Circular No. 02-TC/TCNH guiding the amendment and supplementation of the implementation of insurance commission systems

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 02/TC-TCNH JANUARY 4, 1996 GUIDING AMENDMENTS AND SUPPLEMENTS TO THE IMPLEMENTATION OF THE COMMISSION ON INSURANCE COMMISSIONS

On October 25, 1995, the Ministry of Finance issued Circular No. 76-TC/TCNH stipulating the insurance commission system. To facilitate the implementation of this regulation from the beginning of 1996, the Ministry of Finance guides amendments and supplements to some points as follows:

I. REGARDING THE CLASSIFICATION OF INSURANCE BUSINESS

The types of insurance business specified in the "Table of Maximum Insurance Commission Rates for Various Types of Insurance Business" issued together with Circular No. 76-TC/TCNH dated October 25, 1995 are understood as follows:

1.1. Voluntary health insurance is personal accident insurance including various insurance contracts concluded on the basis of insuring human life against medical expenses such as personal accident insurance, student accident insurance, passenger accident insurance, surgical treatment insurance, tourist insurance...

1.2. Property insurance and damage insurance include various insurance contracts against risks of damage or loss to the insured person (excluding those insurance businesses mentioned below) such as construction and installation insurance, theft insurance...

1.3. Goods transportation insurance by road, sea, river, rail, and air includes various contracts concluded to insure goods and property against risks of damage or loss during transportation, such as export and import goods insurance, domestic goods transportation insurance...

1.4. Hull insurance and shipowner's liability:

a. Marine vessel hull insurance includes various contracts concluded to insure the marine vessel, river vessel, fishing vessel, machinery, and equipment thereof...

b. Shipowner's liability insurance includes various contracts concluded to insure the civil liability of the carrier for all damages arising from the use and operation of the vessel, including liability towards third parties.

1.5. General liability insurance includes various contracts concluded to insure the owner and operator of the business against liabilities arising from the use, operation, and management of factories, offices; product and service liabilities provided and contractual liabilities...

1.6. Aviation insurance:

a. Aircraft insurance includes various contracts concluded to insure the aircraft body, engine, and equipment thereof...

b. Carrier's civil liability insurance includes various contracts concluded to insure the carrier's liability for damages arising from the use and operation of the aircraft, including liability towards third parties...

1.7. Motor vehicle insurance:

a. Vehicle body insurance includes various contracts concluded to insure the motor vehicle body, machinery, and equipment thereof...

b. Motor vehicle owner's civil liability insurance includes various contracts concluded to insure the civil liability of the motor vehicle owner for all damages occurring during the operation and use of the motor vehicle, such as passenger liability insurance...

1.8. Fire insurance includes various contracts concluded to insure property against losses and damage caused by fire, explosion, or similar risks...

1.9. Credit and financial risk insurance includes various contracts concluded to insure losses of the lender arising from the borrower's inability to pay due debts and losses arising from financial risks such as excessively high costs, currency exchange losses...

1.10. Business interruption insurance includes various contracts concluded to insure losses of the insured party due to business disruption or reduction in business scale...

1.11. Agricultural insurance includes various contracts for crop, livestock, and harvest insurance against losses caused by natural disasters and unexpected accidents...

1.12. Compulsory insurance: Any compulsory insurance business as prescribed by current laws such as third-party liability insurance for motor vehicles according to Decree No. 30-HĐBT dated March 10, 1988 of the Council of Ministers (now the Government) on the system of civil liability insurance for motor vehicle owners and Decision No. 504-TC/BH dated November 20, 1991 of the Minister of Finance on the issuance of rules and premium rates for motor vehicle insurance...

II. REGARDING THE APPLICATION OF INSURANCE COMMISSION RATES

1. The table of insurance commission rates already stipulated is the maximum level for insurance companies to implement various types of permitted insurance business. During the implementation process, insurance companies specifically apply these rates to insurance agents, insurance cooperation organizations, and insurance brokers according to the principle of not exceeding the maximum rate already stipulated. For comprehensive insurance, the total insurance commission expense will be the sum of the commission expenses of each type of insurance business within that comprehensive insurance contract.

2. For hull insurance and shipowner's liability insurance to align with practical insurance operations, based on the general maximum rate stipulated in Circular No. 76-TC/TCNH dated October 25, 1995, it is now detailed as follows:

- For marine vessels and hybrid river-sea vessels, the maximum insurance commission rate applicable is 0.16%.

3. For insurance businesses related to property insurance and damage insurance, to facilitate insurance companies in attracting services and properly insuring construction projects in accordance with Decree No. 177-CP dated October 20, 1994 of the Government on the issuance of the Management Regulation for Investment in Construction; Circular No. 105-TC/ĐT dated December 8, 1994 of the Ministry of Finance guiding insurance for construction projects; Decision No. 663-TC/QĐ-TCNH dated June 24, 1995 of the Minister of Finance promulgating the Rules on All-Risk Insurance for Construction; Rules on All-Risk Installation Insurance; Premium Rates for Construction and Installation Insurance, the maximum commission rate now stipulated specifically for construction and installation insurance business is 5%.

4. In cases where insurance brokerage organizations conduct insurance brokerage services for insurance companies permitted to operate in Vietnam, foreign-invested enterprises, and foreign parties participating in joint venture contracts in Vietnam, the insurance commission rate shall be based on mutual agreement between the insurance company and the brokerage organization, in compliance with Vietnamese law and international practices.

III. REGARDING OBJECTS NOT ELIGIBLE FOR INSURANCE COMMISSIONS

Insurance companies are not permitted to pay insurance commissions to representative offices of foreign economic organizations in Vietnam in any form.

IV. IMPLEMENTATION PROVISIONS

This Circular takes effect from January 1, 1996. Insurance companies and insurance brokerage organizations are responsible for strictly implementing the insurance commission system stipulated in Circular No. 76 TC/TCNH dated October 25, 1995, and the guidelines provided in this Circular issued by the Ministry of Finance.

During implementation, if there are difficulties or obstacles, they should be promptly reported to the Ministry of Finance for consideration and resolution.