Regulations detailing the implementation of the Law on insurance business
08:36 15/08/2017
The Minister of Finance promulgates a Circular on guidelines for the Government’s Decree No. 73/2016/ND-CP dated July 1, 2016 on details of the implementation of the Law on insurance business and the Law on amendments to certain articles of the Law on insurance business.
This Circular provide guidelines for the Government’s Decree No. 73/2016/ND-CP dated July 1, 2016 on details of the implementation of the Law on insurance business and the Law on amendments to certain articles of the Law on insurance business (hereinafter referred to as Decree No. 73/2016/ND-CP), with regard to operation of insurance enterprises, branches of foreign non-life insurers, insurance broker enterprises; financial regulations for insurance enterprises, branches of foreign non-life insurers, insurance broker enterprises; insurance agents and insurance agent training facilities; reporting and information disclosure made by insurance enterprises, branches of foreign non-life insurers, insurance broker enterprises, representative offices and forms; establishment and operation of Solvency Control Committee.
Insurers/foreign branches must provide information about their products/services truthfully, publicly, and transparently to avoid misleading clients about these products/services.
Before entering into an insurance policy with a client, the insurer/foreign branch must find out essential information about the client, consider its financial situation and capacity, maintain financial resources, solvency ratio and risk management system; undertake not to discriminate subjects insured with the same risks on the grounds of insurance conditions and insurance premiums.
Brochures of insurers/foreign branches must be clear and contain basic information of rules and terms of insurance products that these insurers/foreign branches are permitted to provide, clarify insurance benefit and waiver of insurance liabilities. The insurer/foreign branch must update its brochures, sales materials and other materials during the duration they are in use.
When entering into an insurance policy, the insurer/foreign branch must provide the policyholder with sufficient information on insurance policy, and explanation for insurance rules and terms.
The policyholder must provide sufficient information on the subject insured for the insurer/foreign branch.
If the insurer/foreign branch sell life insurance or health insurance directly to the policyholder without paying insurance commission to insurance agents or insurance brokers, it may reduce insurance premium charged for the policyholder. The maximum reduction rate may not exceed the insurance commission rate as prescribed in Article 5 and Article 8 hereof. The insurer/foreign branch must formulate procedures for reduction and amount thereof as a fair basis for clients. Director General or Director of the insurer/foreign branch shall endorse the said procedures and communicate it in writing to the Ministry of Finance before initiation.
If non-life insurers, health insurers, and/or foreign branches co-insure a subject insured, the insurance policy must clarify the leading insurer/foreign branch, coinsurance percentages between insurers/foreign branches. Coinsures shall jointly assume liabilities for commitments in the insurance policy.
Apart from those general principles prescribed above, a life insurer must satisfy the following principles:
1. For sales materials provided for a policyholder:
a) Obtain consent of actuary in terms of assumptions to be used for pre-calculation before providing them for the policyholder;
b) In case of products with cash surrender value, the sales materials must present conditions for receiving the cash surrender value and benefits and a sum of money to be received by the policyholder upon receipt of cash surrender value, and clarify if the benefits are secured or non-secured.
2. Clarify and request specific information from the policyholder, the insured; receive and store information provided by the policyholder or the policyholder’s authorized person in the request for insurance.
3. Analyze the need and financial capacity of the policyholder so as to advise him/her/it on suitable lines of insurance.
4. When giving an application for insurance, the life insurer must notify the policyholder in writing of the following:
a) Period, terms of payment of insurance premiums, payment method (if any);
b) Name, contact address of individual or entity affiliated to the insurer that is in charge of handling of complaints or dispute in connection with the engagement, performance, and termination of insurance policy filed by clients;
c) Policyholder’s responsibility for providing sufficient, truthful, and precise information; changes subject to prompt notices to insurer;
d) Insurance benefit; waivers of insurance liabilities and other noticeable cases;
dd) The engagement of supplementary policies enclosed with primary insurance policy does not constitute a mandatory condition for sustaining validity of the primary insurance policy;
e) In case of insurance products with cash surrender value, the life insurance policy must specify the time at which cash surrender value is available;
g) The insurer is entitled to deduct amount of unpaid debts from cash surrender value and insurance benefit in conformity with the insurance policy.
This Circular comes into force as of July 1, 2017.
This Circular replaces Circular No. 124/2012/TT-BTC dated July 30, 2012 of the Ministry of Finance on guidelines for the Government's Decree No. 45/2007/ND-CP dated March 27, 2007 on guidelines for the Law on Insurance Business and the Government's Decree No. 123/2011/ND-CP dated December 28, 2011 on guidelines for Law on amendments to the Law on Insurance Business; Circular No. 125/2012/TT-BTC dated July 30, 2012 of the Ministry of Finance on guidelines for financial regulations of insurers, reinsurers, insurance brokers and foreign non-life branches and Circular No. 194/2014/TT-BTC dated December 17, 2014 of the Ministry of Finance on amendments to Circular No. 124/2012/TT-BTC and Circular No. 125/2012/TT-BTC.
Insurers/foreign branches must provide information about their products/services truthfully, publicly, and transparently to avoid misleading clients about these products/services.
Before entering into an insurance policy with a client, the insurer/foreign branch must find out essential information about the client, consider its financial situation and capacity, maintain financial resources, solvency ratio and risk management system; undertake not to discriminate subjects insured with the same risks on the grounds of insurance conditions and insurance premiums.
Brochures of insurers/foreign branches must be clear and contain basic information of rules and terms of insurance products that these insurers/foreign branches are permitted to provide, clarify insurance benefit and waiver of insurance liabilities. The insurer/foreign branch must update its brochures, sales materials and other materials during the duration they are in use.
When entering into an insurance policy, the insurer/foreign branch must provide the policyholder with sufficient information on insurance policy, and explanation for insurance rules and terms.
The policyholder must provide sufficient information on the subject insured for the insurer/foreign branch.
If the insurer/foreign branch sell life insurance or health insurance directly to the policyholder without paying insurance commission to insurance agents or insurance brokers, it may reduce insurance premium charged for the policyholder. The maximum reduction rate may not exceed the insurance commission rate as prescribed in Article 5 and Article 8 hereof. The insurer/foreign branch must formulate procedures for reduction and amount thereof as a fair basis for clients. Director General or Director of the insurer/foreign branch shall endorse the said procedures and communicate it in writing to the Ministry of Finance before initiation.
If non-life insurers, health insurers, and/or foreign branches co-insure a subject insured, the insurance policy must clarify the leading insurer/foreign branch, coinsurance percentages between insurers/foreign branches. Coinsures shall jointly assume liabilities for commitments in the insurance policy.
Apart from those general principles prescribed above, a life insurer must satisfy the following principles:
1. For sales materials provided for a policyholder:
a) Obtain consent of actuary in terms of assumptions to be used for pre-calculation before providing them for the policyholder;
b) In case of products with cash surrender value, the sales materials must present conditions for receiving the cash surrender value and benefits and a sum of money to be received by the policyholder upon receipt of cash surrender value, and clarify if the benefits are secured or non-secured.
2. Clarify and request specific information from the policyholder, the insured; receive and store information provided by the policyholder or the policyholder’s authorized person in the request for insurance.
3. Analyze the need and financial capacity of the policyholder so as to advise him/her/it on suitable lines of insurance.
4. When giving an application for insurance, the life insurer must notify the policyholder in writing of the following:
a) Period, terms of payment of insurance premiums, payment method (if any);
b) Name, contact address of individual or entity affiliated to the insurer that is in charge of handling of complaints or dispute in connection with the engagement, performance, and termination of insurance policy filed by clients;
c) Policyholder’s responsibility for providing sufficient, truthful, and precise information; changes subject to prompt notices to insurer;
d) Insurance benefit; waivers of insurance liabilities and other noticeable cases;
dd) The engagement of supplementary policies enclosed with primary insurance policy does not constitute a mandatory condition for sustaining validity of the primary insurance policy;
e) In case of insurance products with cash surrender value, the life insurance policy must specify the time at which cash surrender value is available;
g) The insurer is entitled to deduct amount of unpaid debts from cash surrender value and insurance benefit in conformity with the insurance policy.
This Circular comes into force as of July 1, 2017.
This Circular replaces Circular No. 124/2012/TT-BTC dated July 30, 2012 of the Ministry of Finance on guidelines for the Government's Decree No. 45/2007/ND-CP dated March 27, 2007 on guidelines for the Law on Insurance Business and the Government's Decree No. 123/2011/ND-CP dated December 28, 2011 on guidelines for Law on amendments to the Law on Insurance Business; Circular No. 125/2012/TT-BTC dated July 30, 2012 of the Ministry of Finance on guidelines for financial regulations of insurers, reinsurers, insurance brokers and foreign non-life branches and Circular No. 194/2014/TT-BTC dated December 17, 2014 of the Ministry of Finance on amendments to Circular No. 124/2012/TT-BTC and Circular No. 125/2012/TT-BTC.