Circular No. 116/2014/TT-BTC guiding certain financial issues for insurance enterprises implementing insurance as prescribed in Government Decree No. 67/2014/NĐ-CP dated July 7, 2014 on some policies for developing fisheries.

CIRCULAR

Guidelines on certain financial issues for insurance enterprises implementing insurance in accordance with the provisions of Government Decree No. 67/2014/NĐ-CP dated July 7, 2014 on certain policies to develop fisheries

 of the Government regarding certain policies to develop fisheries

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Pursuant to the Insurance Business Law 2000, the Law Amending and Supplementing Certain Provisions of the Insurance Business Law, and guiding documents for implementation;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013, promulgated by the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 89/2015/ND-CP dated October 7, 2015 of the Government amending and supplementing certain articles of Decree No. 67/2014/ND-CP dated July 7, 2014 of the Government on some policies for developing fisheries;

At the proposal of the Director of the Department of Management and Supervision of Insurance;

The Minister of Finance hereby promulgates this Circular guiding certain financial issues for insurance enterprises implementing insurance in accordance with the provisions of Government Decree No. 67/2014/NĐ-CP dated July 7, 2014 of the Government on certain policies to develop fisheries.

Chapter I GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular guides certain financial issues for insurance enterprises implementing insurance in accordance with the provisions of Government Decree No. 67/2014/NĐ-CP dated July 7, 2014 of the Government on certain policies to develop fisheries (hereinafter referred to as Decree No. 67/2014/NĐ-CP) on the following contents:

a) Expenses of insurance enterprises.

b) Principles of accounting for revenue, expenses, and business results of insurance enterprises.

c) Co-insurance.

d) Insurance agents.

2. Other issues related to financial regulations and accounting systems of insurance enterprises implementing insurance in accordance with current laws shall be carried out in accordance with existing legal provisions.

Article 2. Applicability

Insurance enterprises approved to implement insurance (hereinafter referred to as insurance enterprises), insurance agents, and relevant organizations, individuals involved in implementing the insurance policy prescribed in Government Decree No. 67/2014/NĐ-CP.

Chapter II SPECIFIC PROVISIONS

Article 3. Expenses of insurance enterprises

Insurance enterprises are permitted to use up to 30% of premium income for sales expenses, management expenses, insurance agent commissions, and remuneration. Among these, for insurance agent commissions and remuneration, insurance enterprises are permitted to spend no more than 5% of collected premiums. For remuneration, insurance enterprises are responsible for establishing a remuneration payment plan for those directly involved in implementing insurance, without paying remuneration to employees of the insurance enterprise. The Board of Directors of the insurance enterprise has the responsibility to issue a remuneration regulation to ensure uniform implementation.

Article 4. Accounting Principles

1. The results of insurance business activities under Government Decree No. 67/2014/NĐ-CP shall be consolidated into the overall business results of the insurance enterprise.

2. Insurance enterprises shall separately track revenue, expenses, and business results from insurance activities under Government Decree No. 67/2014/NĐ-CP. In the event that there is a positive difference at the end of the fiscal year from insurance activities under Government Decree No. 67/2014/NĐ-CP, the insurance enterprise shall transfer the entire amount of the difference into the reserve for large fluctuations in losses and use it when there are significant fluctuations in losses according to current legal provisions.

Article 5. Co-insurance

1. Insurance enterprises participating in implementing insurance through co-insurance methods.

2. When signing insurance contracts with organizations or individuals managing, operating, or using vessels (hereinafter referred to as ship owners), participating insurance enterprises shall sign the insurance contract together. The insurance contract must clearly state the name of the lead insurance enterprise, participating insurance enterprises, the participation ratio, and the responsibilities of each participating insurance enterprise. The lead insurance enterprise and participating insurance enterprises must jointly bear legal responsibility for commitments made in the insurance contract to the ship owner. Management costs of the lead insurance enterprise are 2.5% of premium income.

3. Revenue Accounting The lead insurance enterprise is responsible for collecting premiums on behalf of participating insurance enterprises. Participating insurance enterprises are responsible for authorizing the lead insurance enterprise to collect premiums on their behalf:

a) When collecting premiums, the lead insurance enterprise is responsible for issuing a receipt for the premium to the ship owner.

b) Based on the co-insurance ratio in the insurance contract, the lead insurance enterprise records revenue corresponding to its share of responsibility. Revenue corresponding to the share of responsibility of other participating insurance enterprises is recorded as collected on behalf.

c) Monthly, the lead insurance enterprise is responsible for preparing and sending a statement of premium revenue to participating insurance enterprises.

d) Based on the statement of premium revenue and premiums received from the lead insurance enterprise, the participating insurance enterprise prepares an invoice to be given to the lead insurance enterprise, indicating the receipt of premiums collected on behalf by the lead insurance enterprise (name, address, tax code of the enterprise) according to the statement of premium revenue (number, date, month, year of the statement). This invoice serves as the basis for the participating insurance enterprise to record revenue.

4. Expense Accounting

a) When purchasing goods or services for claims or other expenses related to the insurance contract, the invoice will be issued in the name, address, and tax code of the lead insurance enterprise. The lead insurance enterprise pays all expenses related to the insurance contract and then records them as its own expenses according to the co-insurance contract. Expenses belonging to the responsibility of other participating insurance enterprises will be recorded as paid on behalf by the lead insurance enterprise.

b) Allocation of expenses is carried out as follows - For management expenses, sales expenses, insurance agent commissions, and remuneration for those directly involved in implementing insurance, the lead insurance enterprise allocates up to 30% of the original premium income corresponding to the share of responsibility of the participating insurance enterprise, among which insurance agent commissions and remuneration are capped at 5%. - Direct insurance business expenses are allocated according to the responsibility ratio in the insurance contract and actual expenses incurred.

c) On a monthly basis, the lead insurance enterprise shall prepare an itemized list accompanied by a payment statement to send to the participating co-insurance enterprises. Within five (05) working days from the date of receipt of the itemized list from the lead insurance enterprise, the participating co-insurance enterprises shall be responsible for confirming and paying to the lead insurance enterprise the corresponding expenses according to their level of insurance liability as shown on the itemized list. Based on the itemized list with the signature confirmation of the lead insurance enterprise, the participating co-insurance enterprise shall record the corresponding expenses according to its share of responsibility under the insurance contract.

d) In the case of reinsurance, the management fee of the reinsured enterprise shall not exceed three percent (3%) of the premium income received from reinsurance. The reinsured enterprise shall implement accounting in accordance with the principles stipulated in Article 4 of this Circular.

Article 6. Insurance Agents

1. To operate insurance activities pursuant to Decree No. 67/2014/ND-CP, insurance agents must meet the following requirements:

a) Have continuously operated as an insurance agent for at least three months.

b) Not violate any legal regulations and ethical standards of the insurance agency profession.

c) Have completed a minimum of sixteen (16) hours of training on insurance as prescribed by Decree No. 67/2014/ND-CP.

2. The organization of training, examination, and issuance of certificates for insurance agents shall be carried out in accordance with current laws.

Chapter III IMPLEMENTATION ORGANIZATION

Article 7. Effective Date

1. This Circular takes effect from the date of signing and applies from August 25, 2014.

2. During implementation, if any difficulties arise, they are requested to be reported to the Ministry of Finance for consideration and resolution.