Socialist Republic of Vietnam

NATIONAL ASSEMBLY


No. 24-2000-QH10 on 9 December 2000.


LAW ON INSURANCE BUSINESS

In order to protect the lawful rights and interests of organizations and individuals participating in insurance ; to promote insurance business activities; to maintain and promote sustainable socio-economic development and stability in the lives of the people; and in order to strengthen State administration of insurance business activities;

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

This Law regulates insurance business.


CHAPTER I

General Provisions

Article 1 Governing scope

1. This Law regulates the organization and conduct of insurance business and prescribes the rights and obligations of organizations and individuals participating in insurance.

2. This Law does not apply to social insurance, medical insurance, deposit insurance and other types of insurance not of a business nature which are operated by the State.

Article 2 Applicability of Law on Insurance Business, related laws, international treaties and international practice

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

2. In the case of any inconsistency between an international treaty to which the Socialist Republic of Vietnam is a signatory or participant and the provisions of this Law, the provisions of the international treaty shall apply.

3. The parties participating in insurance may agree on the applicability of international practice if it is not contrary to the law of Vietnam.

Article 3 Definitions

In this Law, the following terms shall be construed as follows:

1. Insurance business means the activity of an insurer with the objective of profit whereby the insurer accepts risks of an insured person on the basis of the purchaser of insurance paying an insurance premium in order for the insurer to pay insurance proceeds to the beneficiary or to indemnify the insured person upon occurrence of the insured event.

2. Reinsurance business means the activity of an insurer for profit whereby the insurer receives an amount of the insurance premium of another insurer in order to undertake to indemnify the liability for which insurance has already been accepted.

3. Insurance agency activities means introducing and offering insurance, arranging the entering into of insurance contracts and other tasks aimed at implementing insurance contracts as authorized by an insurer.

4. Insurance broking activities means the supply of information and consultancy to a purchaser of insurance regarding insurance products, insurance conditions, insurance premium levels, insurers, and tasks related to negotiation, arrangement and implementation of insurance contracts at the request of a purchaser of insurance.

5. Insurer means an enterprise established, organized and operating in accordance with the provisions of this Law and the provisions of other relevant laws in order to conduct insurance business and reinsurance business.

6. Purchaser of insurance means an organization or individual entering into a contract of insurance with an insurer and paying an insurance premium. The purchaser of insurance may at the same time be the insured person or the beneficiary.

7. Insured person means an organization or individual having their property, civil liability or life insured in accordance with an insurance contract. The insured person may at the same time be the beneficiary.

8. Beneficiary means an organization or individual nominated by the purchaser of insurance to receive the insurance proceeds under a contract of personal insurance.

9. Insurable interest means a right of ownership, right of possession, right of use, or property right ; maintenance rights and obligations with respect to the subject matter insured.

10. Insured event means an objective event agreed by the parties or stipulated by law, upon occurrence of which the insurer must pay the insurance proceeds to the beneficiary or indemnify the insured person.

11. Insurance premium means an amount of money which the purchaser of insurance must pay to the insurer within the time-limit and by the method agreed by the parties to the insurance contract.

12. Life insurance means types of insurance products relating to the life or death of the insured person.

13. Endowment insurance means an insurance product relating to the life of the insured person up to a fixed time , under which the insurer must pay the insurance proceeds to the beneficiary if the insured person is still alive at the time agreed in the insurance contract.

14. Death benefit insurance means an insurance product relating to the death of the insured person during a fixed period , under which the insurer must pay the insurance proceeds to the beneficiary if the insured person dies during the period agreed in the insurance contract.

15. Combined insurance means an insurance product combining endowment insurance and death benefit insurance.

16. Whole of life insurance means an insurance product under which the insurer must pay the insurance proceeds to the beneficiary if the insured person dies at any time whatsoever.

17. Periodical payments insurance means an insurance product relating to the life of the insured person up to a fixed time, under which the insurer must pay insurance proceeds periodically to the beneficiary after the time agreed in the insurance contract.

18. Non-life insurance means the types of insurance products being property insurance, civil liability insurance and other insurance products which are not life insurance.

Article 4 State assurances for insurance business

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

2. The State shall invest capital and other resources in order that State owned insurance business enterprises shall develop and play a dominant role in the insurance market.
3. The State shall have policies to develop the Vietnamese insurance market and to give preference to insurance products which serve the aims of socio-economic development, especially the program for development of agriculture, forestry and fisheries.

Article 5 International co-operation in insurance business sector

The State shall uniformly administer international co-operation in the insurance business sector and shall have policies for its development in the direction of multilateralism and diversification, on the basis of respect for independence, sovereignty, equality and mutual benefit; shall encourage foreign insurers and insurance brokers to attract foreign investors to invest capital in Vietnam and to reinvest profits earned from insurance business activities to serve the tasks of socio-economic development in Vietnam; and shall facilitate the intensification of foreign co-operation by insurers and insurance brokers, aimed at increasing the effectiveness of insurance business.

Article 6 Fundamental principles in insurance activities

1. Organizations and individuals having insurance requirements may only participate in insurance with an insurer operating in Vietnam.

2. An insurer must satisfy the financial requirements for fulfilling its undertakings to purchasers of insurance.

Article 7 Types of insurance products

1. Life insurance shall comprise:

(a) Whole of life insurance;

(b) Endowment insurance;

(c) Death benefit insurance;

(d) Combined insurance;

(dd) Periodical payments insurance;

(e) Other life insurance products as determined by the Government.
2. Non-life insurance shall comprise :

(a) Personal accident and health care insurance;

(b) Property insurance and damage insurance;

(c) Insurance for goods in transit by road, sea, river, rail and air;

(d) Aviation insurance;

(dd) Motor vehicle insurance;

(e) Fire and explosion insurance ;

(g) Marine hull and shipowner’s civil liability insurance;

(h) Public liability insurance;

(i) Credit and financial risks insurance;

(k) Business damage insurance;

(l) Agriculture insurance;

(m) Other non-life insurance products as determined by the Government.

3. The Ministry of Finance shall provide a detailed list of insurance products.

Article 8 Compulsory insurance

1. Compulsory insurance is a type of insurance in respect of which the law prescribes the insurance conditions, the levels of insurance premium, and the minimum insurance proceeds with which organizations and individuals participating in insurance and insurers are obliged to comply.

Only certain types of insurance which are aimed at protecting the public interest and social security shall be compulsory insurance.

2. Compulsory insurance shall include:

(a) Civil liability insurance for motor vehicle owners; insurance for civil liability of aviation carriers to passengers;

(b) Professional indemnity insurance for legal consultancy activities;

(c) Professional indemnity insurance for insurance brokers;

(d) Fire and explosion insurance.

3. Depending on the requirements of socio-economic development from time to time, the Government shall submit to the Standing Committee of the National Assembly regulations on other types of compulsory insurance.

Article 9 Reinsurance

1. Insurers may reinsure with other insurers, including with insurers overseas.

2. In the case of reinsurance with insurers overseas, an insurer must reinsure a part of the liability for which insurance has already been accepted with a domestic reinsurance enterprise in accordance with the regulations of the Government.

Article 10 Co-operation and competition in insurance business

1. Insurers, insurance agents and insurance brokers may engage in lawful co-operation and competition in insurance business.

2. The following conduct shall be strictly prohibited:

(a) Providing false information about and false advertising of areas and scope of operation and insurance conditions, thereby causing damage to the lawful rights and interests of purchasers of insurance;

(b) Competing for clients in the form of obstructing, enticing, bribing, or threatening staff or clients of other insurers, insurance agents and insurance brokers;
(c) Conducting unlawful promotions;

(d) Engaging in any other unlawful competition.

Article 11 Right to participate in socio-professional organizations regarding insurance business

Insurers, insurance agents and insurance brokers may participate in socio-professional organizations regarding insurance business with the aim of developing the insurance market and protecting the lawful rights and interests of their members in accordance with law.


CHAPTER II

Insurance Contracts

SECTION 1

General Provisions on Insurance Contracts

Article 12 Insurance contracts

1. An insurance contract means an agreement between a purchaser of insurance and an insurer, pursuant to which the purchaser of insurance must pay an insurance premium and the insurer must pay insurance proceeds to the beneficiary or indemnify the insured person upon occurrence of the insured event.

2. Types of insurance contracts shall comprise:

(a) Contracts of personal insurance;

(b) Contracts of property insurance;

(c) Contracts of civil liability insurance.

3. Contracts of marine insurance shall be governed by the provisions of the Maritime Code; with respect to issues not covered by the Maritime Code, the provisions of this Law shall apply.

4. Issues relating to insurance contracts which are not covered by this Chapter shall be governed by the provisions of the Civil Code and the provisions of other relevant laws.

Article 13 Contents of insurance contracts

1. An insurance contract must contain the following items:

(a) Names and addresses of the insurer, of the purchaser of insurance, and of the insured person or beneficiary;

(b) Subject matter insured;

(c) Sum insured, and value of property insured in the case of property insurance;

(d) Scope of insurance, insurance terms and conditions ;

(dd) Exclusion clauses;

(e) Period of insurance;

(g) Insurance premium rate and method of payment of insurance premium;

(h) Time-limit for and method of payment of insurance proceeds or indemnity;

(i) Provisions on dispute resolution;

(k) Day, month and year of entering into the contract.

2. In addition to the items prescribed in clause 1 of this article, an insurance contract may contain other items agreed by the parties.

Article 14 Forms of insurance contracts

An insurance contract must be made in writing.

Proof of entering into an insurance contract shall be a certificate of insurance, an insurance policy, a telegram, a telex, a facsimile and other forms stipulated by law.

Article 15 Point of time when insurance liability arises

Insurance liability shall arise when an insurance contract has been entered into or when there is proof that the insurer has agreed to insure and the purchaser of insurance has paid the insurance premium, unless otherwise agreed in the insurance contract.

Article 16 Exclusion clauses

1. Exclusion clauses shall specify the circumstances in which an insurer is not obliged to indemnify or pay insurance proceeds upon occurrence of the insured event.

2. Exclusion clauses must be set out clearly in the insurance contract. They must be explained clearly by an insurer to the purchaser of insurance when a contract is entered into.

3. Exclusion clauses shall not be applied in the following circumstances:

(a) The purchaser of insurance unintentionally breaches the law;

(b) The purchaser of insurance has a legitimate reason for late notification to the insurer of the occurrence of the insured event.

Article 17 Rights and obligations of insurers

1. An insurer shall have the rights:

(a) To collect the insurance premium in accordance with the agreement in the insurance contract;

(b) To require the purchaser of insurance to provide complete and truthful information relating to entering into and implementing the insurance contract;

(c) To suspend unilaterally the implementation of the insurance contract in accordance with the provisions of article 19.2, article 20.2, article 35.2 and article 50.3 of this Law;

(d) To refuse to pay insurance proceeds to the beneficiary or to refuse to indemnify the insured person in circumstances outside the scope of the insurance liability or in circumstances where liability is excluded as agreed in the insurance contract;

(dd) To require the purchaser of insurance to implement measures to prevent and minimize loss in accordance with the provisions of this Law and the provisions of other relevant laws;

(e) To require a third party to reimburse the insured sum which the insurer has paid to indemnify the insured person as a result of the third party in the cases of property and civil liability ;

(g) Other rights as stipulated by law.

2. An insurer shall have the obligations:

(a) To explain to the purchaser of insurance the insurance terms and conditions and the rights and obligations of the purchaser of insurance;

(b) To issue to the purchaser of insurance a certificate of insurance or an insurance policy after entering into the insurance contract;

(c) To pay insurance proceeds in a timely manner to the beneficiary or to indemnify the insured person upon occurrence of the insured event;

(d) To provide a written explanation of the reasons for refusal to pay insurance proceeds or indemnity;

(dd) To co-ordinate with the purchaser of insurance to resolve the claims of a third party for compensation for damage under the insurance liability upon occurrence of the insured event;

(e) Other obligations as stipulated by law.

Article 18 Rights and obligations of purchasers of insurance

1. A purchaser of insurance shall have the rights:

(a) To select an insurer operating in Vietnam in order to purchase insurance;

(b) To require the insurer to explain the insurance terms and conditions and to issue a certificate of insurance or an insurance policy;

(c) To suspend unilaterally the implementation of the insurance contract in accordance with the provisions of article 19.3 and article 20.1 of this Law;

(d) To require the insurer to pay the insurance proceeds to the beneficiary or to indemnify the insured person as agreed in the insurance contract upon occurrence of the insured event;

(dd) To assign the insurance contract as agreed in the insurance contract or as stipulated by law;

(e) Other rights as stipulated by law.

2. A purchaser of insurance shall have the obligations:

(a) To pay the insurance premium in full and on time and in accordance with the method agreed in the insurance contract;

(b) To declare fully and truthfully all details relating to the insurance contract, as requested by the insurer ;
(c) To notify circumstances which may increase the risks or which may result in additional liability on the part of the insurer during the period of implementation of the insurance contract, as requested by the insurer ;

(d) To notify the insurer of the occurrence of the insured event as agreed in the insurance contract;

(dd) To implement measures to prevent and minimize any loss in accordance with this Law and the provisions of other relevant laws;

(e) To implement other obligations as stipulated by law.

Article 19 Responsibility to provide information

1. When entering into an insurance contract, an insurer shall be responsible to provide complete information relating to the insurance contract and to explain to the purchaser of insurance the insurance terms and conditions; and the purchaser of insurance shall be responsible to provide to the insurer complete information relating to the subject matter insured. Both parties shall be responsible for the accuracy and truthfulness of such information. An insurer shall be responsible to keep confidential the information provided by a purchaser of insurance.

2. An insurer shall have the right to suspend unilaterally the implementation of an insurance contract and to collect the insurance premium up until the time of suspension of implementation of the insurance contract, upon one of the following acts being committed by the purchaser of insurance:

(a) Intentionally providing false information with the aim of entering into an insurance contract in order to be paid insurance proceeds or indemnity;

(b) Failing to fulfil obligations to provide information to the insurer in accordance with article 18.2(c) of this Law.

3. In the case where an insurer intentionally provides false information with the aim of entering into an insurance contract, the purchaser of insurance shall have the right to suspend unilaterally the implementation of the insurance contract; and the insurer must indemnify the purchaser of insurance for any damage arising from the provision of false information.

Article 20 Changes in level of insured risks

1. When there is a change in the factors providing the basis for the calculation of the insurance premium, thereby leading to a reduction in the insured risks, the purchaser of insurance shall have the right to require the insurer to reduce the insurance premium for the remaining duration of the insurance contract. If the insurer does not agree to reduce the insurance premium, the purchaser of insurance shall have the right to suspend unilaterally the implementation of the insurance contract, but must immediately provide written notice to the insurer.

2. When there is a change in the factors providing the basis for the calculation of the insurance premium, thereby leading to an increase in the insured risks, the insurer shall have the right to recalculate the insurance premium for the remaining duration of the insurance contract. If the purchaser of insurance does not agree to an increased premium, the insurer shall have the right to suspend unilaterally the implementation of the insurance contract, but must immediately provide written notice to the purchaser of insurance.

Article 21 Interpretation of contracts of insurance

If an insurance contract contains provisions which are unclear, those provisions shall be interpreted in favour of the purchaser of insurance.

Article 22 Void insurance contracts

1. An insurance contract shall be void in the following circumstances:

(a) The purchaser of insurance does not have an insurable interest ;

(b) At the time of entering into the insurance contract, the subject matter insured did not exist;

(c) At the time of entering into the insurance contract, the purchaser of insurance knew that the insured event had already occurred;

(d) The purchaser of insurance or the insurer was guilty of fraud when entering into the contract of insurance;
(dd) Other circumstances as stipulated by law.

2. Void contracts of insurance shall be dealt with in accordance with the provisions of the Civil Code and the provisions of other relevant laws.

Article 23 Termination of insurance contracts

In addition to the circumstances for termination of contracts pursuant to the provisions of the Civil Code, an insurance contract shall also terminate in the following circumstances:

1. The purchaser of insurance no longer has an insurable interest;

2. The purchaser of insurance does not pay the insurance premium in full or on time as agreed in the insurance contract, unless otherwise agreed by the parties;

3. The purchaser of insurance does not pay the insurance premium in full within the grace period as agreed in the insurance contract.

Article 24 Legal consequences of termination of insurance contracts

1. In the case of termination of an insurance contract pursuant to the provisions in article 23.1 of this Law, an insurer must refund to the purchaser of insurance that part of the paid insurance premium which corresponds to the remaining duration of the insurance contract, after deducting legitimate expenses relating to the insurance contract.

2. In the case of termination of an insurance contract pursuant to the provisions in article 23.2 of this Law, the purchaser of insurance must continue to pay the full amount of the insurance premium up until the date of termination of the insurance contract. This provision shall not apply to contracts of personal insurance.

3. In the case of termination of an insurance contract pursuant to the provisions in article 23.3 of this Law, an insurer shall remain liable to indemnify the insured person upon occurrence of the insured event during the grace period; and the purchaser of insurance must continue to pay the full amount of the insurance premium up until the end of the grace period as agreed in the insurance contract. This provision shall not apply to contracts of personal insurance.

4. The legal consequences of the termination of an insurance contract in other cases shall be implemented in accordance with the provisions of the Civil Code and the provisions of other relevant laws.

Article 25 Amendments of and additions to insurance contracts

1. The purchaser of insurance and the insurer may agree on amendments of and additions to insurance premiums, terms and conditions, unless otherwise stipulated by law.

2. Any amendments of and additions to an insurance contract must be made in writing.

Article 26 Assignment of insurance contracts

1. A purchaser of insurance may assign an insurance contract as agreed in the insurance contract.

2. The assignment of an insurance contract shall be valid only where the purchaser of insurance provides a written notice of assignment to the insurer and the latter provides its consent in writing, except in cases where the assignment is carried out in accordance with international practice.

Article 27 Liability on reinsurance

1. An insurer shall be solely liable to the purchaser of insurance pursuant to the insurance contract, including cases where it reinsures its liability .

2. An enterprise which has accepted reinsurance shall not be permitted to demand that the purchaser of insurance pay an insurance premium directly to it, unless otherwise provided in the insurance contract .

3. A purchaser of insurance shall not be permitted to require the reinsurer to pay the insurance proceeds or indemnify it, unless otherwise provided in the insurance contract.

Article 28 Time-limit for requesting payment of insurance proceeds or indemnity

1. The time-limit for requesting payment of insurance proceeds or indemnity under an insurance contract shall be one year from the date of occurrence of the insured event. The duration of an event of force majeure or any other objective interruption shall not be included when calculating the time-limit for requesting payment of insurance proceeds or indemnity.

2. In the case where a purchaser of insurance proves that it did not know the date of occurrence of the insured event, the time-limit prescribed in clause 1 of this article shall run from the date when the purchaser of insurance becomes aware of the occurrence of the insured event.

3. In the case where a third party claims indemnity from the purchaser of insurance for damage which is covered under the insurance liability as agreed in the insurance contract, the time-limit prescribed in clause 1 of this article shall run from the date of the claim of the third party.

Article 29 Time-limit for payment of insurance proceeds or indemnity

Upon occurrence of an insured event, the insurer must pay the insurance proceeds or indemnity within the time-limit stated in the insurance contract; if the insurance contract does not contain any such provision, the insurer must pay the insurance proceeds or indemnity within fifteen (15) days from the date of receipt of a complete and proper application requesting payment of the insurance proceeds or indemnity.

Article 30 Limitation period for initiating legal proceedings

The limitation period for initiating legal proceedings in respect of an insurance contract shall be three years from the time the dispute arises.

SECTION 2

Contracts of Personal Insurance

Article 31 Subject matter of contracts of personal insurance

1. The subject matter of a contract of personal insurance shall be the longevity, life and health of a person, and personal accidents.

2. A purchaser of insurance may only purchase insurance for the following persons:

(a) Purchaser itself;

(b) Spouse, child or parent of the purchaser;

(c) Siblings of the purchaser, or persons in a maintenance relationship ;

(d) Other persons in whom the purchaser of insurance has an insurable interest.

Article 32 Sum insured

A purchaser of insurance and the insurer shall agree in the insurance contract on the sum insured or the method for determining it.

Article 33 Basis for payment of insurance proceeds in personal accident and health care insurance

1. In personal accident insurance, the insurer must pay insurance proceeds to the beneficiary up to the sum insured, based on the actual injury of the person insured and as agreed in the insurance contract.

2. In personal health care insurance, the insurer must pay insurance proceeds to the insured person up to the sum insured, based on the costs of medical examination, treatment and convalescence of the insured person arising as a result of an illness or accident and as agreed in the insurance contract.

Article 34 Notification of age in life insurance

1. A purchaser of insurance shall be obliged to notify the correct age of the insured person at the time of entering into the insurance contract, as a basis for calculating the insurance premium.

2. In the case where a purchaser of insurance notifies an incorrect age of the insured person, and the correct age of the insured person is in fact outside the insurable range, the insurer shall have the right to rescind the insurance contract and to deduct all related legitimate expenses before refunding to the purchaser of insurance the amount of insurance premium already paid . In the case where a contract of life insurance has been in effect for two or more years, the insurer must pay to the purchaser of insurance the surrender value of the insurance contract.

3. In the case where the purchaser of insurance notifies an incorrect age of the insured person, thereby resulting in a reduced insurance premium being payable, and the correct age of the insured person is in fact within the insurable range, the insurer shall have the right:

(a) To require the purchaser of insurance to pay an additional premium to correspond to the amount of premium agreed in the insurance contract;

(b) To reduce the sum insured under the insurance contract corresponding to the amount of premium actually paid.

4. In the case where a purchaser of insurance notifies an incorrect age of the insured person, thereby resulting in an increased premium being payable, and the correct age of the insured person is in fact within the insurable range, the insurer must refund to the purchaser of insurance the excess insurance premium paid, or increase the sum insured under the insurance contract to correspond to the amount of premium actually paid.

Article 35 Payment of life insurance premiums

1. A purchaser of insurance may pay the insurance premium in a lump sum or by instalments at the times and by the methods agreed in the insurance contract.

2. In the case where an insurance premium is payable by instalments and the purchaser of insurance has already paid a number of instalments but is unable to pay the following instalments, after a period of sixty (60) days from the date of any grace period, the insurer shall have the right to suspend unilaterally the implementation of the contract and the purchaser of insurance shall not have the right to demand repayment of any insurance premium paid where insurance premiums have been paid for less than two years, unless otherwise agreed by the parties in the insurance contract.

3. In the case where the purchaser of insurance has already paid insurance premiums for two or more years and the insurer unilaterally suspends implementation of the contract pursuant to the provisions in clause 2 of this article, the insurer must pay the surrender value of the insurance contract to the purchaser of insurance, unless otherwise agreed by the parties in the insurance contract.

4. The parties may agree to reinstate the effectiveness of an insurance contract which has been unilaterally suspended pursuant to the provisions in clause 2 of this article, within a period of two years from the date of suspension and where the purchaser of insurance has paid the outstanding insurance premium.

Article 36 Legal proceedings may not be initiated claiming payment of insurance premiums

In the case of personal insurance, if a purchaser of insurance fails to pay the insurance premium or fails to pay it in full, the insurer may not initiate legal proceedings to require the purchaser of insurance to pay the insurance premiums.

Article 37 Claims for re-imbursement may not be made against third parties

In the case where the death, injury or illness of an insured person was caused directly or indirectly by the act or omission of a third person, the insurer shall remain obliged to pay the insurance proceeds and shall not have the right to demand re-imbursement of the money that it has paid to the beneficiary from the third party. The third party shall be responsible to indemnify the insured person as stipulated by law.

Article 38 Entering into contract of personal insurance covering death

1. When a purchaser of insurance enters into a contract of personal insurance covering the death of another person, such other person must provide written consent specifying the sum insured and the beneficiary.

A purchaser of insurance must agree in writing to any case of a change of beneficiary.

2. A contract of personal insurance may not be entered into covering the death of the following:

(a) A person under eighteen (18) years of age, unless the parents or the guardian of that person agree in writing;

(b) A person suffering from a mental disorder.

Article 39 Cases in which insurance proceeds shall not be paid

1. An insurer shall not be obliged to pay insurance proceeds in the following cases:

(a) The insured person commits suicide within a period of two years from the date of payment of the first insurance premium instalment or from the date of reinstatement of effectiveness of an insurance contract ;

(b) The insured person dies or is permanently disabled due to the intentional wrongful act or omission of the purchaser of insurance or of the beneficiary;

(c) The insured person dies due to the execution of a death sentence.

2. In any case where one or a number of the beneficiaries intentionally causes the death or permanent disablement of the insured person, the insurer shall remain liable to pay insurance proceeds to the other beneficiaries as agreed in the insurance contract.

3. In any case covered by clause 1 of this article, the insurer must pay to the purchaser of insurance the surrender value of the insurance contract or must refund the whole of the insurance premiums already paid after deduction of related legitimate expenses. If the purchaser of insurance is deceased, the amount of the refund shall be determined in accordance with the laws on inheritance.

SECTION 3

Contracts of Property Insurance

Article 40 Subject matter of contracts of property insurance

The subject matter of a contract of property insurance shall be property, including actual things, money, valuable papers and property rights.

Article 41 Sum insured

The sum insured means the sum of money for which the purchaser of insurance requests insurance for property.

Article 42 Contract of property insurance above value

1. A contract of property insurance above value means a contract in which the sum insured is greater than the market value of the insured property at the time of entering into the contract. An insurer and a purchaser of insurance may not enter into a contract of property insurance above value.

2. In the case where a contract of property insurance above value is entered into due to the unintentional wrongful act or omission of the purchaser of insurance, the insurer must refund to the purchaser of insurance the amount of paid insurance premium corresponding to the insured sum which exceeds the market value of the insured property, after deducting legitimate related expenses. Upon occurrence of the insured event, the insurer shall only be responsible to indemnify for damage not exceeding the market value of the insured property.

Article 43 Contract of property insurance below value

1. A contract of property insurance below value means a contract in which the sum insured is less than the market value of the insured property at the time of entering into the contract.

2. In the case where a contract of property insurance below value is entered into, the insurer shall only be responsible to indemnify in accordance with the ratio of the sum insured to the market value of the insured property at the date of entering into the contract.

Article 44 Double insurance contracts

1. Double insurance contracts means the situation where the purchaser of insurance enters into an insurance contract with two or more insurers in order to insure one single subject matter, on the same conditions and for the same insured event.

2. In the case where the parties enter into double insurance contracts, upon occurrence of the insured event, each insurer shall only be responsible to indemnify in accordance with the ratio of the agreed sum insured to the total sum insured under all insurance contracts which the purchaser of insurance has entered into. The total sum of indemnity payable by all of the insurers shall not exceed the value of the actual property damage.

Article 45 Loss suffered through normal wear and tear or due to inherent nature of property

An insurer shall not be liable for loss of insured property due to normal wear and tear or due to the inherent nature of the property, unless otherwise provided in the insurance contract.

Article 46 Basis of indemnity

1. The amount of indemnity which an insurer must pay to the insured person shall be determined on the basis of the market price of the insured property at the point of time when and place where the loss is suffered and on the basis of the actual level of damage, unless otherwise provided in the insurance contract.

The cost of determining the market value and the level of damage shall be borne by the insurer.

2. The amount of indemnity which an insurer shall pay to the insured person shall not exceed the amount of the sum insured, unless otherwise provided in the insurance contract.

3. In addition to the amount of indemnity, an insurer must also pay to the insured person the necessary and legitimate expenses of [measures for] prevention and minimization of loss and the costs arising which the insured person must bear in order to implement instructions of the insurer.

Article 47 Forms of indemnity

1. The purchaser of insurance and the insurer may agree on one of the following forms of indemnity:

(a) Repair of the damaged property;

(b) Replacement of the damaged property with other property;

(c) Payment of monetary compensation.

2. If the purchaser of insurance and the insurer fail to agree on the form of indemnity, monetary compensation shall be paid.

3. In the case of indemnity under clauses 1(b) and (c) of this article, the insurer shall have the right to repossess the damaged property after it has been replaced or after full payment of indemnity in accordance with the market price of the property.

Article 48 Loss assessment

1. Upon occurrence of the insured event, the insurer or the person authorized by it shall conduct a loss assessment to determine the causes and extent of the loss. The insurer shall bear the costs of the loss assessment.

2. If the parties do not reach agreement on the causes and extent of the loss, they may engage an independent assessor, unless otherwise provided in the insurance contract. If the parties do not agree on the engagement of an independent assessor, one of the parties may request a court, at the place where the loss occurred or at the place where the insured person resides, to appoint an independent assessor. The conclusion of the independent assessor shall be binding on both parties.

Article 49 Right of subrogation

1. Where the wrongful act or omission of a third party causes damage to an insured person and the insurer has already indemnified the insured person, the insured person must pass to the insurer the right to claim recovery of such sum of indemnity from the third party.

2. If the insured person refuses to pass such right to the insurer or does not reserve or abandons the right to make a claim against the third party, then the insurer shall have the right to deduct an amount of indemnity depending on the level of fault of the insured person .

3. An insurer may not make a claim against a parent, spouse, child or sibling of an insured person to reimburse the sum paid to the insured person, unless such person intentionally caused the loss.

Article 50 Provisions on safety

1. An insured person must implement all regulations on fire prevention, fire-fighting, occupational safety and hygiene, and other relevant provisions of the law aimed at ensuring the safety of the subject matter insured.

2. An insurer shall have the right to carry out inspections of the conditions for the safety of the subject matter insured, or to recommend or require that the insured person to implement measures to prevent or minimize risks.

3. In the case where an insured person does not implement measures to ensure the safety of the subject matter insured, the insurer shall have the right to fix a time-limit for the insured person to implement such measures; if at the expiry of that time-limit the measures for ensuring safety have not been implemented, the insurer shall have the right to increase the insurance premium or to suspend unilaterally the implementation of the insurance contract.

4. An insurer may implement preventive measures to ensure the safety of the subject matter insured when it has agreement from the purchaser of insurance or from the authorized State body.

Article 51 No renunciation of insured property

Upon the occurrence of loss, an insured person may not renounce the insured property, unless otherwise stipulated by law or unless otherwise agreed by the parties.

SECTION 4

Contracts of Civil Liability Insurance

Article 52 Subject matter of contracts of civil liability insurance

The subject matter of a contract of civil liability insurance shall be the civil liability of the insured person to a third party as stipulated by law.

Article 53 Liability of insurers

1. The liability of an insurer only arises if a third party makes a claim against an insured person for indemnity for damage caused to the third party due to the wrongful act or omission of the insured person during the period of insurance.
2. A third party shall not have the right to require directly an insurer to indemnify the third party, unless otherwise stipulated by law.

Article 54 Sum insured

The sum insured shall be the amount that the insurer must pay to the insured person as agreed in the insurance contract.

Article 55 Limit of insurance liability

1. To the extent of the sum insured, an insurer must pay to the insured person any amount which, by law, the insured person is liable to pay in compensation to the third party.

2. In addition to paying amounts of indemnity pursuant to clause 1 of this article, an insurer must also pay any costs of resolving disputes as to liability to the third party and any interest payable to the third party for late payment of indemnity by the insured person on the instructions of the insurer.

3. The total amount of indemnity payable by an insurer pursuant to the provisions of clauses 1 and 2 of this article shall not exceed the sum insured, unless otherwise agreed in the insurance contract.

4. In the case where an insured person must pay a guarantee sum or security deposit in order to ensure property is not seized or to avoid the initiation of court proceedings, then, at the request of the insured person, an insurer must fulfil such guarantee or pay such security deposit to the extent of the sum insured.

Article 56 Right to represent insured person

An insurer may act on behalf of the purchaser of insurance in negotiations with the third party in relation to the level of damage, unless otherwise agreed in the insurance contract.

Article 57 Methods of paying indemnity

Depending on the request of the insured person, an insurer may pay the indemnity directly to the insured person or to the third party which incurred the damage.


CHAPTER III

Insurers

SECTION 1

Issuance of Licences for Establishment and Operation

Article 58 Establishment and operation of insurers

Insurers shall be established and shall operate in accordance with the provisions of this Law and the provisions of other relevant laws.

Article 59 Types of insurers

Types of insurers shall comprise:

1. State owned insurance enterprises;

2. Shareholding insurance companies;

3. Mutual insurance organizations;

4. Joint venture insurance enterprises;

5. One hundred (100) per cent foreign owned insurance enterprises.

Article 60 Areas of operation of insurers

1. The areas of operation of insurers shall comprise:

(a) Insurance business, reinsurance business;

(b) Risk management, prevention and limitation of loss;

(c) Loss assessment;

(d) Loss assessment agency, agency for consideration and resolution of indemnity, and agency for third party recovery claims;

(dd) Management of funds and investments;

(e) Other operations in accordance with law.

2. Insurers shall not be permitted to conduct simultaneously life and non-life insurance business, unless a life insurer conducts personal accident and health care insurance as a supplement to life insurance.

Article 61 Areas of reinsurance business

Reinsurance business shall comprise:

1. Ceding to one or more other insurers a part of the liability insured;

2. Accepting to insure again a part or all of the liability which another insurer has insured.

Article 62 Power to issue licence for establishment and operation

1. The Ministry of Finance shall issue licences for establishment and operation of insurers in accordance with this Law and the provisions of other relevant laws.

2. The issuance of licences for establishment and operation of insurers must comply with master planning and specific plans for the direction of development of the Vietnamese insurance and financial markets.

Article 63 Conditions for issuance of licences for establishment and operation

The conditions for issuance of a licence for establishment and operation shall comprise:

1. The amount of paid-up charter capital is not less than the level of legal capital required by the regulations of the Government;

2. There is an application requesting issuance of a licence for establishment and operation in accordance with article 64 of this Law;

3. The form of the enterprise and its charter comply with the provisions of this Law and the provisions of other relevant laws;

4. The management personnel have managerial skills and have expertise and professional qualifications in insurance.
Article 64 Application file for issuance of licence for establishment and operation

An application file for the issuance of a licence for establishment and operation shall comprise:

1. Application requesting issuance of a licence for establishment and operation;

2. Draft charter of the enterprise;

3. Operational plan for the first five years, clearly specifying the methods for establishment of insurance reserves, the reinsurance program, the investment of capital, business efficiency, the solvency of the insurer, and the economic benefits of establishing the enterprise.

4. List of, and the curriculum vitae of, the management personnel, including certificates evidencing their skills and their expertise and professional qualifications;

5. Level of capital contribution, capital contribution plan, and list of organizations and individuals contributing ten (10) per cent or more of charter capital; financial standing of, and other information relating to, such organizations and individuals;

6. Insurance regulations, provisions, scale of premiums and commissions for each type of insurance product that is proposed to be provided.

Article 65 Time-limit for issuance of licences

Within sixty (60) days from the date of receipt of a complete application file for issuance of a licence for establishment and operation, the Ministry of Finance must issue or refuse to issue a licence. In the case of refusal, the Ministry of Finance must provide written notice stating clearly its reasons.

A licence for establishment and operation shall also constitute the business registration certificate.

Article 66 Fees for issuance of licences

Insurers must pay fees for the issuance of licences for establishment and operation as stipulated by law.

Article 67 Announcement of areas of operation

After being issued with a licence for establishment and operation, an insurer must announce the areas of its business operation as stipulated by law.

Article 68 Withdrawal of licence for establishment and operation

1. An insurer may have its licence for establishment and operation withdrawn upon occurrence of one of the following events:

(a) The application file requesting issuance of a licence for establishment and operation contains information which was deliberately falsified;

(b) It has not commenced operation after twelve (12) months from the date of issuance of the licence for establishment and operation;

(c) It is dissolved pursuant to the provisions of article 82 of this Law;

(d) It divides, splits, consolidates, merges, becomes bankrupt or converts the form of enterprise;

(dd) It operates other than in accordance with the objectives or other than in accordance with the areas of operation stated in its licence for establishment and operation;

(e) It fails to ensure the financial requirements for fulfilling its undertakings to purchasers of insurance.

2. In the case of withdrawal of a licence for establishment and operation pursuant to the provisions in clauses 1(a), (b), (c), (dd) and (e) of this article, an insurer must immediately suspend the entering into of new insurance contracts, but shall remain liable to pay insurance proceeds to beneficiaries or to indemnify insured persons and must fulfil [obligations under] insurance contracts entered into prior to the date of withdrawal of its licence for establishment and operation.

In the case of withdrawal of a licence for establishment and operation pursuant to the provisions in clause 1(d) of this article, the rights and obligations of the parties shall be implemented as stipulated by law.

3. The Ministry of Finance shall announce by way of the mass media any decision to withdraw a licence for establishment and operation of an insurer.

Article 69 Changes which must be approved

1. An insurer must obtain written approval from the Ministry of Finance when it changes any one of the following items:

(a) Name of the enterprise;

(b) Charter capital;

(c) It opens or terminates operation of a branch or representative office;

(d) It changes the location of its head office, branch or representative office;

(dd) It changes the areas, scope or duration of operation;

(e) Shares or a capital contribution share amounting to ten (10) per cent or more of the charter capital are transferred;

(g) It changes the chairman of the board of management or the general director (director);

(h) It divides, splits, consolidates, merges, dissolves or converts the form of enterprise.

2. Within thirty (30) days from the date of approval by the Ministry of Finance of any change referred to in clause 1 of this article, the insurer must publicly announce the items changed as stipulated by law.

SECTION 2

Mutual Insurance Organizations

Article 70 Mutual insurance organizations

A mutual insurance organization means an organization with legal entity status which is established in order to conduct insurance business aimed at reciprocal assistance as between its members. The members of a mutual insurance organization shall be both the owners and the purchasers of insurance.

Article 71 Members of a mutual insurance organization

1. Vietnamese organizations and citizens of eighteen (18) years of age or more with full capacity for civil acts, operating in the same sector or profession, and all having insurance requirements shall have the right to participate in the establishment of a mutual insurance organization in the capacity of founding members.

2. Only organizations and individuals entering into an insurance contract with a mutual insurance organization may become members of the mutual insurance organization.

Article 72 Limit to liability of mutual insurance organizations

A mutual insurance organization shall only be liable for debts and other property obligations to the extent of its own assets.

Article 73 Establishment, organization and operation of mutual insurance organizations

The Government shall provide regulations on the establishment, organization and operation of mutual insurance organizations.

SECTION 3

Assignment of Insurance Contracts

Article 74 Assignment of insurance contracts

1. The assignment of all insurance contracts within one or a number of [types of] insurance products between insurers shall be carried out in the following circumstances:

(a) An insurer is in danger of becoming insolvent;

(b) An insurer divides, splits, consolidates, merges or dissolves;

(c) Pursuant to an agreement between insurers.

2. In the case of an insurer in danger of becoming insolvent or upon dissolution, where agreement cannot be reached on the assignment of its insurance contracts to another insurer, the Ministry of Finance shall appoint an insurer to accept the assignment.

Article 75 Conditions for assignment of insurance contracts

The assignment of insurance contracts shall be carried out on the following conditions:

1. The insurer accepting the assignment is conducting business in the same type of insurance product as that being assigned;

2. The rights and obligations under the insurance contracts which are being assigned will not change up until the expiry of the duration of those insurance contracts;

3. The assignment of insurance contracts must include the assignment of the funds and insurance reserves relating to the insurance contracts being assigned.

Article 76 Procedure for assignment of insurance contracts

The assignment of insurance contracts shall be carried out in accordance with the following procedure:

1. An insurer wishing to assign insurance contracts must submit an application requesting assignment to the Ministry of Finance, stating clearly the reasons for assignment, and enclosing an assignment plan and attaching the contracts to be assigned. Assignment of insurance contracts may only be carried out upon written approval by the Ministry of Finance.

2. Within thirty (30) days of the Ministry of Finance providing its approval of the assignment, the assigning insurer must make a public announcement of the assignment and must notify the purchasers of insurance in writing.

SECTION 4

Recovery of Solvency, Dissolution and Bankruptcy of Insurers

Article 77 Solvency

1. An insurer must constantly maintain solvency during the whole course of its insurance business operations.

2. An insurer shall be deemed to be solvent when it has fully established the insurance reserves pursuant to article 96 of this Law and has a solvency margin not less than the minimum solvency margin prescribed by the Government.

3. The solvency margin of an insurer means the difference between the value of its assets and its debts payable.

Article 78 Reporting danger of insolvency

1. An insurer is in danger of insolvency when its solvency margin is less than the minimum solvency margin prescribed by the Government.

2. In the case of danger of insolvency, an insurer must immediately report to the Ministry of Finance its current financial status, the reasons which resulted in the danger of insolvency, and remedial measures.

Article 79 Responsibilities of insurer in danger of insolvency

When there is a danger of insolvency, an insurer must implement the following measures:

1. Create a plan for recovery of solvency, reinforce its organization and operation, report to the Ministry of Finance, and implement the plan approved by the Ministry of Finance;

2. Abide by the requirements of the Ministry of Finance on recovery of solvency.

Article 80 Control of insurer in danger of insolvency

1. In the case where an insurer fails to recover its solvency in accordance with the approved plan, the Ministry of Finance shall issue a decision establishing a Solvency Control Committee to implement measures to recover the solvency of the insurer.

2. The Solvency Control Committee shall have the following duties and powers:

(a) To direct and supervise the implementation of the measures to recover solvency in accordance with the approved plan;

(b) To notify the relevant State bodies of the measures to be applied to recover solvency in order that they can co-ordinate their implementation;

(c) To limit the scope and areas of operation of the insurer;

(d) To suspend any operations which may result in the insolvency of the insurer;

(dd) To require the insurer to assign all insurance contracts within one or a number of [types of] insurance products to another insurer;

(e) To suspend temporarily the right to manage and operate of, and to require the insurer to replace, the members of the board of management, the general director (director) and the deputy general director (deputy director) if it considers it necessary;

(g) To require the board of management and the general director (director) to remove, or suspend the work of, any person who is in breach of the law or who does not comply with the approved plan for recovery of solvency;

(h) To recommend that the Ministry of Finance continues or terminates implementation of the measures for recovery of solvency;

(i) To report to the Ministry of Finance on the implementation and results of measures for recovery of solvency.

3. The Solvency Control Committee must bear responsibility for its decisions in accordance with law during the implementation of measures for recovery of solvency of an insurer.

4. An insurer shall be responsible to fulfil the requests and implement the decisions of the Solvency Control Committee.

Article 81 Termination of implementation of measures to recover solvency

1. The implementation of measures to recover solvency shall terminate in the following circumstances:

(a) The expiry of the period for implementation of measures to recover solvency;

(b) The operations of the insurer return to normal;

(c) Prior to the expiry of the period for implementation of measures to recover solvency, the insurer merges or consolidates;

(d) The insurer becomes bankrupt.

2. The termination of implementation of measures to recover solvency shall be carried out in accordance with a decision of the Minister of Finance, which decision shall be notified to the relevant bodies.
Article 82 Dissolution of insurers

1. An insurer shall be dissolved in the following circumstances:

(a) It voluntarily requests dissolution, provided that it is solvent ;

(b) The duration of its operation as stated in its licence for establishment and operation expires and there is no decision on extension;

(c) Its licence for establishment and operation is withdrawn pursuant to clauses (a), (b), (dd) and (e) of article 68.1 of this Law;

(d) In other circumstances as provided by relevant laws.

2. The Ministry of Finance must provide its written approval of the dissolution of an insurer.

Article 83 Bankruptcy of insurers

In the case where an insurer does not have the ability to make its payment obligations as they fall due and, after implementing measures to recover solvency, it continues to lack the financial ability to make its payment obligations, its bankruptcy shall be dealt with in accordance with the laws on business bankruptcy.


CHAPTER IV

Insurance Agents, Insurance Brokers

SECTION 1

Insurance Agents

Article 84 Insurance agents

Insurance agent means an organization or individual authorized by an insurer on the basis of a contract of insurance agency to conduct insurance agency activities in accordance with the provisions of this Law and the provisions of other relevant laws.

Article 85 Areas of operation of insurance agents

An insurer may authorize an insurance agent to conduct the following activities:

1. To introduce and offer insurance for sale;

2. To arrange the entering into of insurance contracts;

3. To collect insurance premiums;

4. To deal with claims for indemnity and to pay insurance proceeds upon occurrence of insured events;

5. To carry out other tasks related to the implementation of insurance contracts.

Article 86 Conditions for operation of insurance agents

1. Individuals conducting insurance agency activities must satisfy the following conditions:

(a) Be a Vietnamese citizen permanently residing in Vietnam;

(b) Be eighteen (18) years of age or more with full capacity for civil acts;

(c) Have a certificate of training as an insurance agent issued by an insurer or by the Vietnam Insurance Association.

2. Organizations conducting insurance agency activities must satisfy the following conditions:

(a) Be a legally established and operating organization;

(b) Personnel in the agency organization directly conducting insurance agency activities must satisfy the conditions in clause 1 of this article.

3. Any person who is currently subject to prosecution for a criminal offence or serving an imprisonment sentence or who has had his or her right to practise a profession cancelled by a court in accordance with the provisions of the law shall not be permitted to enter into a contract of insurance agency.

Article 87 Contents of contract of insurance agency

A contract of insurance agency must contain the following main items:

1. Name and address of the insurance agent;

2. Name and address of the insurer;

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

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

5. Insurance agency commission;

6. Duration of the contract;

7. Principles for dispute resolution.

Article 88 Liability of insurance agents

In the case where an insurance agent breaches the provisions of the contract of insurance agency, thereby causing damage to the lawful rights and interests of an insured person, the insurer shall remain liable for any insurance contract which the insurance agent has arranged to be entered into; and the insurance agent shall be liable to indemnify the insurer for any amount paid by the insurer as indemnity to the insured person.

SECTION 2

Insurance Brokers

Article 89 Insurance brokers

Insurance broker means an enterprise conducting insurance broking activities in accordance with the provisions of this Law and the provisions of other relevant laws.

Article 90 Areas of operation of insurance brokers

The areas of operation of insurance brokers shall comprise:

1. The provision of information to purchasers of insurance on types of insurance, their terms and conditions, insurance premiums and insurers;

2. Consultancy to purchasers of insurance on estimating risks, selecting types of insurance, insurance terms and conditions, insurance premiums and insurers;

3. Negotiating and arranging the entering into of insurance contracts between insurers and purchasers of insurance;

4. Carrying out other tasks related to the implementation of insurance contracts, at the request of purchasers of insurance.

Article 91 Rights and obligations of insurance brokers

1. Insurance brokers shall be entitled to an insurance brokerage commission. Insurance brokerage commissions shall be included in premiums.

2. Insurance brokers shall have the obligations:

(a) To conduct insurance broking honestly;

(b) Not to disclose or supply information causing damage to the lawful rights and interests of purchasers of insurance;

(c) To pay compensation to purchasers of insurance for damage caused by insurance broking activities.

Article 92 Professional indemnity insurance

An insurance broker must purchase professional indemnity insurance for its insurance broking activities at an insurer operating in Vietnam.

Article 93 Issuance of licences for establishment and operation

The issuance of licences for establishment and operation of insurance brokers shall be carried out in accordance with the provisions in articles 62 and 63, clauses 1, 2, 3 and 4 of article 64, and articles 65, 66, 67, 68 and 69 of this Law.


CHAPTER V

Financial, Accounting, and Financial Reporting Requirements

Article 94 Legal capital, charter capital

1. The Government shall prescribe the level of legal capital of an insurer and of an insurance broker.

2. During the course of their operations, insurers and insurance brokers must constantly maintain their paid-up charter capital at a level not less than their legal capital.

Article 95 Security deposit

1. Insurers must use a part of their charter capital to pay a security deposit into a commercial bank operating in Vietnam.

2. The Government shall provide regulations on the amount of the security deposit and on the ways in which it can be used.

Article 96 Insurance reserves

1. Insurance reserve means an amount of money which an insurer must set aside for the purpose of payment of its insurance liabilities determined in advance and arising from the insurance contracts which it has entered into.

2. Insurance reserves must be separately established for each type of insurance product and must be equivalent to that part of the liability retained by the insurer.

3. The Government shall provide specific regulations on the amount to be set aside and the method of establishing a reserve for each type of insurance product.

Article 97 Reserve funds

1. Insurers and insurance brokers must establish a compulsory reserve fund in order to supplement their charter capital and ensure their solvency. Appropriations for the compulsory reserve fund shall be made annually at five per cent of after-tax profits. The Government shall prescribe the maximum level of this fund.

2. In addition to the compulsory reserve fund provided for in clause 1 of this article, insurers and insurance brokers may establish other reserve funds from their after-tax profits in any fiscal year in accordance with the provisions in their charters.

Article 98 Investment of capital

1. The investment of capital by insurers must ensure safety and effectiveness and the ability to make the regular payments required by the undertakings in insurance contracts.

2. Insurers may only use their idle capital to make investments in Vietnam in the following sectors:

(a) Purchase of Government bonds;

(b) Purchase of shares and bonds of enterprises;

(c) Real estate business;

(d) Capital contribution in other enterprises;

(dd) Lending under the Law on Credit Institutions;

(e) Deposits with credit institutions.

2. The Government shall stipulate the specific lists of investments for the sectors referred to in clause 2 of this article and the ratio of idle capital permitted to be invested in each list of investments, aimed at ensuring that insurers constantly maintain their solvency.

Article 99 Financial income and expenditure

Financial income and expenditure of insurers and insurance brokers shall be dealt with in accordance with law.

The Ministry of Finance shall provide guidelines for and shall inspect the implementation of the financial regime for insurers and insurance brokers.

Article 100 Financial year

The financial year of insurers and insurance brokers shall commence on 1 January and end on 31 December of the same Gregorian calendar year.

The first financial year of insurers and insurance brokers shall commence on the date of issuance of the licence for establishment and operation and end on the last day of that year.

Article 101 Accounting regime

Insurers and insurance brokers must implement the accounting regime applicable to insurance business in accordance with the laws on accounting.

Article 102 Auditing

Annual financial statements of insurers and insurance brokers must be certified by an independent auditor .

Article 103 Financial reporting

1. Insurers and insurance brokers must implement the financial reporting regime stipulated by the laws on accounting and must periodically report on their professional operations as stipulated in the regulations of the Ministry of Finance.

2. In addition to periodical reports, insurers must also submit reports to the Ministry of Finance in the following circumstances:

(a) Upon occurrence of any unusual event in the conduct of business operations;

(b) When they fail to satisfy the financial requirements for fulfilling their undertakings to purchasers of insurance.

Article 104 Publishing of financial reports

After the end of the financial year, insurers and insurance brokers must publish their financial reports in accordance with law.


CHAPTER VI

Insurers and Insurance Brokers with Foreign Owned Capital

Article 105 Forms of operation

1. Foreign insurers and foreign insurance brokers shall be permitted to operate in Vietnam in the following forms:

(a) Joint venture insurance enterprises and joint venture insurance broking enterprises;

(b) One hundred (100) per cent foreign owned insurance enterprises and one hundred (100) per cent foreign owned insurance broking enterprises.

2. Foreign insurers and foreign insurance brokers shall be permitted to establish representative offices in Vietnam. Representative offices shall not be permitted to conduct insurance business in Vietnam.

Article 106 Conditions for issuance of licence for establishment and operation

The conditions for issuance of a licence for establishment and operation to an insurer or insurance broker with foreign owned capital shall comprise:

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

2. The foreign insurer or foreign insurance broker is currently legally operating and has normal financial standing;

3. The foreign insurer or foreign insurance broker is licensed by the authorized body of its country to conduct insurance business or to conduct insurance broking in the sectors in which it proposes to operate in Vietnam.

Article 107 Conditions for issuance of licence for establishment of a representative office in Vietnam

The conditions for issuance of a licence for establishment of a representative office in Vietnam to a foreign insurer or insurance broker shall comprise:

1. The foreign insurer or insurance broker has been operating for five years;

2. The foreign insurer or insurance broker has a co-operative relationship with Vietnamese bodies and organizations.

Article 108 Power to issue licences

The Ministry of Finance shall issue licences for establishment and operation of insurers and insurance brokers with foreign owned capital; and shall issue licences for establishment of representative offices of foreign insurers and foreign insurance brokers in Vietnam.

Article 109 Application file for issuance of licence for establishment and operation

1. In addition to the items prescribed in article 64 of this Law, an application file for issuance of a licence for establishment and operation of a joint venture insurance enterprise or a joint venture insurance broking enterprise shall comprise:

(a) Charter and licence for establishment and operation of the joint venture parties;

(b) Joint venture contract;

(c) Balance sheets and annual financial reports for the preceding three years of the joint venture parties, certified by an independent auditor .

2. In addition to the items prescribed in article 64 of this Law, an application file for issuance of a licence for establishment and operation of a one hundred (100) per cent foreign owned insurance enterprise or insurance broking enterprise shall comprise:

(a) Charter and licence for establishment and operation of the foreign insurer or foreign insurance broker in the place where its head office is located;

(b) Power of attorney to the general director (director) in Vietnam;

(c) Balance sheets and annual financial reports for the preceding three years of the foreign insurer or foreign insurance broker in the place where its head office is located, certified by an independent auditor .

Article 110 Application file for issuance of licence for establishment of a representative office

An application file for issuance of a licence for establishment of a representative office of a foreign insurer or foreign insurance broker in Vietnam shall comprise:

1. Application to establish a representative office;

2. Licence for establishment and operation of the foreign insurer or foreign insurance broker in the place where its head office is located;

3. Balance sheet and annual financial reports for the preceding three years of the foreign insurer or foreign insurance broker, certified by an independent auditor ;

4. Full name and curriculum vitae of the head of the representative office in Vietnam;

5. Introduction to the foreign insurer or foreign insurance broker and its co-operative activities with Vietnamese bodies and organizations.

Article 111 Time-limit for issuance of licences, fees for issuance of licences, and announcement of areas of operation

The time-limit for issuance of licences, the fees for issuance of licences, and the announcement of areas of operation in respect of insurers and insurance brokers with foreign owned capital; and in respect of representative offices of foreign insurers and foreign insurance brokers shall be implemented as provided for in articles 65, 66 and 67 of this Law.

Article 112 Withdrawal of licences

1. In addition to the provisions in article 68 of this Law, an insurer or insurance broker with foreign owned capital may have its licence for establishment and operation withdrawn when its licence for establishment and operation is withdrawn at the place where its head office is located.

2. A representative office of a foreign insurer or foreign insurance broker may have its licence for establishment and operation withdrawn when its licence for establishment and operation is withdrawn at the place where its head office is located.

Article 113 Changes which must be approved

The changes in respect of an insurer or insurance broker with foreign owned capital which must be approved shall be implemented as provided for in article 69 of this Law.

Article 114 Areas of operation

The areas of operation of insurers and insurance brokers with foreign owned capital; and of representative offices of foreign insurers and foreign insurance brokers must comply with the provisions of this Law and the provisions of other relevant laws.

Article 115 Capital, reserve funds, and financial income and expenditure of insurers and insurance brokers with foreign owned capital

1. The Government shall prescribe the level of legal capital of insurers and insurance brokers with foreign owned capital.

2. The establishment of a compulsory reserve fund and other reserve funds by insurers and insurance brokers with foreign owned capital shall be implemented as provided for in article 97 of this Law.

3. Financial income and expenditure of insurers and insurance brokers with foreign owned capital shall be dealt with in accordance with the law of Vietnam.

Article 116 Solvency, security deposit, insurance reserves and capital investments of insurers with foreign owned capital

1. An insurer with foreign owned capital must maintain solvency as provided for in article 77 of this Law.

2. An insurer with foreign owned capital must have a security deposit and must establish insurance reserves as provided for in articles 95 and 96 of this Law.

3. An insurer with foreign owned capital may make capital investments as provided for in article 98 of this Law.

Article 117 Accounting regime, auditing, and financial reporting

1. Insurers and insurance brokers with foreign owned capital must implement the accounting regime, auditing, and financial reporting regime as provided for in articles 101, 102, 103 and 104 of this Law.

2. Within one hundred and eighty (180) days from the end of the financial year, insurers and insurance brokers with foreign owned capital and representative offices of foreign insurers and foreign insurance brokers must submit to the Ministry of Finance the financial reports of the foreign insurers and insurance brokers.

Article 118 Remittance of profits and transfer of assets overseas

1. One hundred (100) per cent foreign owned insurance enterprises and one hundred (100) per cent foreign owned insurance broking enterprises may remit overseas the amount of remaining profits belonging to them after making deductions to establish funds and after fulfilling their financial obligations as stipulated by the law of Vietnam.

2. The foreign party to a joint venture insurance enterprise or insurance broking enterprise may remit overseas the amount of distributed profits after such enterprise has established funds and fulfilled its financial obligations as stipulated by the law of Vietnam.

3. One hundred (100) per cent foreign owned insurance enterprises and foreign parties to joint venture insurance enterprises; and one hundred (100) per cent foreign owned insurance broking enterprises and foreign parties to joint venture insurance broking enterprises may remit overseas their remaining assets after liquidation or termination of their operations in Vietnam.

4. The transfer of monies and other assets overseas as provided for in clauses 1, 2 and 3 of this article shall be implemented in accordance with the law of Vietnam.

Article 119 Other provisions

The Government shall provide specific regulations on the areas, scope and location of operations of insurers and insurance brokers with foreign owned capital; and of representative offices of foreign insurers and foreign insurance brokers in Vietnam.


CHAPTER VII

State Administration of Insurance Business

Article 120 Contents of State administration of insurance business

State administration of insurance business shall comprise the following matters:

1. Promulgation of legal instruments and implementing guidelines on insurance business; formulation of strategies, policies, master planning and specific plans for the development of the Vietnamese insurance market;

2. Issuance and withdrawal of licences for establishment and operation of insurers and insurance brokers, and of licences for establishment of representative offices of foreign insurers and foreign insurance brokers in Vietnam;

3. Promulgation, ratification and guiding the implementation of insurance regulations, provisions, scales of premiums and commissions;

4. Application of necessary measures to ensure that insurers satisfy their financial requirements for fulfilling their undertakings to purchasers of insurance;

5. Organization of provision of information on the status of the insurance market and market forecasts;

6. International co-operation in the area of insurance;

7. Consent for overseas operations of insurers and insurance brokers;

8. Administration of the operations of representative offices of foreign insurers and foreign insurance brokers in Vietnam;

9. Organization of the formation and training of a workforce of insurance management personnel and insurance professional experts;

10. Inspections and checks of insurance business activities; resolution of complaints and denunciations, and dealing with breaches of the laws on insurance business.

Article 121 State administration body

1. The Government shall uniformly exercise State administration of insurance business.

2. The Minister of Finance shall be responsible before the Government to carry out State administration of insurance business.

3. Ministries, ministerial equivalent bodies and Government bodies shall, within the scope of their respective duties and powers, be responsible for State administration of insurance business in accordance with law.

4. People's committees at all levels shall, within the scope of their respective duties and powers, carry out State administration of insurance business within their respective localities in accordance with law.

Article 122 Inspections of insurance business operations

1. Inspections of the operations of enterprises conducting insurance business must be carried out strictly in accordance with functions and powers and must comply with the law.

A financial inspection of any one enterprise may only be conducted once per year. The maximum duration of an inspection shall not exceed thirty (30) days, but in special cases that duration may be extended pursuant to a decision of the authorized body at a higher level provided that the duration of extension shall not exceed thirty (30) days.

An extraordinary inspection may only be conducted when there is an indication of a breach of the law by an enterprise.

2. There must be a decision from an authorized person when an inspection is conducted; at the end of the inspection there must be minutes recording the conclusions of the inspection. The head of the inspection team shall be responsible for the contents of the minutes and for the conclusions of the inspection.

3. Any person issuing an inspection decision not strictly in accordance with law or taking advantage of an inspection for their own interests or to harass or cause difficulties for the operations of an enterprise shall, depending on the seriousness of the offence, be disciplined or be subject to criminal prosecution; and if such breach causes damage, then such person must pay compensation to the enterprise in accordance with law.


CHAPTER VIII

Commendations and Rewards,
Dealing with Breaches

Article 123 Commendations and rewards

Organizations and individuals having notable achievements in insurance business or identifying conduct in breach of the laws on insurance business shall be commended and rewarded in accordance with law.
Article 124 Conduct in breach of laws on insurance business

Conduct in breach of the laws on insurance business shall include:

1. Conducting insurance business without a licence for establishment and operation, or insurance business not strictly in accordance with the provisions of the licence for establishment and operation;

2. Breach of the provisions on issuance of licences for establishment and operation, on inspections and checks, and on supervision by the authorized State body;

3. Unlawful competition;

4. Coercion to enter into an insurance contract;

5. Breach of the provisions on compulsory insurance;

6 Breach of the obligation of confidentiality of information relating to insurance contracts provided by purchasers of insurance;

7. Provision of false information, data or reports;

8. Conducting business without satisfying financial requirements or in breach of the provisions on legal capital, reserves, security deposits, and establishment, administration and use of insurance reserves;

9. Breach of the provisions on capital investments;

10. Other conduct in breach of the laws on insurance business.

Article 125 Dealing with breaches

1. Any person in breach of the provisions of this Law shall, depending on the nature and seriousness of the breach, be subject to administrative penalties or be subject to criminal prosecution; and if they cause damage, they must compensate for it in accordance with law.

2. Any person who takes advantage of his or her position or power to breach the provisions on issuance of licences for establishment and operation or of licences to establish a representative office of a foreign insurer or foreign insurance broker in Vietnam; or to breach the provisions on State administration of insurance business or any other provisions of this Law shall, depending on the nature and seriousness of the breach, be subject to disciplinary action or be subject to criminal prosecution; and if they cause damage, they must compensate for it in accordance with law.

Article 126 Complaints and initiation of legal proceedings with respect to decisions on administrative breaches

1. Organizations and individuals being subject to administrative penalties shall have the right to lodge a complaint with the authorized State body or to initiate court proceedings in accordance with law.

2. Pending [resolution of] any complaint or legal proceedings, the organization or individual being subject to administrative penalties must implement it . Upon a decision resolving the complaint by the authorized State body or upon a court judgement or decision which is legally effective, the matter shall be resolved in accordance with such decision or court judgement or decision.


CHAPTER IX

Implementing Provisions

Article 127 Provision on insurers, insurance brokers and representative offices which were established and operating prior to the date of effectiveness of this Law; and on insurance contracts entered into prior to the date of effectiveness of this Law

1. Insurers and insurance brokers which were established and operating in accordance with a decision on establishment, a decision on operation, an investment licence, or a certificate of satisfaction of standards and conditions for insurance business operation prior to the date of effectiveness of this Law; and representative offices of foreign insurers or foreign insurance brokers which were operating in accordance with a licence for establishment of a representative office prior to the date of effectiveness of this Law shall not be required to carry out procedures for re-issuance of a licence.

2. Insurance contracts which were signed prior to the date of effectiveness of this Law shall continue to be implemented in accordance with the law applicable at the time when they were entered into.

Article 128 Effectiveness

1. This Law shall be of full force and effect as of 1 April 2001.

2. Any previous provisions which are in consistent with this Law are hereby repealed.

Article 129 Implementing guidelines

The Government shall provide detailed regulations and guidelines for implementation of this Law.


This Law was passed by Legislature X of the National Assembly of the Socialist Republic of Vietnam at its 8th Session, on 9 December 2000.


Chairman of the National Assembly


NONG DUC MANH