Market overview
Member of IAIS? Sure, Vietnam grew to become member of IAIS in 2007.
International regulators, our bodies and laws relevant to nation
The mission “ComFrame” was arrange by the Internationally Lively Insurance coverage Teams (IAIG, associated to IAIS) to ascertain regulatory framework with obligatory requirements. It got here into impact on the finish of 2019. Vietnam, as a member of the IAIS, has to adjust to its rules.
As a member of the WTO and WHO, Vietnam should additionally adjust to rules of those organizations with respect to insurance coverage. In its bilateral / multilateral agreements akin to Korea – Vietnam FTA, EU- Vietnam FTA, Hong Kong – ASEAN FTA, ASEAN- China FTA, ASEAN – Australia – New Zealand FTA, CPTPP and EU-Vietnam Free Commerce Settlement, commitments on insurance coverage are additionally binding on Vietnam. As well as, Vietnam is a member of the OECD, which points pointers and good practices of non-binding nature for member nations.
Home
The Ministry of Finance is answerable for the state regulation on insurance coverage enterprise. As well as, on February 12, 2009, the Ministry of Finance (MOF) issued Determination No. 288/QD-BTC to ascertain the Insurance coverage Supervisory Authority (ISA) below the MoF. The ISA will help the Minister of the MOF to manage insurance coverage enterprise nationwide; straight govern and supervise insurance coverage enterprise actions and companies associated to insurance coverage enterprise in accordance with legislation. Presently, the position of the ISA is regulated below Determination 1799/QD-BTC issued on 11 September 2017.
In June 2009, Insurance coverage Analysis and Coaching Centre (IRTC) below the ISA was established in response to Determination No. 1379/QD-BTC. The IRTC is tasked with organizing scientific examine and coaching on insurance coverage and insurance coverage market.
Legal guidelines and related court docket selections/judgements
The next legal guidelines and rules primarily govern insurance coverage enterprise in Vietnam: • Regulation on Insurance coverage Enterprise issued by the Nationwide Meeting on December 9, 2000, as amended by Regulation No. 61/2010/QH12 dated November 24, 2010 (Regulation on Insurance coverage Enterprise). This Regulation will expire on 31 December 2022 and can be changed by Regulation on Insurance coverage Enterprise 2022 ; • Decree No. 73/2016/ND-CP on guiding the implementation of the Regulation on Insurance coverage Enterprise issued by the Authorities on July 1, 2016 (Decree 73) as amended by Decree 80/2019/ND-CP dated November 1, 2019 (Decree 80); • Decree No. 98/2013/ND-CP on administrative sanctions on insurance coverage enterprise and lottery enterprise issued by the Authorities on August 28, 2013 (Decree 98) as amended by Decree 48/2018/ND-CP dated March 21, 2018 (Decree 48) and Decree 80; • Round No. 195/2014/TT-BTC on guiding the evaluation and classification of insurance coverage firms issued by the Ministry of Finance on December 17, 2014 (Round 195); • Round No. 50/2017/TT-BTC on guiding Decree 73 issued by the MOF on Might 15, 2017 (Round 50) (as amended by Round 01/2019/TT-BTC dated January 2, 2019), and changed Round No. 125/2012/TT-BTC on guiding monetary regime relevant to insurers, reinsurance companies, insurance coverage brokers and branches of international non-life insurers issued by the MOF on July 30, 2012; • Determination No. 1826/QD-TTg of the Prime Minister on approving the Plan on “Restructuring the securities market and insurance coverage firms” on December 28, 2012 (Determination 1826).
Key guidelines and necessities
Senior administration tasks • Promulgation of authorized devices and implementing pointers on insurance coverage enterprise; formulation of methods, insurance policies, grasp planning and particular plans for the event of the Vietnamese insurance coverage market; • Issuance and withdrawal of licenses for institution and operation insurers and insurance coverage brokers, and of licenses for institution of consultant workplaces of international insurers and international insurance coverage brokers in Vietnam; • Promulgation, ratification and guiding the implementation of insurance coverage rules, provisions, scales of premiums and commissions; • Supervision of insurance coverage enterprise actions through skilled actions, monetary standing, enterprise administration, danger administration and compliance with the legislation on insurers and brokers; utility of mandatory measures to make sure that insurers fulfill the monetary necessities and fulfil their undertakings to purchasers of insurance coverage; • Group of provision of data on the standing of the insurance coverage market and market forecasts; • Worldwide cooperation within the space of insurance coverage; • Consent for abroad operations of insurers and insurance coverage brokers; • Administration of the operations of consultant workplaces of international insurers and international insurance coverage brokers in Vietnam; • Group of the formation and coaching of a workforce of insurance coverage administration personnel and insurance coverage skilled consultants; and • Inspection and checks of insurance coverage enterprise actions; decision of complaints and denunciations, and coping with breaches of the legal guidelines on insurance coverage enterprise.
Whistle-blowing guidelines There are not any such guidelines particularly for the insurance coverage sector.
International possession restrict in an present shareholding insurance coverage firm International buyers are entitled to personal shares or contributed capital as much as 100% of constitution capital of insurance coverage enterprises and reinsurance enterprises.
Capital reserve necessities
Reserve funds Insurers and insurance coverage brokers should set up a obligatory fund to complement their constitution capital and guarantee their solvency. Appropriations for the obligatory reserve fund shall be made yearly at 5% of after-tax income. The utmost quantity of obligatory reserve fund is equal to 10% of the constitution capital of the insurance coverage enterprise or issued capital of the international department.
Along with this obligatory reserve fund, insurers and insurer brokers might set up different reserve funds from their after-tax income of the fiscal 12 months as decided of their constitution. It’s famous that after-tax income could also be shared amongst shareholders however solely after 5% of such income is contributed to the obligatory reserve fund as supplied above.
Insurance coverage reserves Insurance coverage reserve means an sum of money which an insurer should put aside to pay for its insurance coverage liabilities decided upfront and arising from the insurance coverage contracts which it has entered into. Insurance coverage reserve have to be established for every kind of insurance coverage product or insurance coverage contract with respect to that a part of legal responsibility retained by the insurer or international department. Certain quantity contributed for insurance coverage reserve is supplied in Round 50. Insurance coverage firms are entitled to decide on strategies of and foundation for setting insurance coverage reserves however should search prior approval from the MOF for implementation such insurance coverage reserve strategies / foundation.
Safety deposit Insurers should pay a safety deposit right into a business financial institution working in Vietnam in an quantity of two% of the authorized capital as specified for every kind of insurance coverage firm (for instance, a medical health insurance firm should pay a safety deposit of VND6 billion or $255,000 equal) inside 60 days from the issuance date of the working license in Vietnam. An insurance coverage enterprise or international department might solely use its safety deposit to satisfy undertakings to purchasers of insurance coverage when its solvency is insufficient and upon written approval of the MOF. The entire quantity of their safety deposit can solely be withdrawn upon termination of their operation.
Product particular laws
Related advisory documentation or different necessities, together with tax
Life
Authorized capital • For all times insurance coverage enterprise (excluding unit linked insurance coverage and retirement insurance coverage) and well being care insurance coverage enterprise: VND600 billion • Life insurance coverage enterprise and unit linked insurance coverage enterprise or retirement insurance coverage enterprise: VND800 billion • Life insurance coverage enterprise, unit linked insurance coverage enterprise and retirement insurance coverage enterprise: VND1,000 billion. {Qualifications} of the appointed actuary • Not be prohibited from managing an enterprise in response to Vietnam legal guidelines; • Within the three consecutive years previous to the time of appointment: o Not have been topic to an administrative penalty for a breach within the insurance coverage enterprise sector with the type of penalty being obligatory dismissal from his or her place as a supervisor or govt, permitted by the MOF, or with the type of penalty being suspension from a place to which such individual was appointed by an insurance coverage enterprise, insurance coverage dealer or international department; o Not have been disciplined within the type of dismissal for a breach of inside guidelines on underwriting, evaluation, compensation and indemnity, inside management, administration of finance and funding or administration of a re-insurance program in an insurance coverage enterprise or international department; or for a breach of the foundations on skilled insurance coverage broking operations, on inside management or skilled ethics of an insurance coverage dealer; • On the time of being appointed as a supervisor or govt of an insurance coverage enterprise or international department, not be straight associated to any case prosecuted by a reliable company. • Have undergone coaching as an appointed actuary, and have a minimum of 10 years’ work expertise as an appointed actuary within the life insurance coverage and be a fellow of one of many Associations of Actuaries that are well known internationally such because the Institute of Actuaries of England; the Society of Actuaries of the USA; the Institute of Actuaries of Australia; the Canadian Institute of Actuaries; or be a member of one other Affiliation of Actuaries which is an official member of the Worldwide Associations of Actuaries; or have a minimum of 5 years’ work expertise as an appointed actuary within the life insurance coverage or medical health insurance sector from the time of turning into a fellow of one of many above associations. • Not have dedicated any breach of the skilled ethics of actuaries. • Be an worker of the life insurer. • Be resident in Vietnam through the time period of workplace.
Permitted scope of enterprise Life insurers will not be allowed to do non-life enterprise. Life insurance coverage merchandise and medical health insurance merchandise have to be permitted by the MOF upfront.
Insurance coverage reserve Insurance coverage reserve for all times insurance coverage firms contains: actuarial reserve, unearned premium reserve, compensation reserve, revenue distribution reserve, dedicated rate of interest reserve and steadiness reserve.
Funding of idle capital from insurance coverage reserves Investments of idle capital from insurance coverage reserves of insurance coverage enterprises or international branches could also be made straight by the insurance coverage enterprise or international department or by entrusting one other entity to make the funding, however shall solely be invested in Vietnam within the following sectors: • Buy of Authorities bonds, Treasury payments, Treasury bonds, public bonds for building of the Homeland, native authority bonds and Authorities assured bonds with none restriction; • Deposits with credit score establishments with none restriction; • Buy of shares, bonds of enterprises and fund certificates however to not exceed 50 % of idle capital from insurance coverage reserves; • Actual property enterprise in accordance with the Regulation on Actual Property Enterprise however to not exceed 20 % of idle capital from insurance coverage reserves; • Capital contribution to different enterprises however to not exceed 20 % of idle capital from insurance coverage reserves.
Common insurance coverage
Beneath Vietnam legal guidelines, normal insurance coverage is named non-life insurance coverage, which implies the varieties of insurance coverage merchandise being property insurance coverage, civil legal responsibility insurance coverage and different merchandise which aren’t life insurance coverage.
Authorized capital • For non-life insurance coverage enterprise (excluding aviation insurance coverage enterprise and satellite tv for pc insurance coverage enterprise) and medical health insurance: VND300 billion • For non-life insurance coverage enterprise (together with aviation insurance coverage enterprise or satellite tv for pc insurance coverage enterprise) and medical health insurance: VND350 billion • For non-life insurance coverage enterprise, together with aviation insurance coverage enterprise and satellite tv for pc insurance coverage enterprise and medical health insurance: VND400 billion
{Qualifications} of an appointed actuary concerning reserves and solvency of non-life insurer • Not be prohibited from managing an enterprise in response to Vietnam legal guidelines; • Within the three consecutive years previous to the time of appointment: o Not have been topic to an administrative penalty for a breach within the insurance coverage enterprise sector with the type of penalty being obligatory dismissal from his or her place as a supervisor or govt, permitted by the MOF, or with the type of penalty being suspension from a place to which such individual was appointed by an insurance coverage enterprise, insurance coverage dealer or international department; o Not have been disciplined within the type of dismissal for a breach of inside guidelines on underwriting, evaluation, compensation and indemnity, inside management, administration of finance and funding or administration of a re-insurance program in an insurance coverage enterprise or international department; or for a breach of the foundations on skilled insurance coverage broking operations, on inside management or skilled ethics of an insurance coverage dealer; • On the time of being appointed as a supervisor or govt of insurance coverage enterprise or international department, not be straight associated to any case prosecuted by a reliable company. • Be an affiliate of an Affiliation of Actuaries which is an official member of the Worldwide Associations of Actuaries; or • Have a minimum of 5 years’ work expertise within the non-life insurance coverage sector and have proof of passing two exams of one of many following Associations: the Institute of Actuaries of England; the Society of Actuaries of the USA; the Institute of Actuaries of Australia, and the Canadian Institute of Actuaries, or proof of passing exams of a coaching course or program on actuaries acknowledged by the above Associations as equal to 2 exams of the above Associations; and • Not have dedicated any breach of the skilled ethics of actuaries. Permitted scope of enterprise Non-life insurance coverage firms are allowed to do medical health insurance enterprise.
Insurance coverage reserve Insurance coverage reserve for non-life insurance coverage firms contains unearned premium reserve, declare reserve, and huge loss fluctuation reserve. Funding of idle capital from insurance coverage reserves • Buy of Authorities bonds, Treasury payments, Treasury bonds, public bonds for building of the Homeland, native authority bonds and Authorities assured bonds with none restriction; • Deposits with credit score establishments with none restriction; • Buy of shares, bonds of enterprises, fund certificates and capital contribution in different enterprises however to not exceed 35% of idle capital from insurance coverage reserves; and • Actual property enterprise in accordance with the Regulation on Actual Property Enterprise however to not exceed 10% of idle capital from insurance coverage reserves.
Reinsurance
Authorized capital • For non-life reinsurance enterprise or each non-life reinsurance enterprise and well being reinsurance enterprise: VND400 billion; • For all times reinsurance enterprise or each life reinsurance enterprise and well being reinsurance enterprise: VND700 billion; • For enterprise in all three varieties of life reinsurance, non-life reinsurance and well being reinsurance, VND1,100 billion. {Qualifications} of an appointed actuary concerning reserves and solvency of reinsurer Identical as in non-life insurance coverage.
Permitted scope of enterprise • An insurance coverage enterprise might switch half however isn’t permitted to assign the entire legal responsibility for which insurance coverage has already been accepted in an insurance coverage contract to 1 or quite a lot of home and international insurance coverage enterprises, and different international branches; • The utmost stage of the legal responsibility retained on every danger or on every separate loss shall not exceed 10% of fairness. • If an insurance coverage enterprise cedes reinsurance as appointed by an insured individual, the utmost charge for re-insurance by appointment shall be 90% of the legal responsibility insured; • An insurance coverage enterprise might settle for reinsurance of the legal responsibility for which one other insurance coverage enterprise has already accepted insurance coverage. Insurance coverage reserve • For non-life reinsurance: unearned premium reserve, declare reserve, and huge loss fluctuation reserve; • For all times reinsurance: actuarial reserve, unearned premium reserve, compensation reserve, revenue distribution reserve, dedicated rate of interest reserve and steadiness reserve; • For well being reinsurance: actuarial reserve, unearned premium reserve, compensation reserve, and steadiness reserve.
Funding of idle capital from insurance coverage reserves For non-life reinsurance: identical as non-life insurance coverage For all times reinsurance and well being reinsurance: identical as life insurance coverage and medical health insurance
Business insurance coverage
Please discuss with the part on normal insurance coverage above.
Funding administration and markets
Overview of related regulation affecting insurers’ funding portfolios, together with Asset Legal responsibility Administration (ALM)
An insurance coverage enterprise could make funding from its fairness, idle capital from insurance coverage reserves and different lawful sources. Along with guidelines of home funding of idle capital from insurance coverage reserves as talked about above for every kind of insurance coverage enterprise, the next ideas apply: • It’s not permitted to borrow loans for functions of direct funding or entrusted funding in securities, actual property, or capital contribution to different enterprises; • It’s not permitted to reinvest in any type [being lending to or reinvesting with] capital contributing shareholders (members) or associated individuals [affiliated persons] as outlined within the Regulation on Enterprises, aside from deposits with shareholders (or members) that are credit score establishments; • It’s not permitted to take a position greater than 30% of its funding capital sources in firms inside one Group or inside one group of firms with a mutual possession relationship (this provision shall not apply to deposits at credit score establishments and offshore funding capital sources within the type of institution of enterprises or branches abroad); • Within the case of funding entrustment, the group accepting entrustment have to be issued by the competent company with a licence to hold out the actions of acceptance of funding entrustment in compliance with the contents of acceptance of funding entrustment. An insurance coverage enterprise can also make offshore funding however solely to arrange offshore insurance coverage firm or an offshore insurance coverage department. Such offshore funding have to be permitted by the MOF.
Enforcement and investigation
Guidelines of regulatory investigation Insurance coverage enterprise actions have to be checked with out overlapping and not more than as soon as in respect of 1 merchandise in anyone 12 months with respect to enterprises (aside from the case of a unprecedented or unscheduled test).
Complaints process
There isn’t a particular rule on complaints dealing with procedures in insurance coverage enterprises. As an alternative, such guidelines are as indicated within the insurance coverage contracts and should comply with related rules of the Civil Code and financial agreements.
Complaints on administrative selections can be dealt with in response to legal guidelines on complaints and denunciations, that are utilized for all sectors.
Redress, together with Ombudsman service
Relying on the character and seriousness of violations, the violators could also be topic to administrative sanctions (warnings, financial fines, suspension of operation, cures) or felony penalty. In case of inflicting damages, they need to compensate in response to Vietnam legal guidelines.
Insurance coverage mediation compensation schemes
As indicated within the insurance coverage contract. The insured individual has most one 12 months to say for indemnity from the date of prevalence of the insured occasion. Upon prevalence of such insured occasion, the insurer should pay the indemnity with the time-limit acknowledged within the insurance coverage contract. If there isn’t any assertion within the contract, the time-limit is 15 days from the date of receipt of a whole and correct utility requesting cost of indemnity.
Private accident and well being care insurance coverage Private accident insurance coverage: the insurer should pay insurance coverage proceeds to the beneficiary as much as the sum insured, primarily based on the precise damage of the individual insured and as agreed within the contract. Well being care insurance coverage: the insurer should pay insurance coverage proceeds to the beneficiary as much as the sum insured, primarily based on the prices of medical examination, therapy and convalescence of the insured individual arising because of an sickness or accident and as agreed within the contract.
Property insurance coverage Property insurance coverage under worth: the insurer is simply accountable to indemnify in accordance with the ratio of the sum insured to the market worth of the insured property on the date of getting into the contract.
Double insurance coverage contracts Upon prevalence of the insured occasion, every insurer is simply accountable to indemnify in accordance with the ratio of the agreed sum insured to the overall sum insured below all insurance coverage contracts which the purchaser of the insurance coverage has entered into. The entire sum of indemnity payable by all of the insurers won’t exceed the worth of the particular property harm.
Insolvency and policy-holder safety
Related decision regime? There isn’t a separate insolvency regime for insurers. As an alternative, the Regulation on Chapter which offers with chapter and insolvency in all sectors will apply.
The overall process to deal with chapter instances is as follows: • Submitting the petition to the court docket to start chapter procedures (by collectors, staff, grass-root commerce union, authorized consultant of the corporate, shareholders, Chairman of the Board of Administration, and many others.) • The court docket will deal with the chapter case in response to its competence inside 6 working days from the receipt of the petition. Choices to open chapter process have to be despatched to all related events and printed on native newspapers and the Individuals’s Supreme Court docket net portal. • Calling for the assembly of collectors • Relying on the Decision of the Collectors’ assembly, the corporate’s operation could be recovered or the court docket is requested to announce the chapter. • Administration and liquidation of property are performed by a liquidator or firm that’s appointed by the court docket and specializes within the administration and liquidation of property.
Information safety
There isn’t a separate rule governing knowledge safety within the insurance coverage sector in Vietnam. As an alternative, Vietnam’s knowledge safety legal guidelines are scattered in lots of legislations, which embody the Civil Code, the Penal Code, the Regulation on Cyber Info Safety, the Regulation on Info Know-how, the Regulation on Telecommunications, the Regulation on Client Safety, the Regulation on E-Transactions, cybersecurity legislation and related Decrees guiding implementation of the talked about legal guidelines.
These legal guidelines embody provisions to stop, detect, cease and deal with spam, pc viruses and cyber-attacks, and shield info exchanged in our on-line world.
There isn’t a constant definition of “private info” in Vietnam legal guidelines. Common talking, private info might be any info that might be used to determine a particular individual, together with info on cost transactions.
Organisations processing private info should take applicable administration and technical measures to guard private info that they’ve collected and saved and make sure that the non-public info isn’t misplaced, stolen, disclosed, modified or destroyed with out consent. Relying on the character of violations of knowledge safety insurance policies, administrative fines (warning, financial effective) and potential remedial measures or felony penalties may apply.
Company governance
Managers and executives of insurance coverage enterprises, international branches and insurance coverage brokers are: • Chairman of the board of administration (chairman of the members’ council or firm chairman); members of the board of administration (members of the members’ council); • Head of the inspection committee; head of the inner audit committee; inspectors (if the enterprise doesn’t set up an inspection committee); • Common Director (Director); Deputy Common Director (Deputy Director); • Head of the inner management or audit division; chief accountant; department administrators; heads of consultant workplaces; heads {of professional} sections; appointed actuaries (within the case of a life insurer or well being insurer); appointed actuaries concerning reserves and solvency (within the case of a non-life insurer or international department).
Allocation of those individuals should comply with the under ideas: • A member of the board of administration or members’ council of an insurance coverage enterprise or insurance coverage dealer isn’t permitted to concurrently be a member of the board of administration or members’ council of an enterprise working in the identical sector (non-life insurance coverage, life insurance coverage, reinsurance or insurance coverage brokerage); • The overall director (director) or deputy normal director (deputy director) of an insurance coverage enterprise, international department or insurance coverage dealer isn’t permitted to concurrently work for one more insurance coverage enterprise, international department or insurance coverage dealer working in the identical sector in Vietnam; and the overall director (director) of an insurance coverage enterprise, international department or insurance coverage dealer isn’t permitted to be a member of the board of administration or members’ council of one other insurance coverage enterprise or insurance coverage dealer working in the identical sector in Vietnam; • The overall director (director), deputy normal director (deputy director), a department director or a head of a consultant workplace of an insurance coverage enterprise or insurance coverage dealer is simply permitted to concurrently be the top of no multiple department or consultant workplace or skilled part of the insurance coverage enterprise or insurance coverage dealer. The director or deputy director of a international department is simply permitted to concurrently be the top of no multiple skilled part of such department; • An appointed actuary of a life insurer or well being insurer, an appointed actuary concerning reserves and solvency of a non-life insurer, of a reinsurer or of a international department has the responsibility of organizing implementation of labor to make sure the monetary security of the insurance coverage enterprise or international department. An appointed actuary or an appointed actuary concerning reserves and solvency has impartial rights concerning his or her skilled specialty and isn’t permitted to concurrently be the overall director (director) or chief accountant.
Monetary crime prevention
Member of FATF? On FATF blacklist? Not a member of FATF and never blacklisted.