises’ branches of cases which may give rise to increase or reduction of risks or may give rise to increase of responsibilities of the enterprises or branches in the course of performance of insurance contracts as agreed upon in the contracts;

dd/ To notify insurance enterprises or foreign non-life insurance enterprises’ branches of the occurrence of the insured events as agreed upon in insurance contracts; to coordinate with insurance enterprises or foreign non-life insurance enterprises’ branches in conducting loss assessment;

e/ To apply measures to prevent or limit losses in accordance with this Law and other relevant laws;

g/ To perform other obligations provided by law.

Article 22. Legal liability and consequences for breach of the obligation to provide information

1. When concluding an insurance contract, an insurance enterprise or a foreign non-life insurance enterprise’s branch shall provide adequate and accurate information related to the contract, and interpret insurance conditions and terms to the insurance buyer; the insurance buyer shall provide adequate and accurate information relating to the object of insurance to the insurance enterprise or foreign non-life insurance enterprise’s branch.

2. In case the insurance buyer intentionally provides inadequate information or provides untruthful information for the purpose of concluding an insurance contract to receive the indemnity or insurance payout, the insurance enterprise or foreign non-life insurance enterprise may cancel the insurance contract. The insurance enterprise or foreign non-life insurance enterprise’s branch is not required to pay the indemnity or make insurance payout but shall refund premiums to the insurance buyer after subtracting reasonable expenses (if any) as agreed upon in the insurance contract. The insurance buyer shall pay compensation for damage (if any) to the insurance enterprise or foreign non-life insurance enterprise’s branch.

3. In case the insurance enterprise or foreign non-life insurance enterprise’s branch intentionally fails to perform the obligation to provide information or provides untruthful information for the purpose of concluding the insurance contract, the insurance buyer may cancel the insurance contract and shall be refunded the paid premium. The insurance enterprise or foreign non-life insurance enterprise’s branch shall pay compensation for damage (if any) to the insurance buyer.

Article 23. 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 of the insured risks, the insurance buyer may, based on agreements in the insurance contract, request the insurance enterprise or foreign non-life insurance enterprise’s branch to:

a/ Reduce the premium for the remaining period of the contract;

b/ Increase the sum insured for the remaining period of the contract;

c/ Prolong the period of insurance; or,

d/ Expand the scope of insurance for the remaining period of the contract.

2. In case the insurance enterprise or foreign non-life insurance enterprise’s branch rejects the request mentioned in Clause 1 of this Article, the insurance buyer may unilaterally terminate the insurance contract but shall immediately notify such in writing to the insurance enterprise or foreign non-life insurance enterprise’s branch.

3. When there appear changes in the factors used as a basis for premium calculation, thus leading to the increase in the insured risks, based on agreements in the insurance contract, the insurance enterprise or foreign non-life insurance enterprise’s branch may:

a/ Re-calculate the premium for the remaining period of the contract;

b/ Reduce the sum insured for the remaining period of the contract;

c/ Shorten the period of insurance; or,

d/ Narrow the scope of insurance for the remaining period of the contract.

4. In case the insurance buyer rejects the request mentioned in Clause 3 of this Article, the insurance enterprise or foreign non-life insurance enterprise’s branch may unilaterally terminate the insurance contract but shall immediately notify such in writing to the insurance buyer.

Article 24. Interpretation of insurance contracts

In case an insurance contract contains ambiguous terms, leading to different understandings, such terms shall be interpreted in favor of the insurance buyer.

Article 25. 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 at the time of conclusion of the contract;

b/ No object of insurance exists at the time of conclusion of the contract;

c/ At the time of conclusion of the contract, the insurance buyer knows that the insured event has occurred;

d/ The purpose and content of the contract violate prohibitions or contravene social ethics;

dd/ The insurance enterprise or foreign non-life insurance’s branch and the insurance buyer concludes a fake contract;

e/ The insurance buyer is a minor, a person having lost civil act capacity, a person with difficulties in cognition or act control, or a person having civil act capacity restricted;

g/ The contract is concluded with mistakes, resulting in one or all of the contractual parties failing to attain the purpose of the contract conclusion, unless such purpose has been attained or the parties are able to immediately remediate the mistakes, making such purpose still attainable;

h/ The contract is concluded due to cheating, except the case specified in Article 22 of this Law;

i/ The contract is concluded due to threat or coercion;

k/ The insurance buyer cannot cognize and control his/her acts when concluding the contract;

l/ The contract does not comply with the format provided in Article 18 of this Law.

2. When the insurance contract becomes null and void, it shall be invalidated from the time of conclusion. The insurance enterprise or branch of the foreign non-life insurance and the insurance buyer shall refund each other what they have received. The at-fault party causing damage shall pay compensation.

Article 26. Unilateral termination of insurance contracts

The insurance enterprise or foreign non-life insurance’s branch or the insurance buyer may unilaterally terminate the insurance contract in the following cases:

1. The insurance buyer fails to pay premiums or to fully pay premiums within the agreed time limit or after the extended period of premium payment;

2. The insurance enterprise or foreign non-life insurance’s branch or the insurance buyer does not accept the request for change in degrees of the insured risks as specified in Article 23 of this Law;

3. The insured fails to take measures to ensure safety for the object of insurance as specified in Clause 3, Article 55 of this Law;

4. The insurance buyer disagrees to transfer the insurance contract portfolio specified in Clause 4, Article 92 of this Law.

Article 27. Legal consequences of unilateral termination of insurance contracts

1. In case of unilateral termination of an insurance contract under Clause 1, Article 26 of this Law:

a/ The insurance buyer shall still pay sufficient premiums until the time of unilateral termination of the contract. This provision does not apply to life insurance contracts and health insurance contracts, except group insurance contracts;

b/ For life insurance contracts and health insurance contracts, the insurance enterprise or foreign non-life insurance’s branch shall make insurance payout to the insured in case the insured event occurs before the time of unilateral termination of the contract and may deduct the premiums until such time;

c/ For property insurance contracts, damage insurance contracts and liability insurance contracts, the insurance enterprise or foreign non-life insurance enterprise’s branch shall pay the indemnity to the insured in case the insured event occurs before the time of unilateral termination of the contract and may deduct the premiums as agreed upon in the contract.

2. In case of unilateral termination of an insurance contract under Clause 2 or 3, Article 26 of this Law, the insurance enterprise or foreign non-life insurance enterprise’s branch shall refund the paid premium amount for the remaining period of the contract as agreed upon in the contract. The insurance enterprise or foreign non-life insurance enterprise’s branch shall pay the indemnity and make insurance payout as agreed upon in the contract upon occurrence of the insured event before the time of unilateral termination of the contract.

3. In case of unilateral termination of an insurance contract under Clause 1 or 2, Article 26 of this Law, for life insurance contracts with a cash surrender value, the insurance enterprise shall refund to the insurance buyer the cash surrender value of the contract, unless otherwise agreed upon by the parties.

4. In case of unilateral termination of an insurance contract under Clause 4, Article 26 of this Law, the insurance buyer may receive back the cash surrender value or the paid premium corresponding to the amount of the remaining period of the contract, depending on the type of insurance product. In case the property value is lower than the technical reserves stated in the transferred insurance contract portfolio, the money amount to be received by the insurance buyer shall be calculated based on the ratio of the property value to the technical reserves.

Article 28. Transfer of insurance contracts      

1. The insurance buyer may transfer the insurance contract. For a life insurance contract, the transfer must be consented in writing by the insured or his/her at-law representative.

2. The transferee of the insurance contract must have insurable interests and may take over the rights and obligations of the transferor.

3. The transfer of the insurance contract takes effect only when it is notified by the insurance buyer to and consented in writing by the insurance enterprise or foreign non-life insurance enterprise’s branch, unless it is conducted according to international practices or as agreed upon in the contract.

Article 29. Liability in case of reinsurance

1. Insurance enterprises and foreign non-life insurance enterprises’ branches shall take the sole responsibility to insurance buyers under insurance contracts, including also cases of reinsurance of the insured liabilities. Insurance enterprises and foreign non-life insurance enterprises’ branches may not refuse or delay the performance of their liabilities toward insurance buyers even in case enterprises or organizations assuming reinsurance fail to perform the liability to make reinsurance payments for the liabilities they have assumed.

2. Enterprises or organizations assuming reinsurance may not request insurance buyers to pay premiums directly to them, unless otherwise agreed upon in insurance contracts.

3. Insurance buyers may not request enterprises or organizations assuming reinsurance to pay indemnity or make insurance payouts to them, unless otherwise agreed upon in insurance contracts.

Article 30. Time limit for submission of dossiers of claims for indemnities or insurance payouts

1. The time limit for submission of a dossier of claim for indemnity or insurance payout under an insurance contract is 1 year from the date of occurrence of the insured event. The period during which a force majeure event or an external obstacle occurs shall not be counted into the time limit for dossier submission.

2. In case the insured or the beneficiary can prove that it/he/she does not know about the time of occurrence of the insured event, the time limit specified in Clause 1 of this Article shall be counted from the date the insured or the beneficiary knows about the occurrence of the insured event.

3. In case a third party requests the insurance buyer to pay the indemnity for damage falling within the insurance liability as agreed upon in the insurance contract, the time limit specified in Clause 1 of this Article shall be counted from the date the third party makes the request.

Article 31. Time limit for payment of indemnity and making of insurance payout

1. When the insured event occurs, the concerned insurance enterprise or foreign non-life insurance enterprise’s branch shall pay the indemnity or make insurance payout within the time limit agreed upon in the insurance contract. In case of unavailability of agreement on such time limit, the insurance enterprise or foreign non-life insurance enterprise’s branch shall pay the indemnity or make insurance payout within 15 days after receiving a complete and valid dossier of claim for indemnity or insurance payout.

2. In case the insurance enterprise or foreign non-life insurance enterprise’s branch delays payment of the indemnity or the making of insurance payout as provided in Clause 1 of this Article, it shall pay an interest on the late-paid amount for the delay period. The interest shall be determined as agreed upon by the parties in accordance with the Civil Code.

Article 32. Methods of dispute settlement

Insurance contract-related disputes shall be settled through negotiation between the involved parties. If the negotiation fails, disputes shall be settled through conciliation or arbitration or court as agreed upon in insurance contracts and under relevant regulations.

Section 2

LIFE INSURANCE CONTRACTS, HEALTH INSURANCE CONTRACTS

Article 33. Insurance objects of life insurance contracts and health insurance contracts

1. The insurance object of life insurance contracts is human lifespan or life.

2. The insurance object of health insurance contracts is human health.

Article 34. Insurable interests of life insurance contracts and health insurance contracts

1. Insurance buyers have insurable interests toward:

a/ Themselves;

b/ Their spouses, parents and children;

c/ Their blood siblings or other people who foster or nurture them;

d/ People with financial interests or labor relationships with them;

dd/ The insured who agree in writing to permit the insurance buyers to purchase health insurance for the former.

2. At the time of entry into insurance contracts, insurance buyers must have insurable interests.

Article 35. Time limit for consideration of participation in insurance

For an insurance contract of a term of more than 1 year, within 21 days after receiving the insurance contract, the insurance buyer may refuse to continue participating in insurance. In case the insurance buyer refuses to continue participating in insurance, the insurance contract shall become null and void and the insurance buyer may have the paid premium refunded after subtracting reasonable expenses (if any) as agreed upon in the insurance contract; the insurance enterprise is not required to pay indemnities and make insurance payouts when the insured event occurs.

Article 36. Provisional insurance in life insurance

Insurance enterprises shall provide provisional insurance to insurance buyers after receiving insurance requests and temporarily calculated premiums from insurance buyers. Provisional insurance period, sums and conditions shall be agreed upon by insurance enterprises and insurance buyers. Provisional insurance will be terminated after insurance enterprises accept or refuse providing insurance or in other cases as agreed upon.

Article 37. Payment of life insurance premiums

1. Insurance buyers may pay life insurance premiums in lump sum or in installments within time limits and by methods agreed upon in insurance contracts.

2. In case a premium is paid in installments and the insurance buyer has paid one installment or several installments of premiums but is no longer able to pay subsequent installments of premiums, the premium payment time limit may be extended for 60 days.

3. The parties may agree to restore the effect of insurance contracts which have been unilaterally terminated under Clause 1, Article 26 of this Law within 2 years from the date of termination and the insurance buyer has paid the outstanding premium amount.

4. In case the insurance buyer fails to pay or fully pay the premium, the insurance enterprise may not deduct the premium from the cash surrender value of the insurance contract without consent of the insurance buyer and may not initiate a lawsuit to claim payment of the premium by the insurance buyer. This provision is not applicable to group insurance.

Article 38. Being not entitled to demand refund by the third party

In case the insured dies or gets injury or sickness directly or indirectly caused by a third party’s acts, the insurance enterprise or foreign non-life insurance enterprise’s branch shall still be obliged to pay indemnities and make insurance payouts as agreed upon in the insurance contract but has no right to demand the third party refund the amount already paid by the insurance enterprise or foreign non-life insurance enterprise’s branch to the beneficiary. The third party shall still indemnify the insured in accordance with law.

Article 39. Entry into life insurance contracts or health insurance contracts in case of other persons’ death

1. When insurance buyers enter into life insurance contracts or health insurance contracts in case of other persons’ death, they shall get the latter’s written consent, clearly stating the sums insured and beneficiaries thereof.

2. It is not allowed to enter into life insurance contracts or health insurance contracts in case of death of:

a/ Minors, unless it is agreed in writing by their parents or guardians;

b/ Persons who have lost their civil act capacity;

c/ Persons who can hardly cognize and control their acts;

d/ Persons who have their civil act capacity restricted.

Article 40. Cases not requiring payment of indemnities and making of insurance payouts

1. An insurance enterprise or a foreign non-life insurance enterprise’s branch is not required to pay indemnity and make insurance payout in the following cases:

a/ The insured dies of suicide within 2 years counting from the date the first premium amount is paid or from the date the effect of the insurance contract is restored;

b/ The insured dies due to an intentional fault of the insurance buyer or intentional fault of the beneficiary, except the case specified in Clause 2 of this Article;

c/ The insured suffers permanent disability due to his/her own intentional fault or intentional fault of the insurance buyer or beneficiary, except the case specified in Clause 2 of this Article;

d/ The insured dies due to the execution of a death sentence;

dd/ Other cases as agreed upon in the insurance contract.

2. In case of more than one beneficiary, if one beneficiary or several beneficiaries intentionally cause(s) death or permanent disability to the insured, the insurance enterprise or foreign non-life insurance enterprise’s branch shall still pay indemnity and make insurance payout to other beneficiaries as agreed upon in the insurance contract.

3. For the cases specified in Clause 1 of this Article, the insurance enterprise or foreign non-life insurance enterprise’s branch shall return to the insurance buyer the cash surrender value of the insurance contract or the whole paid premium amount after subtracting reasonable expenses (if any) as agreed upon in the insurance contract, except the case specified in Clause 2 of this Article. If the insurance buyer dies, the returned amount shall be handled in accordance with the law on inheritance.

Article 41. Appointment and change of beneficiaries

1. Insurance buyers have the right to appoint beneficiaries, except group insurance contracts. If not concurrently being the insured, the insurance buyer shall obtain the written consent of the insured when appointing a beneficiary. In case the insured is a minor or a person who has lost his/her civil act capacity or can hardly cognize or control his/her acts or has his/her civil act capacity restricted, the appointment of beneficiaries must be consented to by his/her at-law representative.

2. In case of more than one beneficiary, persons who have the right to appoint beneficiaries in accordance with this Law may identify the sequence or proportions of benefits of the beneficiaries. In case it is impossible to identify the sequence or proportions of benefits, all beneficiaries will be entitled to benefits in equal proportions.

3. Insurance buyers may change beneficiaries provided they have to obtain the written consent of the insured and shall notify such in writing to insurance enterprises and foreign non-life insurance enterprises’ branches. In case the insured is a minor or a person who has lost his/her civil act capacity or can hardly cognize or control his/her acts or has his/her civil act capacity restricted, the change of a beneficiary must be consented to by his/her at-law representative. Insurance enterprises and foreign non-life insurance enterprises’ branches shall certify the change in insurance contracts or other documents enclosed with insurance contracts after being notified by insurance buyers.

Article 42. Group insurance contracts

1. Group insurance contract means an agreement between an insurance buyer and an insurance enterprise or a foreign non-life insurance enterprise’s branch to provide insurance for the insured of a group of persons participating in insurance under the same insurance contract.

2. Groups of persons entering into insurance contracts must be those already formed not for the purpose of participation in insurance.

3. Insurance buyers and the insured may agree to jointly pay premiums.

4. The insured may appoint beneficiaries in case of the former’s death.

5. An insurance buyer and an insurance enterprise or a foreign non-life insurance enterprise’s branch may modify or supplement a group insurance contract in the following cases:

a/ At least one insured person is no longer a member of the group;

b/ The premium calculated for each insured person is not paid as agreed upon in the insurance contract;

c/ Other cases as agreed upon in the insurance contract.

6. In addition to the contents specified in Article 17 of this Law, a group insurance contract must have the following contents:

a/ Conditions on the insured for participation in insurance;

b/ Conditions and procedures for transformation of the group insurance contract into individual insurance contract(s).

Section 3

PROPERTY INSURANCE CONTRACTS, DAMAGE INSURANCE CONTRACTS

Article 43. Insurance objects of property insurance contracts and damage insurance contracts

1. The insurance object of property insurance contracts is property as specified in the Civil Code.

2. The insurance object of damage insurance contracts is any economic interest or contract performance liability or law-provided liability that the insured have to bear when damage is caused.

Article 44. Insurable interests of property insurance contracts and damage insurance contracts

1. For property insurance contracts, insurance buyers will have insurable interests when having ownership rights; other rights to property; or possession and use rights of entities other than property owners.

2. For damage insurance contracts, insurance buyers will have insurable interests when having financial interests; financial obligations and responsibilities; or suffer economic damage caused to the insurance objects.

3. At the time of occurrence of loss, insurance buyers or the insured must have insurable interests.

Article 45. Sums insured

Sum insured means an amount agreed upon by an insurance buyer and an insurance enterprise or a foreign non-life insurance enterprise’s branch in an insurance contract to provide insurance for property and damage on the basis of request of the insurance buyer in accordance with this Law.

Article 46. Notification upon the occurrence of insured events

1. An insurance buyer shall notify an insurance enterprise or a foreign non-life insurance enterprise’s branch as soon as it/he/she knows about the occurrence of the insured event within the time limit agreed upon in the insurance contract. In case the insurance buyer fails to perform or delays performing this obligation, the insurance enterprise or foreign non-life insurance enterprise’s branch may reduce the indemnity amount corresponding to damage suffered by the insurance enterprise or foreign non-life insurance enterprise’s branch, except the case of a force majeure event or an external obstacle.

2. Insurance enterprises and foreign non-life insurance enterprises’ branches may not apply the provisions of Clause 1 of this Article if insurance contracts do not contain an agreement on responsibilities of insurance buyers and penalties for failure to perform or delayed performance of the obligation to notify the insured events.

Article 47. Over-insurance contracts

1. Over-insurance contract means a contract in which the sum insured is higher than the market price of the insured property at the time of entry into the contract. Insurance enterprises or foreign non-life insurance enterprises’ branches and insurance buyers may not intentionally enter into over-insurance contracts.

2. In case an over-insurance contract is entered into due to an unintentional fault of the insurance buyer:

a/ If the insured event has not yet occurred, the insurance enterprise or foreign non-life insurance enterprise’s branch shall refund to the insurance buyer the paid premium amount corresponding to the sum insured exceeding the market price of the insured property at the time of entry into the contract after subtracting reasonable expenses (if any) as agreed upon in the contract;

b/ If the insured event occurs, the insurance enterprise or foreign non-life insurance enterprise’s branch shall bear only the responsibility to pay indemnity for damage corresponding to the market price of the insured property at the time of damage occurrence and shall refund to the insurance buyer the paid premium amount corresponding to the sum insured exceeding the market price of the insured property at the time of entry into the contract after subtracting reasonable expenses (if any) as agreed upon in the contract;

Article 48. Under-insurance contracts

1. Under-insurance contract means a contract in which the sum insured is lower that the market price of the insured property at the time of entry into the contract.

2. In case an under-insurance contract is entered into, the insurance enterprise or foreign non-life insurance enterprise’s branch shall bear only the responsibility to pay indemnity according to the proportion of the sum insured and the market price of the insured property at the time of entry into the contract or as agreed upon in the contract.

Article 49. Double insurance contracts

1. Double insurance contract means a case in which there are two or more insurance contracts to provide insurance for the same insurance scope and object, with the same insurance period and for the same insured event, with the total sum insured exceeding the market price of the insured property at the time of entry into the contract.

2. In case the parties enter into a double insurance contract, when the insured event occurs, the indemnity amount of each insurance contract shall be calculated according to the proportion of the agreed sum insured to the total sum insured of all contracts entered into by the insurance buyer. The total indemnity amount of insurance contracts must not exceed the value of actual damage caused to the insured property.

Article 50. Damage due to fair wear and tear or inherent nature of property

Insurance enterprises and foreign non-life insurance enterprises’ branches are not required to bear the indemnification responsibility in case the insured property is damaged due to fair wear and tear or inherent nature of property, unless otherwise agreed upon in insurance contracts.

Article 51. Bases for indemnity

1. Indemnity amounts payable by insurance enterprises or foreign non-life insurance enterprises’ branches to the insured shall be determined on the basis of market prices of insured property at the time when and the place where the damage is caused and actual damage level, unless otherwise agreed upon in insurance contracts. Expenses used for determining market prices and damage levels shall be borne by insurance enterprises or foreign non-life insurance enterprises’ branches.

2. Indemnity amounts to be paid by insurance enterprises or foreign non-life insurance enterprises’ branches to the insured must not exceed sums insured, unless otherwise agreed upon in insurance contracts.

3. In addition to indemnity amounts, insurance enterprises or foreign non-life insurance enterprises’ branches shall also pay to the insured necessary and reasonable expenses as agreed upon in insurance contracts in order to prevent and limit losses and cover arising expenses incurred by insurance buyers or the insured to follow instructions of insurance enterprises or foreign non-life insurance enterprises’ branches.

Article 52. Forms of indemnity

1. Insurance buyers and insurance enterprises or foreign non-life insurance enterprises’ branches may agree on one of the following forms of indemnity:

a/ Repairing damaged property;

b/ Replacing damaged property with other property;

c/ Paying indemnity.

2. In case insurance enterprises or foreign non-life insurance enterprises’ branches and insurance buyers cannot reach agreement on forms of indemnity, indemnity shall be paid in cash.

3. In case indemnity is paid under Point b or c, Clause 1 of this Article, insurance enterprises or foreign non-life insurance enterprises’ branches may recover damaged property after they are replaced or fully indemnified at market prices.

Article 53. Loss assessment

1. Upon the occurrence of an insured event, an insurance enterprise or a foreign non-life insurance enterprise’s branch or a person authorized by the former shall carry out loss assessment in order to identify the cause and level of the loss. Expenses for loss assessment shall be paid by the insurance enterprise or foreign non-life insurance enterprise’s branch.

2. In case the parties cannot reach agreement on the cause and level of the loss, they may agree to hire independent assessors, unless otherwise agreed upon in insurance contracts. In case the parties cannot reach agreement on hiring of independent assessors, one of them may request a competent court or an arbitration to invite independent assessors. Conclusions made by independent assessors are binding on all parties.

Article 54. Transfer of the right of claim for refund 

1. Upon the occurrence of an insured event, in case a third party is at fault in causing damage to the insured and therefore has the responsibility to indemnify:

a/ After the insurance enterprise or foreign non-life insurance enterprise’s branch has paid the indemnity, the insured shall transfer to the former the right to request the third party to refund the paid indemnity amount;

b/ The insurance enterprise or foreign non-life insurance enterprise’s branch may deduct the indemnity amount depending on the extent of the fault of the insured if the insured refuses to transfer the right to request the third party to make refund.

2. When an insurance enterprise or a foreign non-life insurance enterprise’s branch exercises the right to request a third party to make refund, the insured shall provide the insurance enterprise or foreign non-life insurance enterprise’s branch with necessary documents and relevant information as agreed upon in the insurance contract.

3. Insurance enterprises and foreign non-life insurance enterprises’ branches may not request parents, spouses and children of the insured to refund the amounts they have paid to the insured, unless these persons intentionally cause the loss.

Article 55. Regulations on safety

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

2. Insurance enterprises and foreign non-life insurance enterprises’ branches may inspect conditions for ensuring safety for insurance objects or recommend or request the insured to apply measures to prevent and limit risks.

3. In case the insured fail to take measures to ensure safety for insurance objects, insurance enterprises and foreign non-life insurance enterprises’ branches 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 and foreign non-life insurance enterprises’ branches may increase premiums or unilaterally terminate insurance contracts.

Article 56. Not being entitled to abandon insured property

In case of losses, the insured may not abandon the insured property and shall apply necessary measures within their capacity to prevent or mitigate the losses, unless otherwise provided for by law or agreed upon by the parties.

Section 4

LIABILITY INSURANCE CONTRACTS

Article 57. Insurance object of liability insurance contracts

The insurance object of liability insurance contracts is civil liability of the insured toward the third party as provided by law.

Article 58. Responsibility of insurance enterprises and foreign non-life insurance enterprises’ branches

1. Responsibility of an insurance enterprise or a foreign non-life insurance enterprise’s branch will arise if a third party requests the insured to pay indemnity for damage caused to the third party in the insurance period.

2. Third parties do not have the right to directly request insurance enterprises and foreign non-life insurance enterprises’ branches to pay indemnities, unless otherwise provided for by law.

Article 59. Limit of insured liability

1. Limit of insured liability means a money amount payable by an insurance enterprise or a foreign non-life insurance enterprise’s branch to the insured as agreed upon in the insurance contract.

2. Within the limit of insured liability, an insurance enterprise or a foreign non-life insurance enterprise’s branch shall pay to the insured the money amounts payable by the insured to third parties as indemnities in accordance with law.

3. In addition to paying indemnities under Clause 2 of this Article, insurance enterprises and foreign non-life insurance enterprises’ branches shall also pay expenses related to the settlement of disputes over the liability toward third parties and interests payable to third parties as the insured defer the payment of indemnities under instructions of the insurance enterprises and foreign non-life insurance enterprises’ branches.

4. Total indemnities of insurance enterprises and foreign non-life insurance enterprises’ branches specified in Clauses 2 and 3 of this Article must not exceed the limit of insured liability, unless otherwise agreed upon in insurance contracts.

5. In case the insured has to pay a guarantee or collateral amount to ensure that property is not kept in custody or to avoid initiation of lawsuits at court, insurance enterprises and foreign non-life insurance enterprises’ branches shall, at the request of the insured and as agreed upon in insurance contracts, shall provide guarantee or collateral within the limit of insured liability.

Article 60. Right to represent the insured 

Insurance enterprises and foreign non-life insurance enterprises’ branches may represent the insured in conducting negotiations with third parties on levels of indemnity for damage, unless otherwise agreed upon in insurance contracts.

Article 61. Method of indemnification 

At the insured’s request, insurance enterprises and foreign non-life insurance enterprises’ branches may pay indemnities directly to the insured or damage-suffering third parties. 

Chapter III

INSURANCE ENTERPRISES, REINSURANCE ENTERPRISES, VIETNAM-BASED FOREIGN BRANCHES

Section 1

ESTABLISHMENT AND OPERATION LICENSES

Article 62. Forms of operation organization of insurance enterprises and reinsurance enterprises

1. Joint-stock companies.

2. Limited liability companies.

Article 63. Operations of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches

1. Operations of insurance enterprises and foreign non-life insurance enterprises’ branches include:

a/ Insurance business, reinsurance business and retrocession;

b/ Management of funds and investment of capital earned from insurance business activities;

c/ Provision of insurance auxiliary services;

d/ Other operations directly related to insurance business.

2. Operations of reinsurance enterprises and foreign reinsurance enterprises’ branches include:

a/ Reinsurance business; retrocession;

b/ Management of funds and investment of capital earned from reinsurance business activities;

c/ Other operations directly related to reinsurance business.

3. Insurance enterprises and foreign non-life insurance enterprises’ branches may conduct business in only one type of insurance specified in Clause 1, Article 7 of this Law, except the following cases:

a/ Life insurance enterprises providing health insurance;

b/ Non-life insurance enterprises and foreign non-life insurance enterprises’ branches trading in products pertaining to the type of health insurance with a term of up to 1 year and insurance products for death risks with a term of up to 1 year;

c/ Health insurance enterprises trading in insurance products for death risks with a term of up to 1 year.

Article 64. General conditions for grant of establishment and operation licenses of insurance enterprises and reinsurance enterprises

1. Conditions on shareholders and capital contributors:

a/ Being organizations or individuals that have the right to establish and manage enterprises in Vietnam in accordance with the Law on Enterprises;

b/ Being organizations that have the legal person status and are lawfully operating. In case an organization contributes 10% or more of the charter capital, it must have conducted business operations at a profit for the last 3 consecutive fiscal years by the time of submission of the license application dossier and satisfy financial conditions specified by the Government;

c/ For insurance enterprises or reinsurance enterprises that have been granted establishment and operation licenses in Vietnam and wish to contribute capital to establish new insurance enterprises or reinsurance enterprises, they must have conducted business operations at a profit for the last 3 consecutive fiscal years by the time of submission of license application dossiers and satisfy the condition on capital adequacy ratio specified by this Law.

2. Conditions on capital:

a/ Making a contribution to the charter capital in Vietnam dong which is not lower than the minimum level specified by the Government;

b/ Refraining from using loans and investment entrustment capital amounts of other organizations and individuals to contribute capital.

3. Conditions on personnel: The expected Chairperson of the Board of Directors or Chairperson of the Members’ Council, Director/Director General, at-law representative and appointed actuary must satisfy the conditions and criteria on management capacity, experience and professional qualifications specified in Article 81 of this Law.

4. Being organized in one of the operation forms specified in this Law and having a draft charter compliant with the Law on Enterprises.

Article 65. Conditions on capital contributors of insurance enterprises and reinsurance enterprises as limited liability companies

A capital contributor of an insurance enterprise or a reinsurance enterprise as a limited liability company must be an organization satisfying the general conditions specified in Article 64 of this Law and the following conditions:

1. Conditions on organizations established in accordance with foreign laws:

a/ Being an insurance enterprise, a reinsurance enterprise or a foreign finance and insurance group;

b/ Having been certified by a foreign authority that the insurance enterprise, reinsurance enterprise or foreign finance and insurance group has committed no serious violations of the law on insurance business of the country where the enterprise/group is headquartered for the last 3 consecutive years by the time of submission of the license application dossier;

c/ The field in which the insurance enterprise, reinsurance enterprise or foreign finance and insurance group applies for a license to operate in Vietnam is that in which such enterprise/group has directly operated or a subsidiary of such enterprise/group has operated for the last 7 consecutive years;

d/ Having the total asset value not lower than USD 2 billion in the year preceding the year of submission of the license application dossier;

dd/ Having made commitments to providing financial, technological, corporate governance, risk management, administration and operation support to the insurance enterprise or reinsurance enterprise expected to be established in Vietnam; ensuring that such insurance enterprise or reinsurance enterprise complies with this Law’s provisions on assurance of financial prudence and risk management;

e/ Insurance enterprises, reinsurance enterprises and foreign finance and insurance groups that satisfy the conditions specified at Points b, c, d and dd of this Clause may authorize their subsidiaries specialized in offshore investment to establish insurance enterprises or reinsurance enterprises in Vietnam. Subsidiaries specialized in offshore investment must satisfy the condition specified at Point d of this Clause;

2. Conditions on economic organizations established in accordance with Vietnam’s law: Having the total asset value not lower than VND 2 trillion in the year preceding the year of submission of the license application dossier;

3. Based on the provisions of Point d, Clause 1, and Clause 2, of this Article, the Government shall specify the minimum total asset value for each period.

Article 66. Conditions on structure of shareholders contributing capital to establish insurance enterprises or reinsurance enterprises as joint-stock companies

The establishment of an insurance establishment or a reinsurance enterprise as a joint-stock company must satisfy the general conditions specified in Article 64 of this Law and the following conditions:

1. Having at least 2 institutional shareholders, each of them must satisfy the following conditions:

a/ Contributing 10% or more of the charter capital of the insurance enterprise or reinsurance enterprise;

b/ The conditions specified in Article 65 of this Law;

2. An individual shareholder may not contribute more than 10% of the charter capital of an insurance enterprise or a reinsurance enterprise. 

Article 67. Conditions for granting establishment and operation licenses of Vietnam-based foreign branches

1. A foreign non-life insurance enterprise or foreign reinsurance enterprise, when wishing to establish a branch in Vietnam, must satisfy the following conditions:

a/ The enterprise’s head office is located in a country which has signed with Vietnam a treaty containing agreements on the establishment of branches in Vietnam; the foreign insurance authority of the country where the enterprise’s head office is located has signed an international agreement with the Ministry of Finance of Vietnam on management and supervision of operations of branches;

b/ The enterprise is permitted by the foreign insurance authority of the country where the enterprise’s head office is located to establish a branch in Vietnam to operate within the scope of the insurance operations in which the enterprise is permitted to do business;

c/ The enterprise has at least 7 years’ experience in the field in which it plans to apply for a license for operation in Vietnam;

d/ The enterprise has a total asset at least satisfying the conditions specified at Point d, Clause 1, and Clause 3, Article 65 of this Law;

dd/ The enterprise has operated at a profit in the last 3 consecutive fiscal years up to the time of submission of the application dossier and satisfies financial conditions as prescribed by the Government;

e/ The enterprise commits to guaranteeing and taking responsibility for all obligations and commitments of its branch in Vietnam.

2. The branch of a foreign non-life insurance enterprise or foreign reinsurance enterprise that is expected to be established and operate in Vietnam must satisfy the following conditions:

a/ The branch is allocated a capital amount in Vietnam dong which is not lower than the minimum level set by the Government;

b/ Funds for establishing the branch come from lawful sources without using borrowed capital or investment trust capital in any form;

c/ The expected director and appointed actuary of the branch meet the conditions and criteria on management capacity, experience and professional qualifications specified in Article 81 of this Law.

3. After being granted an establishment and operation license, Vietnam-based foreign branches may operate as insurance enterprises or reinsurance enterprises established and operating in Vietnam in accordance with this Law.

Article 68. Foreign holding rates

Foreign investors are entitled to own shares or contributed capital portions up to 100% of the charter capital of insurance enterprises and reinsurance enterprises.

Article 69. 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, for insurance enterprises or reinsurance enterprises; or draft regulation on organization and operation, for Vietnam-based foreign branches;

3. The operational plan for the first 5 years, clearly stating the insurance operations to be deployed, risk management model, method of setting aside technical reserves, reinsurance program, capital investment, and solvency of the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch;

4. Curriculum vitae, criminal records certificate, and copies of diplomas and certificates evidencing capacity and professional qualifications of the persons expected to be appointed as Chairperson of the Board of Directors/Members’ Council, Director/Director General, at-law representative, and appointed actuary;

5. Capital contribution levels and methods of capital contribution, the list of institutional and individual founders or members and shareholders expected to contribute 10% or more of the charter capital and documents proving these organizations’ and individuals’ satisfaction of the conditions corresponding to each type of the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch as specified in Articles 64, 65, 66 and 67 of this Law;

6. A list of beneficial owners of the insurance enterprise or reinsurance enterprise. The Government shall prescribe criteria for identifying beneficial owners of insurance enterprises and reinsurance enterprises.

Article 70. Time limit for grant of establishment and operation licenses

1. Within 60 days after receiving a complete and valid dossier, the Ministry of Finance shall grant or refuse to grant an establishment and operation license; in case of refusal to grant a license, it shall make a written reply, clearly stating the reason.

2. In case of agreeing to grant an establishment and operation license, the Ministry of Finance shall concurrently issue a written in-principle approval of the persons expected to be appointed as the Chairperson of the Board of Directors/Members’ Council, Director/Director General, and appointed actuary.

Article 71. Competence to grant, re-grant, modify, supplement and revoke establishment and operation licenses, and to suspend operations

1. Establishment and operation licenses concurrently serve as enterprise registration certificates.

2. The Ministry of Finance has the competence to grant, re-grant, modify, supplement and revoke establishment and operation licenses, and suspend part or the whole of the operations of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches in accordance with this Law and other relevant laws.

3. After granting, modifying, supplementing or revoking an establishment and operation license, the Ministry of Finance shall notify in writing thereof to the provincial-level business registration agency of the locality where the concerned insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch locates its head office for the latter to update information to the National Information System on Business Registration.

4. The Government shall provide in detail dossiers, order and procedures for grant, re-grant, modification, supplementation and revocation of establishment and operation licenses, and suspension of part or the whole of operations of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

Article 72. Announcement of contents of establishment and operation licenses

1. The Ministry of Finance shall announce on its portal the contents of establishment and operation licenses of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches within 30 days after granting the licenses.

2. At least 30 days before the date of official operation, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch that has been granted an establishment and operation license shall announce the contents of its license and expected date of official operation on 3 consecutive issues of a printed newspaper or an electronic newspaper of Vietnam.

Article 73. Pre-official operation conditions

1. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch must come into official operation within 12 months from the date it is granted an establishment and operation license, unless there are force majeure events or external obstacles. In case of force majeure events or external obstacles, the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch shall report thereon in writing and obtain written approval from the Ministry of Finance of the extension of the time limit for official commencement of operation; the maximum extension period is 12 months.

2. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch must satisfy the following conditions in order to come into official operation:

a/ Converting the capital amount deposited at the blocked account into its charter capital or allocated capital;

b/ Building its organizational structure, management, internal control and internal audit apparatuses, and risk management system in conformity with its operation mode as prescribed by this Law and other relevant laws; electing or appointing an at-law representative; electing or appointing holders of titles already approved in principle by the Ministry of Finance according to Clause 2, Article 70 of this Law;

c/ Issuing internal management regulations on organization and operation, internal regulations on risk management and basic business processes in accordance with law;

d/ Making a full deposit at a commercial bank operating in Vietnam as prescribed by this Law;

dd/ Having a head office, physical foundations and technical facilities, and a technological system suitable to the insurance business processes;

e/ Announcing the contents of its establishment and operation license under Clause 2, Article 72 of this Law.

3. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall notify the Ministry of Finance of their satisfaction of the conditions specified in Clause 2 of this Article at least 15 days before the date of official operation. The Ministry of Finance has the right to suspend the official operation of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches if the latter do not satisfy the conditions specified in Clause 2 of this Article.

4. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may not conduct insurance business activities before the date of official operation.

Article 74. Changes subject to approval or notification

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must obtain written approval from the Ministry of Finance before changing one of the following contents:

a/ Name and location of the head office;

b/ Level of charter capital; allocated capital;

c/ Contents, scope and duration of operation;

d/ Transfer of shares or contributed capital portions resulting in a shareholder’s or capital-contributing member’s holding rate increasing to 10% or more of the charter capital or decreasing to under 10% of the charter capital;

dd/ Chairperson of the Board of Directors/Members’ Council, Director/Director General, or appointed actuary;

e/ Division, separation, merger, consolidation, dissolution or transformation of enterprise;

g/ Offshore investment, including opening of branches, representative offices and other forms of commercial presence in foreign countries.

2. Within 10 days after approving the changes mentioned in Clause 1 of this Article, the Ministry of Finance shall announce such changes on its portal.

3. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall notify the Ministry of Finance in writing of the following changes within 15 days after such changes occur:

a/ Changing the operation charter, for insurance enterprises and reinsurance enterprises, or the organization and operation regulation, for Vietnam-based foreign branches;

b/ Opening, terminating or relocating branches or representative offices, for insurance enterprises and reinsurance enterprises;

c/ Opening, terminating or changing business locations;

d/ Changing beneficial owners, for insurance enterprises and reinsurance enterprises.

4. The Government shall provide in detail the conditions, dossiers, order and procedures for approval of the changes specified in Clause 1 and dossiers, order and procedures for recording of the changes specified at Point b, Clause 3 of this Article.

Article 75. Revocation of establishment and operation licenses

1. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall have its establishment and operation license revoked in one of the following cases:

a/ The dossier of application for the establishment and operation license contains fraudulent information in order to be qualified for a license;

b/ The insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch fails to commence official operation though the time limit specified in Clause 1, Article 73 of this Law has expired;

c/ The insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch is divided, merged or consolidated, dissolves or terminates its operation;

d/  The insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch operates at variance with its establishment and operation license;

dd/ There is a court ruling declaring the insurance enterprise or reinsurance enterprise bankrupt;

e/ The foreign non-life insurance enterprise or foreign reinsurance enterprises that has established the foreign branch in Vietnam goes bankrupt or has its license revoked.

2. In case their establishment and operation licenses are revoked under Point a, c, d or e, Clause 1 of this Article, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall immediately stop the conclusion of new insurance contracts and reinsurance contracts; insurance enterprises and branches of foreign non-life insurance enterprises shall transfer their insurance contract portfolios; the transfer of insurance contract portfolios does not apply to insurance contracts that become null and void under this Law.

3. Decisions on revocation of establishment and operation licenses of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall be announced by the Ministry of Finance on its portal.

Article 76. Vietnam-based foreign representative offices

1. Foreign insurance enterprises, foreign reinsurance enterprises, foreign finance and insurance groups and foreign insurance brokerage enterprises may set up representative offices in Vietnam. Vietnam-based foreign representative offices are dependent units of foreign insurance enterprises, foreign reinsurance enterprises, foreign finance and insurance groups, or foreign insurance brokerage enterprises and may not carry out insurance business activities in Vietnam.

2. Vietnam-based foreign representative offices may carry out the following activities:

a/ Acting as a liaison office;

b/ Conducting market research;

c/ Promoting the formulation of investment projects of foreign insurance enterprises, foreign reinsurance enterprises, foreign finance and insurance groups  and foreign insurance brokerage enterprises in Vietnam;

d/ Promoting and monitoring the implementation of projects receiving donations of foreign insurance enterprises, foreign reinsurance enterprises, foreign finance and insurance groups and foreign insurance brokerage enterprises in Vietnam;

d/ Other activities in conformity with Vietnam’s law.

3. The duration of operation of a Vietnam-based foreign representative office must not exceed 5 years and may be extended.

4. The reporting on operation, notification of changes and disclosure of information of Vietnam-based foreign representative offices must comply with regulations of the Minister of Finance.

Article 77. Grant, re-grant, modification, supplementation, extension, invalidation and revocation of licenses for setting up foreign representative offices in Vietnam

1. Foreign insurance enterprises, foreign reinsurance enterprises, foreign finance and insurance groups, and foreign insurance brokerage enterprises, if wishing to set up foreign representative offices in Vietnam, must satisfy the following conditions:

a/ Having been operating for at least the last 5 years;

b/ Having been permitted by foreign insurance authorities of the countries where their head offices are located to set up representative offices in Vietnam.

2. The Government shall provide in detail the conditions, dossiers, order and procedures for grant, re-grant, modification, supplementation, extension, termination and revocation of licenses to set up foreign representative offices in Vietnam.

3. The Ministry of Finance has the competence to grant, re-grant, modify, supplement, extend and revoke licenses for setting up foreign representative offices in Vietnam and terminate operations of Vietnam-based foreign representative offices.

Section 2

OPERATION ORGANIZATION

Article 78. Operation organization of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches

1. The domestic operation organization of an insurance enterprise or a reinsurance enterprise includes its head office, branch(es), representative office(s) and business location(s).

2. The overseas operation organization of an insurance enterprise or a reinsurance enterprise includes its branch(es), representative office(s) or other forms of commercial presence as prescribed by law.

3. The operation organization a Vietnam-based foreign branch includes its head office and business location(s).

Article 79. Organizational and managerial structure of insurance enterprises and reinsurance enterprises

1. Insurance enterprises and reinsurance enterprises established in the form of a joint-stock company may choose the organizational and managerial structure according to either of the following models:

a/ General Meeting of Shareholders, Board of Directors, Supervisory Board, and Director/Director General. The Supervisory Board consists of between 3 supervisors and 5 supervisors as prescribed in the company’s Charter;

b/ General Meeting of Shareholders, Board of Directors, and Director/Director General, of which the Board of Directors must have at least 20% of its members being independent members and have an attached Audit Committee. The organizational structure, functions and tasks of the Audit Committee shall be specified in the company’s Charter or the Operation Regulation of the Audit Committee issued by the Board of Directors.

2. An insurance enterprise or a reinsurance enterprise established in the form of a limited liability company shall have an organizational and managerial structure consisting of the Members’ Council and Director/Director General. Insurance enterprises and reinsurance enterprises may decide to establish a Supervisory Board in accordance with law.

Article 80. Managers and supervisors of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches

1. Managers of insurance enterprises or reinsurance enterprises include holders of the following titles:

a/ Chairperson of the Board of Directors, member of the Board of Directors or Chairperson of the Members’ Council, member of the Members’ Council;

b/ Director or Director General, Deputy Director or Deputy Director General, at-law representative;

c/ Chief accountant, branch director, head of representative office, head of professional division and holders of equivalent titles as prescribed in the company’s Charter.

2. Managers of Vietnam-based foreign branches include holders of the following titles:

a/ Director, Deputy Director;

b/ Chief accountant, head of professional division and holders of equivalent titles as prescribed in regulations on organization and operation of Vietnam-based foreign branches.

3. Supervisors at insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches who are entitled to independence in terms of professional expertise include holders of the following titles:

a/ Head of the Supervisory Board, supervisor;

b/ Head of risk management division, head of compliance control division, head of internal audit division;

c/ Appointed actuary.

4. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall maintain the titles of Director and appointed actuary or Director General and appointed actuary. In case of any change, within 75 days from the date on which the Director/Director General or appointed actuary of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch ceases to hold his/her position, the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch shall submit a valid dossier requesting the Ministry of Finance to approve the new Director/Director General or appointed actuary.

Article 81. Conditions and criteria for managers and supervisors of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches

1. General conditions and criteria:

a/ Having the right to manage enterprises in accordance with the Law on Enterprises;

b/ Having been neither sanctioned for administrative violations in the field of insurance business nor disciplined in the form of dismissal for violating internal processes in 3 consecutive years before the time of appointment; not being prosecuted by a competent body in accordance with law at the time of election or appointment.

2. Conditions and criteria for the Chairperson of the Board of Directors, Chairperson of the Members’ Council, members of the Board of Directors, and members of the Members’ Council:

a/ The general conditions and criteria specified in Clause 1 of this Article;

b/ Having a university or higher degree;

c/ Having at least 5 years’ experience in the field of insurance, finance or banking or having at least 3 years of  holding the position of manager, executive officer or supervisor at enterprises operating in the fields of insurance, finance or banking, for the Chairperson of the Board of Directors or Chairperson of the Members’ Council; or having at least 3 years’ experience in the field of insurance, finance or banking or having at least 3 years of  holding the position of manager, executive officer or supervisor at enterprises operating in the field of insurance, finance or banking, for members of the Board of Directors or members of the Members’ Council.

3. Conditions and criteria for the Director/Director General and at-law representative:

a/ The general conditions and criteria specified in Clause 1 of this Article;

b/ Having a university or higher degree in the major of insurance. Those who do not have a university or higher degree in the major of insurance must have a university or higher degree in another major and a certificate in insurance issued by an insurance training institution legally established and operating at home or abroad;

c/ Having at least 5 years’ experience in the field of insurance, finance or banking with at least 3 years of holding the position of manager or supervisor of insurance enterprises, reinsurance enterprises or foreign branches;

d/ Residing in Vietnam during the period of incumbency.

4. Conditions and criteria for managers other than those specified in Clauses 2 and 3 of this Article of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches:

a/ The general conditions and criteria specified in Clause 1 of this Article;

b/ Having a university or higher degree in the major of insurance. Those who do not have a university or higher degree on the major of insurance must have a university or higher degree in another major, and a certificate in insurance suitable to the type of insurance which the enterprise is licensed to provide, issued by  an insurance training institution legally established and operating at home or abroad;

c/ Having at least 3 years’ experience in the field of insurance, finance or banking or their expected professional field. Particularly, heads of professional divisions must have at least 3 years’ experience in the field of insurance or their expected professional field;

d/ Residing in Vietnam during the period of incumbency.

5. Supervisors of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must satisfy the general conditions and criteria specified in Clause 1 of this Article and other conditions and criteria as prescribed by the Government.

6. The Minister of Finance shall detail Point b, Clause 3 and Point b, Clause 4 of this Article, training contents, dossiers, order and procedures for sitting in exams, issuance, revocation and renewal of certificates in insurance issued by  insurance training institutions legally established and operating in the country.

Article 82. Principles of holding positions

1. The Chairperson of the Board of Directors, Chairperson of the Members’ Council, members of the Board of Directors and members of the Members’ Council of an insurance enterprise or a reinsurance enterprise may not concurrently act as members of the Board of Directors or members of the Members’ Council of another insurance enterprise or reinsurance enterprise operating in the same field of life insurance, non-life insurance, health insurance or reinsurance in Vietnam.

2. The Director/Director General of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch may not concurrently work for another insurance enterprise, reinsurance enterprise or foreign branch operating in the same field of life insurance, non-life insurance, health insurance or reinsurance in Vietnam.

3. The Director/Director General, a branch director, and the head of a representative office of an insurance enterprise or a reinsurance enterprise may concurrently act as director of only 1 branch or head of 1 representative office or head of 1 professional division of the same insurance enterprise or reinsurance enterprise. The director of a Vietnam-based foreign branch is the at-law representative and may concurrently act as head of only 1 professional division of that branch.

4. Holders of the titles of appointed actuary, head of risk management section, and head of compliance control division of an insurance enterprise, a reinsurance enterprise, or a Vietnam-based foreign branch may not concurrently hold any managerial titles in the same institution; and may not concurrently work at other insurance enterprises, reinsurance enterprises and foreign branches operating in Vietnam. Appointed actuaries shall perform their duties according to regulations of the Minister of Finance.

5. The head of the Supervisory Board and supervisors may not concurrently hold any managerial titles in the same institution. The head of the Supervisory Board may not concurrently act as supervisor or manager of another insurance enterprise or reinsurance enterprise operating in Vietnam.

6. The chief accountant and the head of the internal audit division of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch may not concurrently hold any other titles in the same institution; and may not concurrently work at other insurance enterprises, reinsurance enterprises or other foreign branches operating in Vietnam.

Article 83. Termination and suspension of the exercise of rights and the fulfillment of obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/Director General, and appointed actuary

1. The Ministry of Finance has the right to terminate or suspend the exercise of rights and the fulfillment of obligations of the Chairperson of the Board of Directors/Members’ Council, the Director/Director General, and appointed actuary of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch who violates the principles of holding positions specified in Article 82 of this Law or no longer satisfies the conditions and criteria specified in Article 81 of this Law.

2. Within 75 days from the date the Ministry of Finance issues the termination document, the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch shall submit a valid dossier requesting the Ministry of Finance to approve the new Chairperson of the Board of Directors/Members’ Council, Director/Director General or appointed actuary.

3. The person who is subject to termination or suspension under Clause 1 of this Article shall take part in handling shortcomings and violations related to his/her personal responsibility at the request of the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch.

4. The Government shall provide in detail the termination and suspension of the exercise of rights and fulfillment of obligations of the Chairperson of the Board of Directors, Chairperson of the Members’ Council, Director/Director General and appointed actuary under Clauses 1 and 2 of this Article.

Section 3

INTERNAL CONTROL, INTERNAL AUDIT, RISK MANAGEMENT

Article 84. Internal control

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall carry out internal control to meet the following requirements:

a/ Efficiency and safety in operation and in the protection, management and use of assets and resources;

b/ Honesty, reasonability, adequacy and timeliness in the financial information and management information systems;

c/ Compliance with law, regulations, processes and internal regulations.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall establish internal control standards, processes and procedures; and ensure that their managers, supervisors and employees clearly understand and strictly implement them.

3. Internal control activities of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall be subject to annual assessment by internal audit bodies.

4. The Minister of Finance shall detail this Article.

Article 85. Internal audit

1. Insurance enterprises and reinsurance enterprises shall establish internal audit divisions. Vietnam-based foreign branches may establish their internal audit divisions or use internal audit divisions of foreign non-life insurance enterprises or foreign reinsurance enterprises.

2. Annually, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall conduct internal audit according to the following contents:

a/ Conducting independent and objective review and assessment of internal control and risk management activities;

b/ Conducting independent assessment of the conformity and compliance with regulations, internal policies, procedures and processes established in the insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches;

c/ Making recommendations to correct and remedy errors, and proposing measures to improve and raise the effectiveness of systems, processes and regulations, ensuring their safe, efficient and lawful operation.

3. Internal audit results of an insurance enterprise or a reinsurance enterprise must be promptly reported to the Board of Directors/Members’ Council and sent to the Director/Director General of the enterprise.

Internal audit results of a Vietnam-based foreign branch must be promptly reported to the foreign non-life insurance enterprise or foreign reinsurance enterprise and sent to the Director of the Vietnam-based foreign branch.

4. The Minister of Finance shall detail this Article.

Article 86. Risk management

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall establish a risk management system in order to effectively identify, measure, evaluate, report and control risks arising from business activities.

2. Risk management of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch must satisfy the following requirements:

a/ Being able to identify and quantify risks in conformity with the nature, scope and complexity of risks arising from business activities, and impacts on capital, operational safety and financial safety;

b/ Clearly defining the roles and responsibilities of each division and individual in risk management activities and risk management structure;

c/ Having a clear and transparent risk management policy, clearly identifying the types of material risks and related risks arising from business activities, risk appetite and management method for each type of risk. The risk management policy must be approved by the Board of Directors/Members’ Council of the insurance enterprise or reinsurance enterprise or by the foreign non-life insurance enterprise/foreign reinsurance enterprise having established the foreign branch in Vietnam;

d/ Fully establishing the risk tolerance for each type of material risk and related risks and the correlation between these risks. Risk tolerances must be consistent with the risk management policy, business strategy, human resources, and information technology conditions;

dd/ Fully establishing risk management processes, including the process of monitoring, receiving and promptly responding to any risk change.

3. Annually, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall make reports on assessment of solvency and risk management, covering the assessment of the level of adequacy of risk management and current and expected solvency ratios with a time frame coinciding with business plans; overall identification of financial resources required to manage business activities within risk tolerances and business plans; stress testing and operational continuity analysis.

4. The Minister of Finance shall detail this Article.

Section 4

PROFESSIONAL OPERATIONS

Article 87. Formulation, designing, development and provision of insurance products

1. Insurance enterprises and branches of foreign non-life insurance enterprises may practice autonomy and accountability in formulating, designing and developing insurance products.

2. Insurance rules, terms and premium schedules developed by an insurance enterprise or a foreign non-life insurance enterprise’s branch must satisfy the following requirements:

a/ Complying with law and conforming with practices, ethical standards, culture and customs of Vietnam;

b/ Insurance rules and terms must be expressed in a precise, simple and easy-to-understand language with technical terms clearly defined;

c/ Clearly and transparently showing the insured benefits, insured objects, scope of insurance and insured risks, interests and obligations of the insurance buyer and the insured, responsibilities of the insurance enterprise or foreign non-life insurance enterprise’s branch, insurance liability exclusion terms, insurance payout-making methods, and provisions on dispute settlement;

d/ The premiums must be formulated on the basis of statistical data, corresponding to the insurance conditions and liabilities and ensuring solvency of the insurance enterprise or foreign non-life insurance enterprise’ branch.

3. Insurance enterprises and branches of foreign non-life insurance enterprises shall register the methods and bases for calculation of premiums of products of life insurance, health insurance and motor vehicle insurance, except insurance for civil liability of motor vehicle owners, with the Ministry of Finance and obtain the latter’s approval thereof.

4. Insurance enterprises and branches of foreign non-life insurance enterprises may proactively provide insurance products in the following forms:

a/ Directly;

b/ Through insurance agents or insurance brokers;

c/ Through bidding;

d/ Through electronic transactions;

dd/ Other forms in accordance with law.

5. The Government shall provide in detail dossiers, order and procedures for registration of methods and bases for calculation of premiums specified in Clause 3 of this Article.

6. The Minister of Finance shall provide in detail the methods and bases for calculation of premiums specified in Clause 3 of this Article and the provision of insurance products specified in Clause 4 of this Article.

Article 88. State-supported insurance products

1. The State shall encourage, support and facilitate the deployment of and participation in agro-forestry-fishery insurance products and insurance products for social security purposes through one or some of the following measures:

a/ Simplifying administrative procedures;

b/ Disseminating insurance policies;

c/ Setting up insurance risk funds;

d/ Building databases, supporting application of technologies in designing and formulation of insurance products, loss assessment, and insurance compensation;

dd/ Establishing distribution channels based on agro-forestry-fishery production value chains;

e/ Paying part of premiums from the sources of the central budget and local budgets, which shall be included in annual state budget estimates or other lawful financial sources in accordance with law;

g/ Formulating a mechanism for association, cooperation and sharing of information for management and supervision among related ministries and sectors serving association and cooperation in insurance business activities.

2. The Government shall provide in detail the measures specified in Clause 1 of this Article in conformity with development orientations and socio-economic conditions in each period.

Article 89. Reinsurance, retrocession, co-insurance, the Motor Vehicle Insurance Fund, and insurance risk funds

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may share risks with other insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches, and foreign insurance enterprises, foreign reinsurance enterprises and foreign insurance institutions in the form of reinsurance and retrocession.

Foreign insurance enterprises, foreign reinsurance enterprises and foreign reinsurance organizations wishing to assume reinsurance must achieve the ratings of international credit rating organizations and satisfy other conditions as prescribed by the Government.

2. Insurance enterprises and branches of foreign non-life insurance enterprises may provide co-insurance on the basis of jointly concluding an insurance contract with an insurance buyer, in which the insurance enterprises and foreign non-life insurance enterprises branches receive premiums and pay indemnity and make insurance payout according to the rate agreed upon in the insurance contract.

Insurance enterprises and branches of foreign non-life insurance enterprises participating in co-insurance must be those already granted establishment and operation licenses in accordance with this Law.

3. The Motor Vehicle Insurance Fund shall be formed from contributions of non-life insurance enterprises and branches of foreign non-life insurance enterprises providing compulsory insurance for civil liability of motor vehicle owners and from other lawful sources in order to provide humanitarian assistance and carry out other activities to strengthen the implementation of compulsory insurance for civil liability of motor vehicle owners. The Motor Vehicle Insurance Fund shall be managed in a centralized manner; the mechanism on management and use of the Fund must comply with the Government’s regulations.

4. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may agree to establish an insurance risk fund to disperse and share insurance for great risks, catastrophic risks or emerging risks for which the market has not yet provided or has just provided few insurance products. Agreements on establishment of insurance risk funds with the participation and support of the State must comply with the Government’s regulations; cases of establishment of funds with state budget supports must comply with the Law on the State Budget.

5. The Minister of Finance shall provide in detail reinsurance, retrocession and co-insurance.

Article 90. Outsourcing activities

1. Outsourcing means that an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch enters into an outsourcing contract with another organization or individual for the latter to perform part of the former’s processes or operations, except the following operations:

a/ Internal control;

b/ Internal audit;

c/ Risk management;

d/ Consulting, introducing, and offering for sale insurance products, arranging the conclusion of insurance contracts.

2. In case of outsourcing part of processes and operations directly related to insurance business, the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch shall still bear the ultimate and sole responsibility to the insurance buyer sand has the following obligations:

a/ Formulating a regulation on management of outsourcing activities, including regulations on the scope of activities that can be outsourced, a framework for assessing the risks involved, criteria for approving outsourcing contracts and conditions on outsourcing service providers, ensuring compliance with law. The regulation on management of outsourcing activities must be approved by the Board of Directors/Members’ Council of the insurance enterprise or reinsurance enterprise or the competent authority of the Vietnam-based foreign branch;

b/ Establishing the outsourcing process, risk management process, internal control for outsourcing activities and taking measures to ensure prevention, mitigation and timely handling of risks arising from the outsourcing, especially risks related to the lawful rights and interests of the insurance buyer and the insured;

c/ Halting, adjusting or terminating outsourcing activities if detecting that outsourcing activities adversely affect the lawful rights and interests of the insurance buyer or the insured;

d/ Having a backup plan to ensure uninterrupted business operations in case the outsourced service provider is unable to perform or fails to properly perform its responsibilities for outsourcing activities as prescribed in the outsourcing contract;

dd/ Regularly inspecting and supervising the outsourced service provider during the implementation of the outsourcing agreement in order to ensure the quality and progress of implementation as prescribed in the outsourcing contract. The outsourced service provider must perform at least 75% of the value of the outsourced jobs by itself/himself/herself; in case of hiring subcontractors to perform part of the jobs, the outsourced service provider must obtain written consent of the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch in advance and ensure that such will not change the responsibilities and obligations of the outsourced service provider;

e/ Ensuring confidentiality of customers’ data and information in accordance with law;

g/ Monitoring and conducting separate accounting for outsourcing activities.

3. An outsourcing contract must be made in writing and include the following principal contents:

a/ Scope and contents of outsourcing activities;

b/ Time and location of implementation of outsourcing activities;

c/ Rights and obligations of the insurance enterprise, reinsurance enterprise, Vietnam-based foreign branch and outsourced service provider;

d/ Standards and requirements for the quality and results of outsourcing activities;

dd/ Mechanism and responsibility for providing information and reports of the outsourced service provider to the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch in the course of performing outsourcing activities;

e/ The outsourced service provider’s plan on damage prevention and remediation and compensation in case the outsourced service provider is unable to perform or improperly performs agreements in the outsourcing contract;

g/ Mechanisms for supervising, controlling and auditing the performance of outsourcing activities by the outsourced service provider; requiring the outsourced service provider to monitor and make separate accounting of the outsourcing activities in the field of insurance from other activities and among activities outsourcing activities from different insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches;

h/ Regulations on restriction on conclusion of subcontractor contracts;

i/ Mechanism on customers’ data and information confidentiality;

k/ Dispute settlement method.

Section 5

TRANSFER OF INSURANCE CONTRACT PORTFOLIOS

Article 91. Cases of transfer of insurance contract portfolios

The transfer of the whole insurance contract portfolio of one or several of lines of  insurance and corresponding assets and liabilities among insurance enterprises and foreign non-life insurance enterprises’ branches shall be carried out in the following cases:

1. At the request of the Ministry of Finance under Point c or d, Clause 8, Article 113 of this Law;

2. Narrowing of the contents or scope of operation;

3. Division, splitting, merger, consolidation, dissolution or operation termination;

4. The cases specified at Points a, d and e, Clause 1, Article 75 of this Law.

Article 92. Conditions for transfer of insurance contract portfolios

1. Insurance enterprises and foreign non-life insurance enterprises’ branches may acquire insurance contract portfolios when meeting the following conditions:

a/ Currently conducting the lines of insurance to be acquired;

b/ Ensuring the capital adequacy ratio and solvency in accordance with this Law;

c/ Satisfying conditions for conducting insurance lines after the acquisition.

2. The transfer of an insurance contract portfolio must be accompanied by the transfer of assets corresponding to technical reserves of the whole transferred portfolio.

3. Rights and obligations under transferred insurance contracts remain unchanged till the expiration of such contracts. In case of transferring an insurance contract portfolio specified in Clause 1, Article 91 of this Law, if the value of assets is lower than the technical reserves amount of the transferred insurance contract portfolio, the insurance enterprise or foreign non-life insurance enterprise’s branch being the transferee shall reach an agreement with the insurance buyer and the insured on reduction of the sum insured or insurance benefits and other obligations provided in the insurance contract.

4. In case of disagreeing with the transfer, insurance buyers may unilaterally terminate the insurance contracts.

Article 93. Procedures for transfer of insurance contract portfolios

1. An insurance enterprise or a foreign non-life insurance enterprise’s branch that wishes to transfer its insurance contract portfolio shall send a written request for transfer of the insurance contract portfolio to the Ministry of Finance, stating the reason for the transfer, enclosed with the transfer plan and contract. The transfer of an insurance contract portfolio may be carried out only after it is approved in writing by the Ministry of Finance.

2. Within 30 days after the Ministry of Finance approves the transfer of an insurance contract portfolio, the transferring insurance enterprise or foreign non-life insurance enterprise’s branch shall notify the transfer on its website and notify such in writing to the insurance buyer.

3. The Government shall provide in detail dossiers, order and procedures for transfer of insurance contract portfolios.

Section 6

FINANCE, COST-ACCOUNTING AND FINANCIAL STATEMENTS

Article 94. Capital

1. Charter capital is the total amount the members have contributed or committed to contribute for the establishment of a limited liability company or the total par value of shares already sold or registered to be purchased upon the establishment of a joint-stock company, and must be stated in the charter of an insurance enterprise or a reinsurance enterprise.

2. Allocated capital of a Vietnam-based foreign branch is a capital amount allocated by a foreign non-life insurance enterprise or foreign reinsurance enterprise to its branch in Vietnam.

3. Equity includes contributed charter capital and allocated capital of a Vietnam-based foreign branch, reserve funds, undistributed after-tax profits, and the owner’s funds set aside from after-tax profits under regulations.

4. Actual capital includes equity and other sources allowed to be recorded or reduced under the Ministry of Finance’s regulations.

5. Risk-based capital shall be determined based on size and quantification of impacts of risk groups on business activities of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch. These risks include:

a/ Insurance risks, covering risks arising due to the fluctuation of technical factors corresponding to the types of life insurance, non-life insurance and health insurance;

b/ Market risks, covering risks arising from the market with regard to investment activities of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch;

c/ Operational risks, covering risks arising from the process of operation, system and management of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch;

d/ Other risks, covering risks arising from other partners or other factors not yet accounted as insurance risks, market risks or operational risks.

6. The Government shall provide in detail the minimum charter capital and minimum allocated capital for each type of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

Article 95. Capital adequacy ratio

1. Capital adequacy ratio means a ratio of actual capital to risk-based capital.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall always maintain the capital adequacy ratio not lower than the law-specified ratio.

3. When determining its capital adequacy ratio, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch  may not include in its actual capital the investment amount in the form of capital contribution to, or purchase of shares from, another insurance enterprise, another reinsurance enterprise, a subsidiary of an insurance enterprise or a subsidiary of a reinsurance enterprise.

4. The Minister of Finance shall provide in detail the capital adequacy ratio, risk-based capital and actual capital.

Article 96. Escrow account

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall use part of their charter capital or allocated capital for opening an escrow account at commercial banks operating in Vietnam.

2. The escrow account level must equal 2% of the minimum charter capital or minimum allocated capital at the time of establishment of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch.

3. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch may only use its escrow account amount to fulfill its commitments to the insurance buyer when its solvency ratio is low and shall obtain the Ministry of Finance’s written approval for such use. Within 90 days from the date of using its escrow account amount, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall make addition to the used escrow account amount.

4. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch may only withdraw the whole escrow account amount upon the termination of its operation.

Article 97. Technical reserves

1. Technical reserves means a money amount which an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch  must set aside for the purpose of paying for insured liabilities which may arise from concluded insurance contracts.

2. The setting aside of technical reserves must satisfy the following requirements:

a/ Setting aside technical reserves exclusively for each line of insurance;

b/ Ensuring correspondence to the part of the committed responsibility as agreed upon in insurance contracts;

c/ Separating insurance contracts of insurance objects inside the territory of Vietnam from those outside the territory of Vietnam, even when they are in the same line of insurance or insurance product, unless otherwise provided by law;

d/ Ensuring that there are always assets corresponding to technical reserves already set aside, and concurrently separating assets corresponding to the reserves as specified at Point c of this Clause;

dd/ Having actuary experts to calculate and set aside technical reserves;

e/ Regularly reviewing and evaluating the setting aside of technical reserves; promptly taking measures to fully set aside reserves for paying liabilities of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

3. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall register methods of setting aside technical reserves with and have them approved by the Ministry of Finance.

4. The Government shall provide in detail the setting aside of technical reserves, and dossiers, order and procedures for registration of methods of setting aside technical reserves.

Article 98. Reserve funds

1. An insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall set aside a required reserve fund in order to make additions to its equity and ensure its solvency.

2. A required reserve fund shall be set aside annually at the rate of 5% of after-tax profits until reaching the maximum level set by the Government.

3. Apart from the required reserve fund, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch may set aside other reserve funds from after-tax profits of a fiscal year as provided in the charter of the insurance enterprise or reinsurance enterprise or the organization and operation regulation of the Vietnam-based foreign branch.

Article 99. General provisions on investment

1. Investment sources of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches include:

a/ Equity;

b/ Idle capital amounts from technical reserves under the Government’s regulations;

c/ Other lawful sources as specified by law.

2. Investment by insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must adhere to the following principles:

a/ Ensuring safety, liquidity and efficiency; complying with regulations and taking accountability for investment activities;

b/ Using technical reserves only for investment in Vietnam, except the case specified at Point b, Clause 2, Article 100 of this Law;

c/ Refraining from borrowing loans to invest or entrust investment in securities or real estate business or to contribute capital to other enterprises;

d/ Refraining from investing more than 30% of investment capital in companies in the same group of companies having cross-ownership relationships. This provision does not apply to the making of deposits at credit institutions and offshore investment in the form of establishing overseas enterprises or branches;

dd/ Refraining from making reinvestment in any form for shareholders, capital-contributing members or their affiliated persons in accordance with the Law on Enterprises, except deposits at shareholders or members being credit institutions;

e/ Refraining from purchasing corporate bonds issued for the purpose of restructuring debts of the bond issuers;

g/ In case of investment entrustment, entrusted organizations must obtain permission for entrusted investment in conformity with contents of entrusted investment.

3. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may not:

a/ Conduct real estate business, except cases of purchasing stocks of real estate enterprises listed on the securities market or fund certificates of public funds; purchasing, investing or owning real estate for use as business offices, workplaces or warehouses directly serving professional operations; leasing unused business offices under their ownership or use rights; and holding real estate due to the settlement of bonds secured by real estate or due to the clearing of receivables with real estate within 3 years from the date of holding;

b/ Invest in precious metals and gems;

c/ Invest in intangible fixed assets, except the case of investment to serve their insurance business activities;

d/ Invest in derivatives or derivative contracts, except derivatives listed for the purpose of preventing risks arising from insurance contracts or reinsurance contracts and securities investment portfolios currently held by insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

4. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall determine the value of invested assets under the Minister of Finance’s regulations.

5. The Government shall provide in detail investment limits applicable to insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

Article 100. Offshore investment

1. Insurance enterprises and reinsurance enterprises may only make offshore investment in the following forms:

a/ Establishing or contributing capital to establish, contributing capital, purchasing shares, purchasing contributed capital portions of, foreign insurance enterprises or reinsurance enterprises; establishing overseas insurance enterprises’ or reinsurance enterprises’ branches; opening representative offices and other forms of commercial presence overseas;

b/ Purchasing and selling securities or other valuable papers or investing through other overseas securities investment funds or intermediary financial institutions under the Government’s regulations.

2. Insurance enterprises and reinsurance enterprises may make offshore investment from the following sources:

a/ The equity amount left after deducting the amount for ensuring the capital adequacy ratio and solvency in accordance with this Law;

b/ Idle capital amounts from technical reserves of insurance contracts having benefits connected with foreign investment indicators and idle capital amounts from technical reserves of insurance contracts signed with foreign organizations and individuals.

3. The offshore investment by insurance enterprises and reinsurance enterprises must comply with general provisions on investment of Article 99 of this Law and the following provisions:

a/ Ensuring the capital adequacy ratio and solvency of insurance enterprises and reinsurance enterprises;

b/ Complying with the law on insurance business, investment law and the law on foreign exchange management;

c/ Being made in the name of the insurance enterprises or reinsurance enterprises;

d/ Managing and monitoring separately investment sources, invested assets, revenues and expenses of offshore investment activities;

dd/ Refraining from using money and assets of domestic insurance buyers to cover losses of offshore investment activities, unless otherwise provided by law;

e/ Obtaining the Ministry of Finance’s written approval before making offshore investment.

4. Vietnam-based foreign branches may not make offshore investment.

5. The Government shall provide in detail conditions, limits, dossiers, order and procedures for approval of offshore investment by insurance enterprises and reinsurance enterprises.

Article 101. Separation of equity from premiums, surplus  division

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall register principles of separation of equity from premiums with the Ministry of Finance and separate, record and separately monitor:

a/ Equity, premiums and corresponding assets of each capital source;

b/ Revenues, expenses and results of insurance business activities and investment activities from equity and premiums;

c/ Premiums from insurance business activities inside and outside the territory of Vietnam; revenues, expenses, technical reserves and corresponding expenses from insurance business activities inside and outside the territory of Vietnam.

2. Life insurance enterprises shall separate, record and separately monitor assets, capital sources, revenues, expenses and results of the performance of life insurance contracts with profits shared by methods approved by the Ministry of Finance.

3. The Government shall provide in detail dossiers, order and procedures for registration and approval specified in Clauses 1 and 2 of this Article.

4. The Minister of Finance shall provide in detail the separation of equity from premiums, principles of surplus division for life insurance contracts with profit sharing.

Article 102. Financial regime

1. The financial regime applicable to insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must comply with this Law and relevant regulations.

2. The Government shall provide in detail the financial regime applicable to insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches.

Article 103. Fiscal year

1. A fiscal year of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches begins on January 1 and ends on December 31 of the same calendar year.

2. The first fiscal year of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch begins on the date the enterprise or branch is granted an establishment and operation license and ends on the last day of the same year.

Article 104. Accounting regime

The accounting regime applicable to insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must comply with the accounting law.

Article 105. Independent audit

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall have their annual financial statements put for independent audit on an annual basis.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall obtain certification by independent audit firms of their reports on solvency assessment and risk management; reports on separation of equity from premiums; and reports on operation of universal life funds, unit-linked funds and pension funds.

3. When auditing and certifying the reports specified in Clauses 1 and 2 of this Article, an independent audit firm shall:

a/ Comply with regulations on independent audit;

b/ Employ appointed actuaries to audit the capital adequacy ratio and technical reserves; risk management experts to audit the risk management and other experts for relevant independent auditing contents;

c/ Explain and provide information and data related to the audit of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches when so requested by the Ministry of Finance;

d/ Notify in writing to the Ministry of Finance if finding that an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch has made material misstatements in audited and certified reports due to its failure to comply with law, insurance fraud or abnormal transactions that may cause serious impacts on the financial prudence or benefits of insurance participants;

dd/ Keep information confidential in accordance with law.

4. The Minister of Finance shall detail Clause 2 of this Article.

Article 106. Reporting and provision of information

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall send to the Ministry of Finance the following reports:

a/ Financial statements. In case of having an opinion or a conclusion other than unqualified opinions of an independent audit firm on any audited report or activity, the concerned insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch  shall report causes and situation to the Ministry of Finance;

b/ Reports on professional operations;

c/ Reports on separation of equity from premiums;

d/ Reports on solvency assessment risk management;

dd/ Reports on capital-related changes concerning each type of risks.

2. In addition to the reports specified in Clause 1 of this Article, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall report the Ministry of Finance in the following cases:

a/ When abnormal events occur that affect their solvency and prestige in their insurance business activities;

b/ When they fail to meet financial requirements and other requirements.

3. The Minister of Finance shall provide in detail reporting and provision of information under Clauses 1 and 2 of this Article.

Article 107. Transfer of profits and assets abroad

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may transfer abroad their profits and assets in accordance with Vietnam’s law and the following provisions:

a/ Remitting the remaining profit amounts under foreign investors’ ownership after setting aside funds, fulfilling all financial obligations and ensuring the capital adequacy ratio and solvency in accordance with this Law;

b/ Transferring the remaining assets under foreign investors’ ownership after the termination of their operation in Vietnam.

2. The remittance of money and other assets abroad must comply with Vietnam’s law.

Article 108. Financial management

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may practice financial autonomy and shall take accountability for managing and supervising their operational efficiency; and shall fulfill their obligations and commitments with the insurance buyers, related organizations and individuals and the State in accordance with law.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall formulate strategies, processes, regulations, procedures and organizational structure for the management and supervision of their financial activities, ensuring safety, efficiency and lawfulness; and proactively prevent and reduce risks.

Section 7

SOLVENCY AND INTERVENTION MEASURES

Article 109. Financial prudence

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall be considered ensuring financial prudence when meeting the conditions on capital, solvency and investment.

2. In the course of their operation, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must proactively review their procedures, regulations, risk management systems and business plans, and evaluate their insurance business, reinsurance business and financial activities, ensuring safety, efficiency and law observance to meet the condition on financial prudence provided in this Law.

3. The Minister of Finance shall provide cases of application of improvement measures, early intervention measures and control measures specified in Articles 111, 112 and 113 of this Law to ensure financial prudence.

Article 110. Solvency

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches must maintain their solvency throughout the course of their operation.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall be considered solvent if fully satisfying the following conditions:

a/ Fully setting aside technical reserves;

b/ Ensuring capital adequacy ratio.

Article 111. Improvement measures

1. If required to apply improvement measures, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall proactively select, and organize the implementation of, one or several of the improvement measures specified in Clause 2 of this Article, and notify in writing the Ministry of Finance of the actual situation and its causes and applied improvement measures.

2. Improvement measures include:

a/ Increasing the charter capital or allocated capital;

b/ Intensifying the efficiency of business activities, such as focusing on providing efficient insurance products; reviewing premiums in correspondence with insurance conditions and liabilities; restructuring reinsurance plans; reducing operation expenses, management expenses and selling expenses; and reducing payment of remunerations, wages and bonuses for managers;

c/ Restructuring investment portfolios, such as increasing the holding of assets with high liquidity; selling or transferring inefficient or high-risk assets;

d/ Intensifying risk management; reorganizing the management apparatus and personnel; reducing the procurement of fixed assets; and restricting the setting aside up and use of assorted funds;

dd/ Other measures in accordance with law.

3. In the course of implementation of improvement measures, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may not:

a/ Transfer abroad, distribute profits and pay dividends;

b/ Increasing reinsurance assumption.

Article 112. Early intervention measures

1. In case insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches have the capital adequacy ratio subject to application of early intervention measures, or are still unable to improve the capital adequacy ratio though having applied the improvement measures specified in Article 111 of this Law in 12 consecutive months, the Ministry of Finance shall issue a document on application of early intervention measures.

2. Within 60 days after the Ministry of Finance issues the document on application of early intervention measures, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall formulate, and organize the implementation of, a plan on improvement of the capital adequacy ratio as specified in Clause 4 of this Article, and concurrently report to the Ministry of Finance on the actual situation and its causes and remedies for improvement of the capital adequacy ratio. If deeming it necessity, the Ministry of Finance shall issue a document requesting the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch to modify such plan.

3. The time limit for implementation of a plan on improvement of the capital adequacy ratio is 12 months after the Ministry of Finance issues a document on application of early intervention measures.

4. A plan on improvement of the capital adequacy ratio includes one or several of the following measures:

a/ The measures specified in Clause 2, Article 111 of this Law;

b/  Removing from office or relieving from duty managers;

c/ Narrowing the contents and scope of inefficient activities; suspending provision of inefficient insurance products or lines of insurance.

5. In the course of implementation of early intervention measures, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may not:

a/ Cary out the activities specified in Clause 3, Article 111 of this Law;

b/ Buy treasury stocks;

c/ Expand operation contents, scope and period.

6. Within the time limit specified in Clause 2 of this Article, if insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches fail to formulate their plans on improvement of the capital adequacy ratio, or past the time limit specified in Clause 3 of this Article, they fail to improve the capital adequacy ratio, depending on the nature and degree of risks, the Ministry of Finance shall request the insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches to implement one or several of the measures specified in Clause 4 of this Article.

7. The Ministry of Finance shall publish on its portal the list of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches required to apply early intervention measures.

8. The Ministry of Finance shall consider and decide to issue a document on termination of the application of early intervention measures for an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch falling in either of the following cases:

a/ Having improved the capital adequacy ratio as certified by an independent audit firm;

b/ Being subject to application of the control measures specified in Article 113 of this Law.

Article 113. Control measures

1. In case an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch has the capital adequacy ratio subject to application of control measures, the Ministry of Finance shall consider and decide to issue a document on application of control measures and send it to the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch.

2. The Ministry of Finance shall notify the application of control measures to:

a/ Owners, capital-contributing members and shareholders that hold 10% or more of the charter capital of an insurance enterprise or a reinsurance enterprise; or of a foreign non-life insurance enterprise or foreign reinsurance enterprise with Vietnam-based branches;

b/ The foreign insurance authorities that are competent to manage companies holding 100% of the charter capital or allocated capital of insurance enterprises, foreign reinsurance enterprises or Vietnam-based foreign branches.

3. Within 30 days after the Ministry of Finance issues a document on application of control measures, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall hire an independent audit firm to review and evaluate its actual financial situation, and determine the real value of its charter capital or allocated capital and solvency. In case the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch fails to hire an independent audit firm within the law-specified time limit, the Ministry of Finance shall designate an independent audit firm. Audit expenses shall be covered by the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch.

4. Within 120 days after the Ministry of Finance issues a document on application of control measures, an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch shall formulate, and organize the implementation of, a plan on improvement of the capital adequacy ratio, and concurrently report to the Ministry of Finance on the actual situation and its causes, and remedies for improvement of the capital adequacy ratio. If deeming it necessity, the Ministry of Finance shall issue a document requesting the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch to modify such plan.

5. The time limit for implementation of the plan on improvement of the capital adequacy ratio in 18 months after the Ministry of Finance issues a document on application of control measures.

6. A plan on improvement of the capital adequacy ratio includes one or several of the following measures:

a/ The measures specified in Clause 4, Article 112 of this Law;

b/ Suspending the activities that may lead to the failure to ensure the capital adequacy ratio.

7. In the course of implementation of control measures, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches may not:

a/ Carry out the activities specified in Clause 5, Article 112 of this Law;

b/ Contribute capital to establish enterprises; purchase real estate for use as business locations, working places or warehousing facilities directly serving their professional operations;

c/ Invest in high-risk assets or carry out business activities that reduce the capital adequacy ratio.

8. Within the time limit specified in Clause 4 of this Article, if an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch fails to formulate a plan on improvement of the capital adequacy ratio, or past the time limit specified in Clause 5 of this Article, if it fails to improve the capital adequacy ratio, depending on the nature and degree of risks, the Ministry of Finance shall implement one or several of the following measures:

a/ Suspending part or the whole of operation contents of the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch;

b/ Requesting the division, splitting, merger or consolidation of the insurance enterprise or reinsurance enterprise;

c/ Requesting the transfer of the insurance contract portfolio;

d/ Designating another insurance enterprise or foreign non-life insurance enterprise’s branch to contribute capital, buy shares and acquire the insurance contract portfolio of the insurance enterprise or foreign non-life insurance enterprise’s branch put under control.

9. During the suspension period specified at Point a, Clause 8 of this Article, the insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch shall still fully set aside technical reserves in accordance with law; closely monitor insurance contracts that remain valid; promptly and fully pay indemnities and make payouts as agreed upon in insurance contracts and provided by law; fully fulfill tax obligations; and continue paying debts and completing the performance of contracts signed with insurance buyers and employees in accordance with law, unless otherwise agreed upon by the parties.

10. The Ministry of Finance shall publish on its Portal the list of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches required to apply control measures.

11. The Ministry of Finance shall consider and decide to issue a document on termination of the application of control measures for an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch falling in one of the following cases:

a/ The insurance enterprise, reinsurance enterprise or Vietnam-based foreign branch put under control has improved the capital adequacy ratio as certified by an independent audit firm;

b/ The insurance enterprise or reinsurance enterprise is consolidated, merged or dissolved;

c/ The insurance enterprise, reinsurance enterprise or Vietnam-based foreign  branch fails to remediate its status of being subject to application of control measures.

Article 114. Responsibilities of insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches in case of being subject to application of improvement measures, early intervention measures or control measures

Apart from the responsibilities specified in Articles 111, 112 and 113 of this Law, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches subject to application of improvement measures, early intervention measures or control measures have the following responsibilities:

1. To carry out the governance, control and administration of their business activities and ensure property safety;

2. To be responsible for the accuracy of information, documents and dossiers, matters concerning organization and operation, and other relevant issues;

3. To report to the Ministry of Finance on the results of implementation and extent of improvement on a monthly basis or upon request;

4. To perform other responsibilities in accordance with law.

Article 115. Dissolution of insurance enterprises and reinsurance enterprises and termination of operation of Vietnam-based foreign branches

1. An insurance enterprise or a reinsurance enterprise shall be dissolved or a Vietnam-based foreign branch shall terminate its operation in the following cases:

a/ It applies for dissolution or operation termination on a voluntary basis;

b/ Its operation period stated in the establishment and operation license has expired;

c/ Its establishment and operation license is revoked under Point a, b, d or e, Clause 1, Article 75 of this Law;

d/ The Vietnam-based foreign branch fails to improve the capital adequacy ratio after the period of application of control measures;

dd/ Other cases as provided by law.

2. The dissolution of insurance enterprises and reinsurance enterprises and the termination of operation of Vietnam-based foreign branches must be approved in writing by the Ministry of Finance.

3. The Government shall provide in detail the conditions, dossiers, order and procedures for dissolution of insurance enterprises and reinsurance enterprises and termination of operation of Vietnam-based foreign branches.

Article 116. Bankruptcy of insurance enterprises and reinsurance enterprises

1. After the Ministry of Finance issues a document on termination of the application of control measures under Point c, Clause 11, Article 113 of this Law, the concerned insurance enterprise or reinsurance enterprise is obliged to file a petition to the court for initiation of bankruptcy procedures in accordance with the Law on Bankruptcy; in case the insurance enterprise or reinsurance enterprise fails to file a petition for initiation of bankruptcy procedures, the Ministry of Finance shall do so.

2. When receiving the petition for initiation of bankruptcy procedures of an insurance enterprise or reinsurance enterprise as specified in Clause 1 of this Article, the court shall initiate procedures for settlement of the petition of bankruptcy declaration, declare the insurance enterprise or reinsurance enterprise bankrupt, and immediately apply procedures for asset liquidation of the insurance enterprise or reinsurance enterprise without organizing a creditors’ meeting, and carry out procedures for resumption of business operations.

3. Assets of a bankrupt insurance enterprise or reinsurance enterprise shall be divided according to the following order of priority:

a/ Bankruptcy expenses;

b/ Salaries, severance allowances and social insurance and health insurance premiums owed to employees;

c/ Indemnities and sums insured  for claims for indemnities and sums insured  for which the insurance enterprise or reinsurance enterprise has approved the payment of cash surrender value and account value of the insurance contract or refund of premiums;

d/ Financial obligations toward the State; unsecured debts payable to creditors on the list of creditors; secured debts not yet paid for the reason that the value of collaterals is insufficient;

dd/ Amounts payable to owners, capital-contributing members and shareholders of the insurance enterprise or reinsurance enterprise.

4. In case the asset value is insufficient for payment as specified in Clause 3 of this Article, the entities of the same priority rank are entitled to receive payments in percentage in proportion to the owed debt amounts.

5. Contents on bankruptcy of insurance enterprises and reinsurance enterprises which are not mentioned in this Article must comply with the Law on Bankruptcy.

Section 8

INFORMATION DISCLOSURE

Article 117. Responsibility for information disclosure

1. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall disclose the information specified in Articles 118, 119 and 120 of this Law, and take responsibility before law for the disclosed information. Information must be disclosed in an accurate, timely, sufficient, easy-to-follow and lawful manner.

In case there is a change in the disclosed information contents, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall promptly and sufficiently update the changed contents and reasons for such change.

2. Insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall post to-be-disclosed information on their websites. The posting of information must comply with the Minister of Finance’s regulations. The time limit for information disclosure is:

a/ Seven working days after the deadline for sending the reports specified in Article 118 of this Law, or from the date of occurrence of one of the events related to the to-be-disclosed information specified in Article 119 of this Law;

b/ Three working days after the occurrence of one of the events related to the to-be-disclosed information specified in Article 120 of this Law.

3. Within 7 working days from the date of information disclosure, insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches shall notify the Ministry of Finance of the disclosed information.

4. Insurance enterprises or reinsurance enterprises being public companies shall disclose information in accordance with this Law and the Law on Securities.

Article 118. Information subject to periodical disclosure

1. Audited annual financial statements, biannual financial statements.

2. Solvency and risk management evaluation reports.

3. Actual capital and capital adequacy ratio.

Article 119. Information subject to regular disclosure

1. Information about the dossiers of an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch, including:

a/ Information stated in the establishment and operation license;

b/ Information about the Chairperson of the Board of Directors or Chairperson of the Members’ Council, Director/Director General, at-law representative and appointed actuary;

c/ Addresses of the head office, branch(es), representative office(s) and business location(s);

d/ Hotline.

2. Information about professional operations, including:

a/ Insurance rules, terms and premium rates of the insurance products currently provided, notes to customers about each insurance product;

b/ Procedures, dossiers of request and time limits for payment of indemnities and sums insured;

c/ Targets and policies on investment management;

d/ Targets and policies on evaluation of the capital adequacy ratio.

Article 120. Information subject to irregular disclosure

1. Information subject to irregular disclosure includes:

a/ Information about suspension of business operations or termination of operation contents, revocation of establishment and operation licenses;

b/ Information about division, splitting, merger, consolidation, dissolution or transformation of enterprises, offshore investment, and establishment and closure of branches and representative offices;

c/ Information about termination of the operation of Vietnam-based foreign branches;

d/ Changes in applicable accounting policies; results of retrospective restatement of financial statements; opinions other than unqualified opinions on financial statements, provided by independent audit firms; selection or replacement of independent audit firms;

dd/ Information about transfer of shares and contributed capital portions, making one or some of shareholders or capital-contributing members hold 10% or more of the charter capital or under 10% of the charter capital;

e/ Decisions on sanctioning of administrative violations in insurance business activities;

g/ The courts’ legally effective judgments or rulings related to the operation of insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches;

h/ The courts’ rulings on initiation of bankruptcy procedures for insurance enterprises or reinsurance enterprises;

i/ Decisions to prosecute enterprises, managers or supervisors involved in the business operations of insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches;

k/ Events that seriously affect the lawful rights and interests of insurance participants;

l/ Information related to insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches that materially affect capital, solvency, risk management and corporate governance of the enterprises/branches;

m/ Information about loss of assets with value accounting for 10% or more of the charter capital;

n/ Information about transfer of the insurance contract portfolio;

o/ Other information as provided by law.

2. The Minister of Finance shall provide in detail the information subject to irregular disclosure specified at Points k and l, Clause 1 of this Article.

Section 9

LOSS PREVENTION AND LIMITATION, INSURANCE FRAUD PREVENTION AND CONTROL

Article 121. Responsibilities for loss prevention and limitation and insurance fraud prevention and control

Insurance enterprises, foreign non-life insurance enterprises’ branches, insurance buyers, the insured and related parties are responsible for loss prevention and limitation and insurance fraud prevention and control.

Article 122. Loss prevention and limitation

1. Loss prevention and limitation in insurance business activities mean the implementation of measures to prevent and reduce possible losses to objects of insurance.

2. Insurance buyers and the insured shall proactively implement measures for loss prevention and limitation; immediately notify insurance enterprises and foreign non-life insurance enterprises’ branches of the occurrence of insured events; and implement loss prevention and limitation measures under instructions of insurance enterprises (if any).

3. Insurance enterprises and foreign non-life insurance enterprises’ branches shall implement the following loss prevention and limitation measures:

a/ To provide coaching, public communication and training; to support the coaching and public communication about policies on insurance business;

b/ To provide donations and support in terms of means and physical facilities for risk prevention and limitation;

c/ To support the construction of works serving risk prevention and mitigation for objects of insurance;

d/ To hire other organizations and individuals for supervision and loss prevention and limitation.

4. Related agencies and organizations shall guide and organize public communication about the implementation of loss prevention and limitation measures.

Article 123. Insurance fraud prevention and control

1. Insurance fraud prevention and control in insurance business activities mean the implementation of measures to prevent and limit fraudulent acts in the course of conclusion and performance of insurance contracts that aim to appropriate money and assets of insurance enterprises, foreign non-life insurance enterprises’ branches and insurance buyers.

2. Insurance enterprises and foreign non-life insurance enterprises’ branches shall proactively devise, and organize the implementation of, measures to prevent, detect and mitigate acts of insurance fraud; and organize public communication about insurance fraud prevention and control.

3. Insurance buyers and the insured shall proactively participate in insurance fraud prevention and control activities; in case of detecting acts of insurance fraud, they shall promptly notify such acts to insurance enterprises or foreign non-life insurance enterprises’ branches and competent agencies.

4. Related agencies and organizations shall coordinate with insurance enterprises, foreign non-life insurance enterprises’ branches, insurance buyers and the insured in organizing insurance fraud prevention and control activities.

Chapter IV

INSURANCE AGENTS, INSURANCE BROKERAGE ENTERPRISES, INSURANCE AUXILIARY SERVICE PROVIDERS

Section 1

INSURANCE AGENTS

Article 124. Insurance agents

Insurance agents are organizations and individuals that are authorized by insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance on the basis of insurance agency contracts to carry out insurance agency activities.

Article 125. Conditions for conducting insurance agency activities

1. To conduct insurance agency activities, an individual must fully meet the following conditions:

a/ Being a Vietnamese citizen permanently residing in Vietnam;

b/ Having full civil act capacity;

c/  Possessing an insurance agent’s certificate as specified in Article 130 of this Law.

2. To conduct insurance agency activities, an organization must fully meet the following conditions:

a/ Being lawfully established and operating in Vietnam;

b/ Having registered for the business line of insurance agency under the Law on Enterprises. Organizations operating in conditional business lines must possess licenses, certificates, written certifications or other written approvals (if any) issued by competent agencies, which have the content on insurance agency activities.

c/ Having employees directly engaged in insurance agency activities who fully satisfy the conditions specified in Clause 1 of this Article;

d/ Satisfying the conditions on personnel and other conditions under the Government’s regulations.

3. Organizations and individuals may not conclude and perform insurance agency contracts in the following cases:

a/ Organizations being commercial legal persons that are currently subject to penal liability examination; organizations that are subject to definite-term operation suspension, operation termination, or prohibition from doing business or operating in insurance-related fields;

b/ Individuals who are currently subject to penal liability examination, serving their imprisonment sentences or serving the penalty of prohibition from insurance-related practice.

Article 126. Contents of insurance agency contracts

An insurance agency contract must contain the following principal details:

1. Name and address of the insurance agent;

2. Name and head office address of the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance;

3. Rights and obligations of the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance and insurance agent;

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

5. Insurance agency commission, bonus and support, and other interests (if any);

6. Term of the contract;

7. Dispute settlement method.

Article 127. Operational principles of insurance agents

1. An individual may not concurrently act as an insurance agent for another insurance enterprise or foreign non-life insurance enterprise’s branch operating in the same type of insurance with the insurance enterprise or foreign non-life insurance enterprise’s branch of which he/she is an agent. An individual who is an insurance agent of a mutual organization providing microinsurance may not concurrently act as an insurance agent for another mutual organization providing microinsurance.

2. An organization may not concurrently act as an insurance agent for another insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance without obtaining the written consent of the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance of which it is an agent.

3. Individuals conducting insurance agency activities or employees of organizations conducting insurance agency activities may only conduct insurance agency activities for the insurance products in which they have been trained.

4. Information on individuals conducting insurance agency activities and employees of organizations conducting insurance agency activities who directly conduct insurance agency activities shall be registered and updated to the database on insurance business activities specified in Article 11 of this Law.

5. Individuals who are granted insurance agent’s certificates but fail to conduct insurance agency activities for 3 consecutive years must take a test for obtaining a new insurance agent’s certificate before conducting insurance agency activities.

Article 128. Rights and obligations of insurance enterprises, foreign non-life insurance enterprises’ branches and mutual organizations providing microinsurance in insurance agency activities

1. Insurance enterprises, foreign non-life insurance enterprises’ branches and mutual organizations providing microinsurance have the following rights:

a/ To organize the system of insurance agents suitable to their business strategies;

b/ To recruit insurance agents and conclude contracts with insurance agents;

c/ To decide on the levels of commission, bonus and support amounts to and other interests for insurance agents in insurance agency contracts which must not exceed the maximum levels specified by the Minister of Finance;

d/ To receive and manage escrow account amounts or mortgaged assets of insurance agents if agreed upon in insurance agency contracts;

dd/ To request insurance agents to pay collected premiums as agreed upon in insurance contracts;

e/ To inspect and supervise the performance of insurance agency contracts, evaluate the quality of consultancy and introduction of insurance products of insurance agents and employees of organizations conducting insurance agency activities;

g/ To be entitled to other lawful rights and interests from insurance agency activities;

h/ Other rights provided by law.

2. Insurance enterprises, foreign non-life insurance enterprises’ branches and mutual organizations providing microinsurance have the following obligations:

a/ To be responsible for the organization, management and employment of insurance agents;

b/ To provide training and update knowledge for insurance agents in accordance with law;

c/ To guide and provide necessary information and documents related to insurance agency activities in an adequate and accurate manner;

d/ To perform responsibilities arising under signed insurance agency contracts;

dd/ To pay commission, bonus and support amounts to and guarantee other interests for insurance agents as agreed upon in insurance agency contracts which must not exceed the maximum levels specified by the Minister of Finance;

e/ To refund the escrow account amounts or mortgaged assets to insurance agents as agreed upon;

g/ To fulfill obligations as agreed upon in insurance contracts of which the conclusion is arranged by insurance agents or employees of organizations conducting insurance agency activities. In case an insurance agent or an employee of an organization conducting insurance agency activities breaches the insurance agency contract, thus causing damage to the lawful rights and interests of the insured and insurance buyer, the insurance enterprise, foreign non-life insurance enterprise’s branch or mutual organization providing microinsurance shall still fulfill the obligations agreed upon in the insurance contract of which the conclusion is arranged by the insurance agent;

h/ To submit to the inspection and supervision by competent state agencies for insurance agency activities;

i/ To guarantee, and refrain from obstructing, the lawful rights and interests of insurance agents as agreed upon in insurance agency contracts and provided by law;

k/ To report on the training and employment of insurance agents under the Minister of Finance’s regulations;

l/ To register and update information on individuals acting as insurance agents and employees of organizations conducting insurance agency activities who directly conduct insurance agency activities to the database on insurance business activities specified in Article 11 of this Law;

m/ Other obligations as provided by law.

Article 129. Rights and obligations of insurance agents

1. Insurance agents have the following rights:

a/ To select, and conclude insurance agency contracts with, insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance in accordance with law;

b/ To be provided with necessary information and conditions to perform insurance agency contracts;

c/ To enjoy insurance agency commissions, bonuses and support and other interests from insurance agency activities as agreed upon in insurance agency contracts;

d/ To request insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance to refund escrow account amounts or mortgaged assets as agreed upon in insurance agency contracts;

dd/ Other rights provided by law.

2. Insurance agents have the following obligations:

a/ To fulfill the obligations stated in insurance agency contracts;

b/ To make escrow account or mortgage assets for insurance enterprises, foreign non-life insurance enterprises’ or mutual organizations providing microinsurance if so agreed upon in insurance agency contracts;

c/ To fully fulfill financial obligations in accordance with law;

d/ To provide consultancy to, introduce and offer insurance products for sale; to provide insurance buyers with sufficient and accurate information about insurance products, insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance and with explicit and adequate interpretations about insurance benefits, terms on exclusion of insurance liability, and rights and obligations of insurance buyers; to refrain from arbitrarily declaring information for insurance buyers without the latter’s consent; to fulfill other obligations within the scope of authorization stated in insurance agency contracts;

dd/ To attend knowledge update courses organized by insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance;

e/ To submit to the inspection and supervision by insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance;

g/ To reimburse to insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance the indemnity amounts already paid by the latter to the insured and insurance buyers in case insurance agents or employees of organizations conducting insurance agency activities breach insurance agency contracts causing damage to the lawful rights and interests of the insured and insurance buyers;

h/ To satisfy the criteria on insurance agency activities set by insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance;

i/ To keep confidentiality of customer information, use customer information for the proper purposes, and refrain from providing such information to third parties without the customer’s consent, unless otherwise provided by law;

k/ Other obligations in accordance with law.

3. Insurance agents may not:

a/ Provide untruthful information or advertisement on operation contents and scope of insurance enterprises, foreign non-life insurance enterprises’ branches or mutual organizations providing microinsurance, and insurance conditions and terms that harm the lawful rights and interests of insurance buyers;

b/ Prevent insurance buyers from providing information related to insurance contracts or incite insurance buyers and the insured not to declare information related to insurance contracts;

c/ Scramble for customers through obstructing, inducing, buying off or intimidating employees or customers of other insurance enterprises, foreign non-life insurance enterprises’ branches, mutual organizations providing microinsurance, insurance agents or insurance brokerage enterprises;

d/ Inciting customers to cancel insurance contracts remaining valid in any forms.

4. The Minister of Finance shall detail Point d, Clause 2 of this Article.

Article 130. Insurance agent’s certificates

1. Insurance agent’s certificates include:

a/  Life insurance agent’s certificates;

b/ Non-life insurance agent’s certificates;

c/ Health insurance agent’s certificates.

2. Main contents on training for grant of insurance agent’s certificates include:

a/ General knowledge about insurance; principles of lines of insurance suitable to each type of insurance agent’s certificate;

b/ Code of professional ethics and conduct of insurance agents;

c/ Rights and obligations of insurance enterprises, foreign non-life insurance enterprises’ branches, mutual organizations providing microinsurance and insurance agents in insurance agency activities;

d/ Vietnam’s law on insurance business;

d/ Insurance agency skills and practice.

3. The Minister of Finance shall provide in detail types of insurance agent’s certificates; contents of training in insurance agency, dossiers, order and procedures for testing of insurance agency operations, and grant, revocation and renewal of  insurance agent’s certificates.

Section 2

INSURANCE BROKERAGE ENTERPRISES

Article 131. Activities of insurance brokerage enterprises

1. Primary insurance brokerage activities, reinsurance brokerage activities.

2. Provision of insurance auxiliary services.

3. Other activities related to insurance contracts at the request of insurance buyers.

Article 132. Principles of insurance brokerage activities

1. Honesty, objectivity and transparency; guarantee of lawful rights and interests of related parties;

2. Compliance with the code of professional ethics issued by socio-professional organizations.

3. Insurance brokerage enterprises shall reach a written agreement with customers when providing insurance brokerage services.

Article 133. Conditions for insurance brokerage enterprises to be granted establishment and operation licenses

1. Conditions on shareholders and capital contributors:

a/ Being organizations and individuals that have the right to establish and manage enterprises in Vietnam in accordance with the Law on Enterprises;

b/ Being organizations that have the legal person status, are lawfully operating and meet financial conditions specified by the Government;

2. Conditions on capital:

a/ Charter capital must be in Vietnam dong and not be lower than the minimum level set by the Government;

b/ Shareholders and capital contributors may not use loans or investment trust capital of other organizations or individuals to contribute capital.

3. Conditions on personnel: The expected Chairperson of the Board of Directors or Chairperson of the Members’ Council, Director/Director General and at-law representative must meet the conditions and criteria on management capacity, experience and professional qualifications as specified in Article 138 of this Law.

4. Being organized to operate in the form specified in this Law and having the draft charter in conformity with the Law on Enterprises.

5. Organizations established under foreign laws which contribute capital for establishment, purchase shares or contributed capital portions accounting for 10% or more of the charter capital of insurance brokerage enterprises must meet the following conditions:

a/ Being an organization established under a foreign law which is carrying out insurance brokerage activities or a subsidiary of which carries out such activities for the last 5 consecutive years up to the time of submission of a dossier of application for an establishment and operation license;

b/ Having been permitted by a foreign authority to establish an insurance brokerage enterprise in Vietnam and certified as not seriously violating the law on insurance brokerage of the country where the organization’s head office is located for the last 3 consecutive years up to the time of submission of a dossier of application for an establishment and operation license.

Article 134. Dossiers of application for establishment and operation licenses for insurance brokerage enterprises

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

a/ An application for an establishment and operation license;

b/ The draft charter of the enterprise;

c/ A plan for operation in the first 5 years, clearly stating the expected activities;

d/ Curricula vitae, criminal record certificates, and copies of degrees or certificates proving capacity and professional qualifications of persons expected to be appointed as the Chairperson of the Board of Directors or Chairperson of the Members’ Council, Director/Director General and at-law representative of the enterprise;

dd/ Contributed capital level and method of capital contribution, list of founders or members/shareholders expected to contribute 10% or more of the charter capital, and documents proving the satisfaction of the conditions specified in Article 133 of this Law.

2. The Government shall provide in detail the conditions, dossier, order and procedures for grant of establishment and operation licenses for insurance brokerage enterprises.

Article 135. Organization and operation

Regulations on organization and operation of insurance brokerage enterprises, including forms of organization and operation; holding rate of foreign investors; time limit for grant of establishment and operation licenses; competence to grant, re-grant, modify, supplement and revoke establishment and operation licenses and suspend operation contents; disclosure of contents of establishment and operation licenses; and revocation of establishment and operation licenses, must comply with Articles 62, 68, 70, 71 and 72, and Clauses 1 and 3, Article 75, of this Law.

Article 136. Changes subject to approval or notification

1. An insurance brokerage enterprise shall obtain the Ministry of Finance’s written approval before changing one of the following contents:

a/ The enterprise’s name and head office’s location;

b/ Charter capital level;

c/ Contents, scope and duration of operation;

d/ Transfer of shares or contributed capital portions, making one or several of   shareholders or capital contributors hold 10% or more of the charter capital or under 10% of the charter capital;

dd/ Chairperson of the Board of Directors or Chairperson of the Member’s Council, Director/Director General;

e/ Division, splitting, merger, consolidation, dissolution or transformation of enterprises; opening of branches, representative offices and other forms of commercial presence in foreign countries.

2. Insurance brokerage enterprises shall notify in writing to the Ministry of Finance within 15 days from the date of:

a/ Changing the operation charter;

b/ Opening, terminating or relocating branches or representative offices.

3. Within 10 days after approving the changes specified in Clause 1 of this Article, the Ministry of Finance shall publish such changes on its Portal.

4. The Government shall provide in detail the conditions, dossiers, order and procedures for approval of the changes specified in Clause 1 of this Article and the dossiers, order and procedures for acknowledgement of the changes specified at Point b, Clause 2 of this Article.

Article 137. Rights and obligations of insurance brokerage enterprises

1. An insurance brokerage enterprise has the following rights:

a/ To enjoy primary insurance brokerage commissions and reinsurance brokerage commissions under the Minister of Finance’s regulations;

b/ To collect revenues from provision of insurance auxiliary services;

c/ To collect revenues from performance of other jobs related to insurance contracts at the request of insurance buyers;

d/ Other rights as provided by law.

2. An insurance brokerage enterprise has the following obligations:

a/ To keep confidential information provided by customers, insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches, unless the provision of such information is requested by competent state agencies or consented by customers, insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches;

b/ To indemnify customers for the damage caused by insurance brokerage activities;

c/ To disclose to customers the information contents specified by the Minister of Finance;

d/ To conduct cost-accounting of and monitor separately revenues and expenditures on behalf of insurance enterprises, reinsurance enterprises or Vietnam-based foreign branches;

dd/ To buy professional liability insurance suitable to insurance brokerage activities;

e/ Other obligations as provided by law.

3. An insurance brokerage enterprise may not:

a/ Prevent insurance buyers or the insured from providing information related to insurance contracts or incite insurance buyers or the insured not to declare details related to insurance contracts;

b/ To provide sales promotion through promising to provide illegal benefits to incite customers to enter into insurance contracts;

c/ To incite insurance buyers to cancel insurance contracts remaining valid in order to enter into new insurance contracts;

d/ To advise customers to buy insurance at insurance enterprises or foreign non-life insurance enterprises’ branches with conditions and terms less competitive than those of other insurance enterprises or foreign non-life insurance enterprises’ branches in order to earn higher brokerage commissions;

dd/ To provide customers with false or inappropriate information as compared with insurance conditions and terms of insurance enterprises or foreign non-life insurance enterprises’ branches.

Article 138. Personnel, capital, finance, accounting regime and financial statements of insurance brokerage enterprises

1. The Chairperson of the Board of Directors, the Chairperson of the Members’ Council, members of the Board of Directors, members of the Members’ Council, Director/Director General, at-law representative, Deputy Director/Deputy Director General, Chief Accountant, and head of a professional division of an insurance brokerage enterprise must satisfy the conditions and criteria on degree, certificate and experience and other conditions specified by the Government.

2. Persons directly carrying out insurance brokerage activities must possess a university or higher degree in the major of insurance or have an insurance certificate suitable to the type of insurance or an insurance brokerage certificate issued by a training institution lawfully established and operating at home or abroad under the Minister of Finance’s regulations.

3. Insurance brokerage enterprises must maintain the level of charter capital and equity not lower than the minimum charter capital level and shall implement the financial regime under the Government’s regulations.

4. Insurance brokerage enterprises shall apply the fiscal year and accounting regime as prescribed in Articles 103 and 104 of this Law and have their financial statements put for independent audit on an annual basis.

5. Insurance brokerage enterprises shall implement the reporting regime under the Minister of Finance’s regulations for:

a/ Financial statements;

b/ Periodical reports on professional operations, extraordinary reports, and other information and data.

6. Foreign-invested insurance brokerage enterprises may transfer profits and assets abroad under Article 107 of this Law.

7. Insurance brokerage enterprises shall perform financial management under Article 108 of this Law.

8. Insurance brokerage enterprises shall disclose on their websites the information about their audited annual financial statements and changes subject to the Ministry of Finance’s approval as specified in Clause 1, Article 136 of this Law and the information specified at Points a, b and e, Clause 1, Article 120 of this Law. The responsibility for information disclosure must comply with Article 117 of this Law.

Article 139. Insurance broker’s certificates

1. Contents of insurance brokerage training mainly include:

a/ General knowledge of insurance and lines of insurance;

b/ Principles, responsibilities and ethics of insurance brokerage practice;

c/ Vietnam’s law on insurance business;

d/ Insurance brokerage skills and practice.

2. The Minister of Finance shall provide in detail contents of training in insurance brokerage, dossiers, order and procedures for testing of insurance brokerage operations, grant, revocation and renewal of insurance broker’s certificates issued by insurance training institutions lawfully established and operating at home.

Section 3

INSURANCE AUXILIARY SERVICE PROVIDERS

Article 140. Insurance auxiliary service providers

1. Insurance enterprises and foreign non-life insurance enterprises’ branches may provide insurance auxiliary services for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance brokerage enterprises and mutual organizations providing microinsurance.

2. Insurance brokerage enterprises may provide insurance auxiliary services for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance brokerage enterprises, mutual organizations providing microinsurance and other organizations and individuals.

3. Other organizations having the legal person status may provide insurance auxiliary services for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance brokerage enterprises and mutual organizations providing microinsurance.

4. Individuals may provide consultancy services for insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance brokerage enterprises and mutual organizations providing microinsurance.

Article 141. Principles of provision of insurance auxiliary services

1. Honesty, objectivity and transparency; guarantee of lawful rights and interests of related parties;

2. Compliance with standards in the field of insurance auxiliary services;

3. Compliance with the code of professional ethics issued by socio-professional organizations.

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

Article 142. Responsibilities of insurance auxiliary service providers

1. To keep confidential customer information; to use customer information for the proper purposes and refrain from providing such information to third parties without customers’ consent, except cases of information provision under law.

2. Insurance brokerage enterprises may not provide insurance loss assessment services for the insurance contracts of which they arrange the conclusion.

3. Organizations providing insurance auxiliary services may not provide insurance loss assessment services and insurance claim settlement support for the insurance contracts in which they are also insurance buyers, the insured or beneficiaries.

4. Individuals providing consultancy services are required to buy professional liability insurance for the provision of consultancy services; organizations providing insurance auxiliary services are required to buy professional liability insurance suitable to each type of insurance auxiliary services.

Article 143. Conditions for provision of insurance auxiliary services

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

a/ Having full civil act capacity;

b/ Possessing a university or higher degree in the major of insurance. Those who do not possess a university or higher degree in the major of insurance must possess a university or higher degree in another major and a consultancy-related insurance auxiliary operations certificate issued by a training institution lawfully established and operating at home or abroad.

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

a/ It has the legal person status and is lawfully established and operates;

b/ Its employees who directly carry out insurance auxiliary activities have full civil act capacity; possess degrees or certificates on insurance auxiliary operations suitable to the type of insurance auxiliary services, issued by training institutions lawfully established and operating at home or abroad;

c/ Its employees who directly perform insurance loss assessment satisfy the conditions specified at Point b of this Clause and the criteria on assessor in accordance with the commercial law;

d/ Its employees who directly perform insurance actuary satisfy the conditions specified at Point b of this Clause and the conditions and criteria for appointed actuary.

3. The Government shall detail Points b, c and d, Clause 2 of this Article.

4. The Minister of Finance shall provide in detail types of insurance auxiliary operations certificates, contents of training in insurance auxiliary operations, dossiers, order and procedures for testing of insurance auxiliary operations, and grant, renewal and revocation of insurance auxiliary operations certificates.

Chapter V

MICROINSURANCE

Article 144. Characteristics of microinsurance products

A microinsurance product has the following basic characteristics:

1. Being designed to be concise and easy-to-understand, with simple insurance appraisal procedures or without requiring insurance appraisal;

2. Only covering benefits to satisfy the insured’s basic protection needs against life, health and property risks with a term not exceeding 5 years;

3. The sum insured in each contract and annual premium for each of the insured in a contract must not exceed the maximum level set by the Government.

Article 145. Making, designing and development of microinsurance products

1. The State shall encourage, support and facilitate the organization of and participation in microinsurance products by one or several of the measures specified at Points a, b, d and e, Clause 1, Article 88 of this Law.

2. Microinsurance-providing organizations shall register with, and obtain approval of the Ministry of Finance for, methods and bases for calculating premiums of microinsurance products.

3. The Government shall provide in detail the measures specified in Clause 1 of this Article in line with development orientations and socio-economic conditions in each period; and dossiers, order and procedures for registration of methods and bases for calculating premiums of microinsurance products.

4. The Minister of Finance shall provide in detail methods and bases for calculating premiums of microinsurance products.

Article 146. Microinsurance-providing organizations

 1. Microinsurance-providing organizations include:

a/ Insurance enterprises and foreign non-life insurance enterprises’ branches established and operating in Vietnam;

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

2. The Government shall provide the dossiers, order and procedures for grant, re-grant, modification, supplementation and revocation of establishment and operation licenses, and suspension of operation contents of mutual organizations providing microinsurance.

3. The Ministry of Finance has the competence to grant, re-grant, modify, supplement and revoke establishment and operation licenses, and suspend operation contents of mutual organizations providing microinsurance.

Article 147. Insurance enterprises and foreign non-life insurance enterprises’ branches providing microinsurance

1. Insurance enterprises and foreign non-life insurance enterprises’ branches may take the initiative in providing microinsurance suitable to their licensed lines of insurance in the following forms:

a/ Directly;

b/ Via insurance agents;

c/ Via employees or members of socio-political organizations, socio-professional organizations or cooperatives authorized by insurance enterprises or foreign non-life insurance enterprises’ branches to advise and arrange the conclusion of microinsurance contracts for members of such organizations;

d/ Other forms as prescribed by law.

2. Insurance enterprises and foreign non-life insurance enterprises’ branches shall monitor, and conduct separate cost-accounting of, revenues and expenses of the activities of provision of microinsurance with other activities of the enterprises.

Article 148. Mutual organizations providing microinsurance

1. A mutual organization providing microinsurance may provide only microinsurance for its own members. Members participating in insurance concurrently act as the owners of the mutual organization providing microinsurance and the insurance buyers.

2. Insurance contracts concluded by mutual organizations providing microinsurance and members participating in insurance must comply with general provisions on insurance contracts, life insurance contracts, health insurance contracts or property insurance contracts as prescribed in Chapter II of this Law.

3. The Government shall provide in detail the provision of microinsurance by mutual organizations providing microinsurance.

Article 149. Conditions for grant of establishment and operation licenses of mutual organizations providing microinsurance

1. Conditions on founding members of a mutual organization providing microinsurance:

a/ For individuals, being Vietnamese citizens who have full civil act capacity and are members of the institution expected to establish a mutual organization providing microinsurance;

b/ For organizations, being a members’ representative organization as prescribed by law.

2. The contributed capital must be in Vietnam dong and not lower than the minimum level set by the Government.

3. The expected Chairperson of the Board of Directors, Director/Director General, at-law representative and microinsurance appointed actuary must satisfy the conditions and criteria specified by the Government.

4. Having a plan for implementation of microinsurance suitable to the number of members and networks of the organization.

5. Having a draft charter suitable to operational objectives of the organization and compliant with the Government’s regulations.

6. Having an information technology system which helps provide support for and monitor all microinsurance contracts and help monitor financial and accounting operations of microinsurance activities.

Article 150. Principles of operation of mutual organizations providing microinsurance

1. Mutual organizations providing microinsurance shall practice financial autonomy and take self-responsibility before law within the scope of assets formed from the provision of microinsurance.

2. Mutual organizations providing microinsurance shall manage and supervise operational efficiency, and comply with regulations on financial regime in order to ensure financial prudence and fulfillment of obligations and commitments toward members participating in insurance and related organizations and individuals in accordance with law.

3. Mutual organizations providing microinsurance shall implement risk management in order to effectively control risks arising from the provision of microinsurance.

4. The whole profits earned from the provision of microinsurance by mutual organizations providing microinsurance shall be used for the benefits of members participating in insurance by reducing premiums, increasing insurance benefits of the insured, and providing support for members, and to serve other goals stated in the charters of mutual organizations providing microinsurance.

5. The Government shall provide in detail the organization of operation, risk management, professional operations, information disclosure, financial regime, cost-accounting and financial statements of mutual organizations providing microinsurance.

Chapter VI

STATE MANAGEMENT OF INSURANCE BUSINESS ACTIVITIES

Article 151. State management of insurance business activities

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

2. The Ministry of Finance shall take responsibility before the Government for performing the state management of insurance business activities and has the following tasks and powers:

a/ To promulgate, or submit to competent agencies for promulgation, and guide the implementation of, legal documents on insurance business activities, and formulate strategies, schemes and policies on development of Vietnam’s insurance market;

b/ To make statistics of and forecasts about the insurance market;

c/ To supervise insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, mutual organizations providing microinsurance and insurance brokerage enterprises based on professional operations, financial situation, corporate governance, risk management and observance of the law on insurance business; to supervise the operation of Vietnam-based foreign representative offices;

d/ To supervise the operation of insurance agents and insurance auxiliary services through insurance enterprises, reinsurance enterprises and Vietnam-based foreign branches;

dd/ To inspect and examine insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, mutual organizations providing microinsurance and insurance brokerage enterprises; to examine the operation of Vietnam-based foreign representative offices;

e/ To enter into international cooperation in the field of insurance;

g/ To settle complaints and denunciations about, and handle administrative violations in, insurance business activities.

Article 152. Coordination mechanism in state management of insurance business activities

1. The Ministry of Finance shall coordinate with foreign insurance authorities in managing, supervising, inspecting and examining Vietnam-based foreign branches in accordance with the Government’s regulations.

2. The Ministry of Finance shall establish a mechanism for sharing administrative and supervisory information with the State Bank of Vietnam, ministries, sectors and socio-professional organizations in insurance business activities.

3. The Ministry of Finance shall coordinate with related ministries and sectors in implementing association and cooperation activities between insurance business activities and social insurance and health insurance provided by the State.

4. Business registration agencies may not approve the use of the phrase or term “insurance” or “reinsurance” or other phrase and terms in the name of an enterprise if the use of such phrase or term may cause the misunderstanding that such enterprise is an insurance enterprise, a reinsurance enterprise or a Vietnam-based foreign branch.

5. Business registration agencies may not approve the use of the phrase or term “insurance brokerage” or  “reinsurance brokerage” or other phrases and terms in the name of an enterprise if the use of such phrase or term may cause the misunderstanding that such enterprise is an insurance brokerage enterprise.

Article 153. The Ministry of Finance’s right to request provision of information in the inspection, examination, and handling of administrative violations in insurance business activities

1. In the course of inspection, examination, and handling of administrative violations in insurance business activities, in addition to the tasks and powers prescribed by the law on inspection, law on handling of administrative violations and other relevant laws, the Ministry of Finance has the following tasks and powers:

a/ To request shareholders, capital contributors, managers, supervisors and employees of insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches and insurance brokerage enterprises to interpret and provide information, documents and data related to inspection and examination contents;

b/ To request agencies, organizations and individuals that have information, documents and data related to the contents of inspection and examination of insurance business activities to provide such information, documents and data or request organizations and individuals to explain and show up for settling affairs related to contents of inspection and examination;

c/ To request credit institutions and foreign bank branches to provide information related to accounts of insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, insurance agents, insurance brokerage enterprises, organizations providing insurance auxiliary services, fund management companies of insurance enterprises, Vietnam-based foreign representative offices and organizations and individuals that show signs of committing the prohibited acts prescribed in Article 9 of this Law or violate regulations on capital adequacy ratio or investment activities of insurance enterprises, reinsurance enterprises, Vietnam-based foreign branches, financial prudence or solvency specified in Articles 95, 99, 100, 109 and 110 of this Law. The order and procedures for requesting provision of and providing information must comply with the law on banking.

2. The request for organizations and individuals to coordinate, provide information, documents and data, explain, and show up for settling affairs under this Article must be made in writing, clearly stating the purposes, bases, contents and scope of the request.

3. Information provided by credit institutions, foreign bank branches, organizations and individuals under this Article must be kept confidential in accordance with law and may be used only for the purposes of inspection, examination, and handling of administrative violations of related organizations and individuals.

Article 154. Inspection of insurance business activities

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

2. When deeming it necessary, in order to carry out specialized inspection of insurance business, the agency specified in Clause 1 of this Article may hire an independent audit firm, a consultancy firm or experts to evaluate and give their professional opinions on contents that threaten to affect the safety and health of the inspected subjects. These contents include:

a/ Technical reserves;

b/ Solvency;

c/ Reinsurance;

d/ Investment;

dd/ Separation of equity and premiums, division of surpluses;

e/ Rules, terms and premium tariff.

3. The hired independent audit firm, consultancy firm or experts shall take responsibility before law for the accuracy, truthfulness and objectivity of data, evaluation documents and opinions on the contents put for consultancy.

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

Chapter VII

IMPLEMENTATION PROVISIONS

Article 155. To amend and supplement Appendix IV of Law No. 61/2020/QH14 on Investment, which had a number of articles amended and supplemented under Law No. 03/2022/QH15

To amend and supplement the sector/trade with ordinal number 29 and add the sector/trade with ordinal number 29a below ordinal number 29 of Appendix IV on the List of sectors and trades subject to conditional business investment as follows:

“29. Insurance brokerage

29a. Insurance auxiliary services”

Article 156. Effect

1. This Law will take effect on January 1, 2023, except the case specified in Clause 2 of this Article.

2. Clause 3, Article 86; Clauses 4 and 5, Article 94; Article 95; Clauses 3 and 4, Article 99; and Articles 109, 110, 111, 112, 113, 114, 115 and 116 of this Law will take effect on January 1, 2028.

3. Law No. 24/2000/QH10 on Insurance Business, which had a number of articles amended and supplemented under Law No. 61/2010/QH12 and Law No. 42/2019/QH14, ceases to be effective on the effective date of this Law, except:

a/ Clause 1, Article 157 of this Law;

b/ Articles 77, 78, 79, 80, 81, 83, 94 and 98 of Law No. 24/2000/QH10 on Insurance Business, which had a number of articles amended and supplemented under Law No. 61/2010/QH12 and Law No. 42/2019/QH14, which will take effect through December 31, 2027.

Article 157. Transitional provisions

1. Insurance contracts concluded before the effective date of this Law and remaining valid must continue to comply with law effective at the time of their conclusion, except cases in which the contractual parties make an agreement on modification and supplementation of the contracts to make them conformable with this Law and for application of this Law.

2. Insurance agent’s certificates issued before the effective date of this Law will remain valid through December 31, 2025. The Ministry of Finance shall provide in detail the conversion of insurance agent’s certificates issued before the effective date of this Law into insurance agent’s certificates provided in this Law.

3. Insurance certificates, insurance broker’s certificates and insurance auxiliary operations certificates issued before the effective date of this Law will remain valid.

4. From January 1, 2023, insurance enterprises and foreign non-life insurance enterprises’ branches shall cease to make deductions for the Fund for Protection of the Insured.

5. The handling of the balance of the Fund for Protection of the Insured as mentioned in Article 97 of Law No. 24/2000/QH10 on Insurance Business, which had a number of articles amended and supplemented under Law No. 61/2010/QH12 and Law No. 42/2019/QH14, is as follows:

a/ The whole balance of the Fund for Protection of the Insured shall be managed by the Ministry of Finance to protect the insured’s interests in case an insurance enterprise becomes insolvent or goes bankrupt;

b. The Government shall provide in detail the management and use of the balance of the Fund for Protection of the Insured.

This Law was passed on June 16, 2022, by the XV^th National Assembly of the Socialist Republic of Vietnam at its 3^rd session.-

Chairman of the National Assembly
VUONG DINH HUE