Decree No. 123/2011/ND-CP provides detailed regulations on implementing certain articles of the Law Amending and Supplementing Certain Provisions of the Insurance Business Law and amending and supplementing certain provisions of Decree No. 45/2007/NĐ-CP dated March 27, 2007 of the Government detailing the implementation of certain articles of the Insurance Business Law.

DECREE

Detailed Implementation of Certain Provisions of the Law Amending and Supplementing Certain Provisions of the Insurance Business Law

and Amending and Supplementing Certain Provisions of Decree No. 45/2007/NĐ-CP dated March 27, 2007and amend and supplement some articles

of the Government on Detailed Implementation of Certain Provisions of the Insurance Business Law

issuedPursuant to the Law Amending and Supplementing Certain Provisions of the Insurance Business Law dated November 24, 2010;

This Decree provides detailed implementation of certain provisions of the Law Amending and Supplementing Certain Provisions of the Insurance Business Law and amending and supplementing certain provisions of Decree No. 45/2007/NĐ-CP dated March 27, 2007 of the Government on detailed implementation of certain provisions of the Insurance Business Law (hereinafter referred to as Decree No. 45/2007/NĐ-CP).

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Insurance Business Law dated December 9, 2000;

1. This Decree applies to insurance business activities (including the provision of insurance services and insurance brokerage services across borders in Vietnam), reinsurance business activities, insurance brokerage activities, and insurance agency activities.

Considering the proposal of the Minister of Finance,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Application

2. This Decree does not apply to social insurance, health insurance, deposit insurance, and other types of insurance implemented by the State without a commercial nature.

Article 2. Applicability

PROVISION AND USE OF INSURANCE SERVICES ACROSS BORDERS

Article 3. Objects providing and using insurance services, insurance brokerage services across borders

Chapter II

SPECIFIC PROVISIONS

Section 1

1. The objects providing insurance services, insurance brokerage services across borders (hereinafter referred to as providing insurance services across borders) are foreign insurance companies and foreign insurance brokerage companies with their headquarters in countries where Vietnam and those countries have signed international treaties including agreements on providing insurance services across borders in Vietnam.

2. The objects using insurance services provided across borders are enterprises established in Vietnam with foreign investors owning more than 49% of the charter capital and foreigners working in Vietnam.

3. Reinsurance services, international marine insurance, international aviation insurance, international reinsurance brokerage services, consulting services, calculation services, risk assessment services, and claims settlement services shall be carried out in accordance with current laws and international practices.

4. Life insurance and health insurance do not apply the provisions on providing and using insurance services across borders in this Decree.

Article 4. Conditions for providing insurance services across borders

Foreign insurance companies and foreign insurance brokerage companies providing insurance services across borders in Vietnam must meet the following conditions:

a) Having a Permit from the competent state management agency on insurance in the country where the enterprise has its headquarters allowing the execution of insurance operations intended to be provided across borders in Vietnam and proving that the enterprise has been legally operating for at least ten years up to the time of providing insurance services across borders in Vietnam;

b) Having a document from the competent state management agency on insurance in the country where the enterprise has its headquarters allowing the provision of insurance services across borders in Vietnam and confirming that the enterprise has not violated regulations on insurance business, insurance brokerage business, and other relevant laws of the foreign country for three consecutive years prior to the year of providing insurance services across borders in Vietnam.

a/ Must be a trader registered for business according to current laws.

2. Financial capacity conditions:

a) Having total assets of at least two billion US dollars for foreign insurance companies; at least one hundred million US dollars for foreign insurance brokerage companies in the fiscal year before providing insurance services across borders in Vietnam;

b) Foreign insurance companies must have a minimum rating of "BBB+" according to Standard & Poor's or Fitch, "B++" according to A.M.Best, "Baa1" according to Moody's, or equivalent ratings from other organizations with rating functions and experience in rating in the fiscal year before providing insurance services across borders in Vietnam;

c) Operating profitably for three consecutive fiscal years before providing insurance services across borders in Vietnam.

3. Conditions regarding loss handling capability:

a) Foreign insurance companies must deposit a minimum of 100 billion Vietnamese dong in a bank licensed to operate in Vietnam and obtain a payment guarantee letter from that bank committing to pay in case the liability under insurance contracts provided across borders in Vietnam exceeds the mandatory deposit amount. The deposit funds can only be used to fulfill commitments to policyholders when the foreign insurance company loses its ability to pay according to the decision of the competent authority in the foreign country where the company is headquartered. The deposit funds will earn interest as agreed with the deposit bank. The foreign insurance company may withdraw the entire deposit when it terminates its responsibility for insurance service contracts provided across borders in Vietnam;

b) Foreign insurance companies must have a claims processing procedure clearly stating the procedures, sequence of handling losses, and the deadline for paying compensation to policyholders in Vietnam. In all cases, the foreign insurance company or its authorized representative must be present at the location of the loss within forty-eight hours from the time of receiving the loss notification. The maximum claim settlement period is stipulated in Article 29 of the Insurance Business Law;

c) Foreign insurance brokerage companies must purchase professional liability insurance for the responsibility of providing insurance brokerage services across borders in Vietnam.

b) Foreign insurance enterprises must have a claims settlement procedure specifying the procedures, sequence for handling losses, and the deadline for compensating the policyholder in Vietnam. In all cases, foreign insurance enterprises or their authorized representatives must be present at the location where the loss occurred within forty-eight hours from the time they receive the loss notification. The maximum claims settlement period shall be as prescribed in Article 29 of the Insurance Business Law;

c) Foreign insurance brokerage enterprises must purchase insurance coverage for professional liability in insurance brokerage for the provision of insurance brokerage services across borders in Vietnam.

Article 5. Methods for Implementing Cross-border Insurance Services in Vietnam

1. Foreign insurance companies providing cross-border insurance services in Vietnam must do so through insurance brokerage companies that have been granted a License to establish and operate in Vietnam.

2. Foreign insurance brokerage companies providing cross-border insurance services in Vietnam must broker for foreign non-life insurance companies or their branches that have been granted a License to establish and operate in Vietnam.

Article 6. Responsibilities of Entities Providing Cross-border Insurance Services

1. Provide to insurance companies, insurance brokerage companies, and foreign non-life insurance company branches that have been granted a License to establish and operate in Vietnam, which participate in the process of providing cross-border insurance services as stipulated in Article 5 of this Decree, documents proving compliance with the conditions for providing cross-border insurance services as prescribed in Article 4 of this Decree.

2. Within 120 days from the end of the fiscal year, submit to the Ministry of Finance a financial report of the preceding fiscal year, certified by an independent auditing organization, and a statement from the foreign insurance regulatory authority where the company's headquarters is located regarding the company’s compliance with laws and regulations.

3. Pay taxes and fulfill other financial obligations related to the provision of cross-border insurance services in Vietnam according to current tax laws.

Article 7. Responsibilities of Related Parties in the Provision of Cross-border Insurance Services

Insurance companies, insurance brokerage companies, and foreign non-life insurance company branches that have been granted a License to establish and operate in Vietnam and participate in the provision of cross-border insurance services as stipulated in Article 5 of this Decree shall have the following responsibilities:

1. Retain documents proving that the entities providing cross-border insurance services in Vietnam, with whom they jointly provide insurance, meet the conditions as prescribed in Article 4 of this Decree, and provide them to competent authorities upon request.

2. Quarterly, report to the Ministry of Finance on the provision of cross-border insurance services carried out in Vietnam during the quarter within 30 days from the end of the quarter. The report format is specified by the Ministry of Finance.

Section 2

FOREIGN NON-LIFE INSURANCE COMPANY BRANCHES

Article 8. Legal Status of Foreign Non-Life Insurance Company Branches

A foreign non-life insurance company branch is a dependent unit of a foreign non-life insurance company, without legal personality, and is guaranteed and held responsible for all obligations and commitments of the branch in Vietnam by the foreign non-life insurance company.

Article 9. Conditions for Issuing Licenses to Establish and Operate Foreign Non-Life Insurance Company Branches

Foreign non-life insurance companies wishing to establish branches in Vietnam must meet the following conditions:

1. Conditions for foreign non-life insurance companies:

a) Have headquarters in a country with which Vietnam has signed international treaties on trade including agreements on establishing foreign non-life insurance company branches in Vietnam;

b) Legally operating in non-life insurance business for at least 10 years in the country where the company's headquarters is located as of the date of submitting the application for a License to establish and operate a branch in Vietnam;

c) Have total assets of at least two billion US dollars in the fiscal year prior to the submission of the application for a License to establish and operate a branch in Vietnam;

d) Operating profitably for three consecutive fiscal years prior to the submission of the application for a License to establish and operate a branch in Vietnam;

đ) Not seriously violating regulations on insurance business operations and other laws of the country where the company's headquarters is located in the three years immediately preceding the submission of the application for a License to establish and operate a branch in Vietnam;

e) Being permitted by the foreign insurance regulatory authority where the company's headquarters is located to establish a branch in Vietnam to operate within the scope of insurance businesses the company is authorized to conduct; not limiting the foreign non-life insurance company's ability to supplement capital for the branch in Vietnam and ensuring comprehensive supervision over the entire operation of the non-life insurance company;

g) The foreign insurance regulatory authority where the company's headquarters is located has signed a Memorandum of Understanding on cooperation with the Ministry of Finance of Vietnam regarding the management and supervision of foreign non-life insurance company branches in Vietnam;

h) The foreign non-life insurance company has a commitment letter accepting responsibility for all obligations and commitments of the branch in Vietnam and a power of attorney authorizing the Branch Manager to be legally responsible for all activities of the branch in Vietnam;

i) Submitting an application for a License to establish and operate in accordance with Article 10 of this Decree.

2. Conditions for the established branch:

a) Having a minimum capital level as prescribed in point a, Clause 1, Article 19 of this Decree;

b) Having an organizational and operational charter in compliance with the law;

c) The capital for establishing the branch must be legitimate; no borrowed funds or entrusted investments under any form may be used to establish the branch;

d) Organizing the branch's business operations in compliance with Article 10 of Decree No. 45/2007/NĐ-CP;

đ) Managers and executives of the branch must have professional qualifications and managerial capabilities meeting the requirements stipulated in Article 13 of Decree No. 45/2007/NĐ-CP;

e) Having infrastructure and information technology systems meeting the conditions prescribed by the Ministry of Finance.

Article 10. Documents for Applying for a License to Establish and Operate a Branch of a Non-Life Insurance Company from Foreign Countries in Vietnam

1. An application form for a license to establish and operate a branch according to the model prescribed by the Ministry of Finance.

2. A five-year business plan consistent with the business field specified in the license application, including details on the method of setting aside reserves, reinsurance programs, capital investment, business effectiveness, payment capability, and the economic benefits of establishing a branch of a non-life insurance company from foreign countries, accompanied by procedures for exploitation, appraisal, compensation, reinsurance, internal control procedures, risk management procedures, investment procedures, and financial management. The Ministry of Finance will provide detailed guidance on the establishment of a five-year business plan for branches of non-life insurance companies from foreign countries.

3. The charter of the non-life insurance company from foreign countries (certified copy).

4. A draft regulation on the organization and operation of the branch signed by the authorized representative of the investor.

5. The operating license of the non-life insurance company from foreign countries (certified copy).

6. Reports on business operations and financial statements for three consecutive fiscal years prior to the year of applying to establish a branch, confirmed by an independent auditing organization (certified copy).

7. A document from the national insurance regulatory authority in the country where the company's headquarters is located confirming that the non-life insurance company from foreign countries meets the conditions stipulated in points d and e of Clause 1, Article 9 of this Decree. In cases where the regulations of the country where the company's headquarters is located do not require such a confirmation document, evidence must be provided to confirm this.

8. A commitment letter and power of attorney of the non-life insurance company from foreign countries meeting the requirements stipulated in point h of Clause 1, Article 9 of this Decree.

9. Curriculum vitae, criminal record, certified copies of certificates proving the qualifications and professional expertise of managerial positions at the branch meeting the conditions stipulated in Decision 45/2007/NĐ-CP.

10. Commitment letters from individuals who will assume managerial positions at the branch if the branch is granted permission to establish and operate (for individuals expected to be appointed as managers of the branch).

11. Rules, terms, premium rates, and commission schedules for the types of insurance products planned to be implemented.

12. Evidence proving that the infrastructure and information technology software systems meet the requirements set forth by the Ministry of Finance.

13. Confirmation from a bank permitted to operate in Vietnam regarding the amount of capital allocated to the branch of the non-life insurance company from foreign countries deposited in a frozen account opened at that bank.

Article 11. Procedures for Issuing a License to Establish and Operate a Branch of a Non-Life Insurance Company from Foreign Countries in Vietnam

1. A non-life insurance company from foreign countries wishing to establish a branch in Vietnam must submit three sets of application documents to the Ministry of Finance, of which at least one set must be the original. Each set includes one copy in Vietnamese and one copy in a commonly used foreign language. Certified copies in Vietnamese and translations from foreign languages into Vietnamese must be verified by a Vietnamese notary public in accordance with the laws on notarization. The investor shall be responsible for the accuracy of the application documents.

2. The time limit for issuing a license to establish and operate a branch of a non-life insurance company from foreign countries is regulated in Article 65 of the Law on Insurance Business. The license issued by the Ministry of Finance for establishing and operating a branch simultaneously serves as a business registration certificate.

3. The Ministry of Finance shall specify the procedures, formalities, and content of the review of application documents for a license to establish and operate a branch of a non-life insurance company from foreign countries in Vietnam.

Article 12. Organization and Conditions for Branch Directors

1. Foreign non-life insurance enterprises' branches are not permitted to establish subordinate branches in Vietnam.

2. The branch director must meet the conditions stipulated in Article 13 of Decree 45/2007/NĐ-CP and must reside in Vietnam during their term of office.

Article 13. Content of Branch Activities

1. Foreign non-life insurance enterprise branches may carry out the following activities:

a) Insurance business, reinsurance business;

b) Risk prevention and limitation;

c) Loss assessment;

d) Agency loss assessment, claim settlement review, third-party compensation request;

đ) Financial investment according to the parent company's authorization.

2. Foreign non-life insurance enterprise branches may only conduct insurance operations and products that the foreign non-life insurance enterprise is authorized to perform according to the regulations of the country where the enterprise's headquarters is located.

Article 14. Fees for Issuing Establishment and Operation Licenses for Branches

Foreign non-life insurance enterprise branches that are granted establishment and operation licenses must pay fees as prescribed by law.

Article 15. Procedures After Granting Establishment and Operation Licenses for Foreign Non-Life Insurance Enterprise Branches

1. Within thirty days from the date of issuance of the establishment and operation license, foreign non-life insurance enterprise branches must publish in three consecutive issues of central newspapers and local newspapers where the branch is headquartered the main contents as follows:

a) Name and address of the branch;

b) Content, scope, and duration of activities;

c) Capital amount granted;

d) Full name of the branch director;

đ) License number, date of issuance of the branch establishment and operation license;

e) Insurance businesses permitted to operate in Vietnam.

2. Within twelve months from the date of issuance of the establishment and operation license, foreign non-life insurance enterprise branches must complete all necessary procedures as prescribed by law to officially commence operations. If the branch does not start operating within this period, the establishment and operation license will be revoked.

Article 16. Changes That Must Be Approved by the Ministry of Finance

1. Foreign non-life insurance enterprise branches must obtain approval from the Ministry of Finance when changing any of the following items:

a) Branch name;

b) Capital granted in Vietnam;

c) Branch location;

d) Content, scope, and duration of operation;

đ) Branch director, risk calculation specialist, and payment capacity analyst;

e) Overseas investment;

g) Branch transfer;

h) Branch division, separation, merger, or consolidation;

2. Documents for requesting approval of changes include the following:

a) A document proposing changes as specified in Clause 1 of this Article;

b) An approval document from the competent authority as stipulated in the Branch Organizational and Operational Regulations regarding the changes as specified in Clause 1 of this Article;

c) A plan for increasing or decreasing the capital granted to the branch as guided by the Ministry of Finance when changing the item specified in Point b of Clause 1 of this Article;

d) Evidence of rights to use the branch location (lease or ownership) when changing the item specified in Point c of Clause 1 of this Article (certified copy);

đ) Rules, terms, and premium rates for new insurance products planned to be implemented (if applicable); certified copies of certificates proving the qualifications and experience of the head of the department responsible for implementing new activities when requesting to expand the scope of activities as specified in Point d of Clause 1 of this Article; plans for handling existing valid insurance contracts and obligations towards related parties when requesting to reduce the scope of activities as specified in Point d of Clause 1 of this Article;

e) Criminal record; legal personal identification documents, certificates, and diplomas proving professional qualifications (certified copy); a commitment letter from the replacement person when changing the item specified in Point đ of Clause 1 of this Article;

g) Documents proving compliance with laws on overseas investment; certificates and diplomas (certified copy) proving the qualifications and expertise of the head of the overseas investment department when changing the item specified in Point e of Clause 1 of this Article;

h) Documents proving that the new investor meets the conditions stipulated in Article 9 of this Decree when changing the item specified in Point g of Clause 1 of this Article;

i) Plans for division, separation, merger, or consolidation; reports on plans for dividing and handling valid customer contracts, debts, obligations to the state, commitments to employees, audited financial statements for three consecutive fiscal years before the merger or consolidation of the organizations being divided, separated, merged, or consolidated; criminal records, legal personal identification documents, and certificates and diplomas (certified copy) proving the qualifications and expertise of the proposed new management and operational personnel of the branch of the non-life insurance enterprise when changing the item specified in Point h of Clause 1 of this Article. New branches formed after division, separation, merger, or consolidation may only engage in insurance business if they meet the conditions stipulated in this Decree and relevant legal documents.

3. Foreign non-life insurance enterprise branches wishing to change the items specified in Clause 1 of this Article must submit a complete set of documents to the Ministry of Finance. Within twenty-one days from the date of receipt of a complete and valid application for changes from the foreign non-life insurance enterprise branch, the Ministry of Finance must respond in writing regarding approval or rejection of the changes; in case of rejection, the reasons must be clearly stated.

4. Within thirty days from the date on which the Ministry of Finance approves the changes referred to in Clause 1 of this Article, the branch of the foreign non-life insurance company must publish information about such changes in three consecutive issues of central newspapers and local newspapers where the branch is located.

Article 17. Changes to be Notified to the Ministry of Finance

The branch of the foreign non-life insurance company shall notify in writing to the Ministry of Finance any changes related to the foreign non-life insurance company, including:

1. Changes in the Chairman of the Board of Directors or Chief Executive Officer.

2. Changes in name or address.

3. Splitting, merging, or consolidation.

4. Transfer of 100% capital.

Article 18. Insurance Operations, Reinsurance, and Other Activities

The branch of the foreign non-life insurance company shall comply with the provisions of the law regarding insurance operations, reinsurance, and other similar activities as domestic non-life insurance companies.

Article 19. Financial Regime of the Branch of the Foreign Non-Life Insurance Company

1. Management of the Capital of the Branch of the Foreign Non-Life Insurance Company:

a) The statutory capital of the branch of the foreign non-life insurance company is two hundred billion Vietnamese dong.

b) During its operation, the branch of the foreign non-life insurance company must always maintain the level of equity capital of the branch at no less than the statutory capital specified in point a of Clause 1 of this Article.

c) The allocated capital of the branch of the foreign non-life insurance company is the amount of capital provided by the foreign non-life insurance company to the branch in Vietnam. The branch of the foreign non-life insurance company must supplement the allocated capital commensurate with the content and scope of the branch's business activities, and the Ministry of Finance will specify the level of supplementary allocated capital.

2. Management of the Deposit Fund of the Branch of the Foreign Non-Life Insurance Company:

a) Within sixty days from the date of issuance of the License for Establishment and Operation in Vietnam, the branch of the foreign non-life insurance company must use part of the allocated capital to deposit at a commercial bank operating in Vietnam;

b) The deposit amount is equal to 2% of the allocated capital of the branch of the foreign non-life insurance company;

c) The deposit fund earns interest according to the agreement with the bank where it is deposited;

d) The use of the deposit fund is carried out in accordance with Clause 3 and Clause 4 of Article 6 of Decree No. 46/2007/ND-CP dated March 27, 2007 of the Government on the financial regime for insurance companies and insurance brokerage companies (hereinafter referred to as Decree No. 46/2007/ND-CP).

3. The branch of the foreign non-life insurance company shall establish reserve funds for insurance business in accordance with Articles 8 and 10 of Decree No. 46/2007/ND-CP.

4. The sources of investment capital of the branch of the foreign non-life insurance company include:

a) The equity capital of the branch;

b) Idle funds from the reserve funds for insurance business of the branch;

c) Other lawful sources as prescribed by law.

5. The investment of capital by the branch of the foreign non-life insurance company shall be carried out similarly to the investment of capital by non-life insurance companies as stipulated in Articles 12 and 13 and Clause 1 of Article 14 of Decree No. 46/2007/ND-CP.

6. The solvency and recovery of solvency of the branch of the foreign non-life insurance company shall be carried out in accordance with the provisions of Article 15, Clause 1 of Article 16, Article 17, Article 18, and Article 19 of Decree No. 46/2007/ND-CP.

7. Revenue and expenses of the branch of the foreign non-life insurance company shall be carried out in accordance with the provisions from Article 20 to Article 22 of Decree No. 46/2007/ND-CP.

8. Profit of the branch of the foreign non-life insurance company shall be carried out in accordance with the provisions of Article 27, Article 29, and Article 30 of Decree No. 46/2007/ND-CP. The transfer of profits and assets by the branch to abroad shall be carried out in accordance with Vietnamese law.

9. The branch of the foreign non-life insurance company must set aside five percent of annual post-tax profit to establish a mandatory reserve fund. The maximum level of the mandatory reserve fund equals ten percent of the allocated capital of the branch.

Article 20. Accounting System and Reporting Requirements for Branches of Foreign Non-Life Insurance Enterprises

1. Branches of foreign non-life insurance enterprises must comply with the accounting system, tax obligations, and other financial obligations as prescribed by Vietnamese law.

2. Branches of foreign non-life insurance enterprises shall implement reporting requirements as stipulated in Article 34 of Decree 46/2007/NĐ-CP.

3. Branches of foreign non-life insurance enterprises must submit to the Ministry of Finance audited financial reports of the foreign insurance enterprise; on-site inspection conclusions and other conclusions of the foreign insurance regulatory authority where the enterprise's headquarters is located within ninety days from the end of the fiscal year.

Article 21. Inspection and Supervision of Branches of Foreign Non-Life Insurance Enterprises

1. Competent authorities of Vietnam shall conduct inspections and supervision of branches of foreign non-life insurance enterprises operating in Vietnam according to current laws.

2. The foreign insurance regulatory authority where the enterprise's headquarters is located shall conduct inspections and supervision of branches of foreign non-life insurance enterprises operating in Vietnam as follows:

a) Prior to conducting inspections and supervision, the foreign insurance regulatory authority where the enterprise's headquarters is located must notify the plan for inspections and supervision to the Ministry of Finance;

b) After completing inspections and supervision, the foreign insurance regulatory authority where the enterprise's headquarters is located must provide the results of inspections and supervision to the Ministry of Finance.

Article 22. Dissolution and Termination of Operations of Branches of Foreign Non-Life Insurance Enterprises

1. Branches of foreign non-life insurance enterprises shall be dissolved and terminate operations in the following cases:

a) Expiration of the term of operation as specified in the License for Establishment and Operation without requesting an extension or having requested an extension but not granted further extension;

b) Voluntary cessation of operations;

c) Revocation of the License for Establishment and Operation;

d) Insolvency as determined by the Ministry of Finance;

e) The foreign non-life insurance enterprise has had its license revoked, expired term of operation, or been dissolved or declared bankrupt.

2. Documents for dissolution and termination of operations of branches of foreign non-life insurance enterprises include:

a) A letter requesting dissolution and termination of operations;

b) Decision of the competent authority as prescribed in the Charter and Operating Regulations of the branch;

c) Decision of the competent state authority for the cases specified in points a (for the case of requesting an extension but not granted further extension), point c, d, and e of Clause 1 of this Article;

d) Plan for handling ongoing valid insurance contracts and resolution of obligations towards related parties;

e) License for Establishment and Operation of the branch.

3. If a branch of a foreign non-life insurance enterprise wishes to dissolve and terminate operations in Vietnam, it must prepare a complete set of documents and submit them to the Ministry of Finance. Within thirty days from the date of receipt of the complete dissolution and termination application documents, the Ministry of Finance shall issue a decision on the dissolution and termination of the branch.

Section 3

BIDDING AND COMPETITION IN INSURANCE BUSINESS

Article 23. Bidding Object

The project investors using state capital of 30% or more, owners or users of state-owned assets and state-owned enterprises when participating in property insurance and liability insurance for their projects, assets, or activities (except mandatory fire insurance and mandatory civil liability insurance for motor vehicles) must conduct bidding to select insurance companies or foreign non-life insurance company branches providing insurance services.

Article 24. Forms, Procedures, and Bidding Process

1. Based on the budget for insurance premiums, the entities specified in Article 23 of this Decree shall choose a bidding form that meets the conditions stipulated in the Law on Bidding and the following provisions:

a) In cases where the insurance premium is less than three billion Vietnamese dong, the entities specified in Article 23 of this Decree may choose either competitive bidding or direct assignment if they meet the conditions stipulated in the Law on Bidding. For insurance companies, if the insurance premium is less than five hundred million Vietnamese dong, they may apply the self-execution form (self-insurance).

b) In cases where the insurance premium is three billion Vietnamese dong or more, the entities specified in Article 23 of this Decree shall apply open bidding if they meet the conditions stipulated in the Law on Bidding.

2. The procedures and bidding process shall be carried out according to current regulations.

Article 25. Conditions for Participation in Bidding

1. Insurance companies and foreign non-life insurance company branches participating in bidding to provide insurance services must meet the following conditions:

a) They must have permission to operate the type of insurance business they intend to bid for, as stated in their establishment and operation license;

b) They must ensure payment capacity as prescribed by law;

c) They must have a capital base meeting the requirements of the law;

d) In cases involving reinsurance, confirmation from the reinsurer company or evidence proving the reinsurer company's approval to accept reinsurance for the portion exceeding the retained liability limit of the insurance company or foreign non-life insurance company branch, according to the rules, terms, and rates that the bidding insurance company or foreign non-life insurance company branch plans to offer to customers is required. Foreign reinsurers accepting at least 10% of each insurance contract's total liability must have a minimum rating of "BBB+" by Standard & Poor's or Fitch, "B++" by A.M. Best, "Baa1" by Moody's, or equivalent ratings from other rating organizations with relevant experience at the most recent fiscal year compared to the time of accepting reinsurance;

e) They must not violate other bidding regulations.

2. Insurance companies and foreign non-life insurance company branches participating in bidding for insurance services are not required to provide bid guarantees or performance guarantees.

Article 26. Competition in Insurance Business

Competition in the insurance business must be conducted in accordance with the following provisions:

1. For compulsory insurance products as stipulated in Article 8 of the Law on Insurance Business, insurance companies and foreign non-life insurance company branches must comply with the insurance conditions, premium rates, and minimum indemnity amounts set by the Ministry of Finance.

2. For special insurance products prescribed by the Government,

3. For life insurance products (of life insurance companies) and health insurance products (of insurance companies and foreign non-life insurance company branches), they must follow the rules, terms, and rates of insurance already approved by the Ministry of Finance.

4. For other non-life insurance products: Non-life insurance companies and foreign non-life insurance company branches are permitted to independently develop and implement insurance rules, terms, and rates according to Clause 4 of Article 20 of Decree 45/2007/NĐ-CP. If the insurance rules, terms, and rates do not ensure financial safety as required for non-life insurance companies and foreign non-life insurance company branches and affect the interests of policyholders, the Ministry of Finance will require non-life insurance companies and foreign non-life insurance company branches to make appropriate adjustments.

Article 27. Contents of Insurance Business Activities

1. An insurance company is permitted to operate according to the contents prescribed in Clause 1 of Article 60 of the Law on Insurance Business.

2. A life insurance company is not permitted to engage in non-life insurance business operations, and vice versa.

3. Life insurance companies and non-life insurance companies are permitted to conduct health insurance business operations.

Section 4

INSURER PROTECTION FUND

Article 28. Principles for Managing the Insurer Protection Fund

1. The Insurer Protection Fund is centrally managed at the Vietnam Insurance Association and is separately accounted for, managed, and monitored for life insurance and non-life insurance types. The Insurer Protection Fund has its own account at commercial banks and uses the seal of the Vietnam Insurance Association.

2. The Vietnam Insurance Association monitors the contribution of the Insurer Protection Fund by insurance companies and branches of foreign non-life insurance companies; manages and uses the Insurer Protection Fund effectively and in accordance with its purpose as stipulated in this Decree and other relevant laws.

3. The Ministry of Finance guides and supervises the management and use of the Insurer Protection Fund.

Article 29. Entities Contributing to the Insurer Protection Fund

Entities contributing to the Insurer Protection Fund include:

1. Insurance companies;

2. Branches of foreign non-life insurance companies.

Article 30. Contribution Rate for the Insurer Protection Fund

1. The contribution rate for the Insurer Protection Fund is announced annually by the Ministry of Finance but shall not exceed 0.3% of the total premium income retained from original insurance contracts of insurance companies and branches of foreign non-life insurance companies.

2. Contributions continue until the scale of the Insurer Protection Fund reaches 5% of total assets for non-life insurance companies and branches of foreign non-life insurance companies, and 3% of total assets for life insurance companies.

Article 31. Sources of Formation of the Insurer Protection Fund

The Insurer Protection Fund is formed from the following sources:

1. Annual contributions based on a percentage of premiums applied to all insurance contracts. This amount is included in reasonable expenses when calculating corporate income tax.

2. Profits from the investment activities of the Insurer Protection Fund.

3. The balance of the Insurer Protection Fund from the previous year carried over to the next year.

Article 32. Principles for Using the Insurer Protection Fund

1. The Insurer Protection Fund is used in the following cases:

a) In the case where an insurance company or branch of a foreign non-life insurance company loses its ability to pay and has implemented measures to restore its ability to pay but still cannot overcome the situation, the insurance company or branch of a foreign non-life insurance company may use the Insurer Protection Fund pursuant to the decision of the Ministry of Finance terminating the application of measures to restore the ability to pay;

b) In the case where an insurance company goes bankrupt, the Insurer Protection Fund is used from the date the Judge issues a decision declaring the bankruptcy of the insurance company.

2. The Insurer Protection Fund is used separately for life insurance and non-life insurance types.

3. The Insurer Protection Fund is used to pay insurance money, surrender values; pay insurance indemnities; refund premiums according to the insurance contract upon request of an insurance company or branch of a foreign non-life insurance company that has lost its ability to pay, an insurance company that has gone bankrupt, and is executed once for each claim for payment of insurance money, surrender values; payment of insurance indemnities; refund of premiums.

Article 33. Contents of the Fund for Protecting Insured Persons

The Fund for Protecting Insured Persons shall be used for the following purposes:

1. Paying insurance money, return value; paying insurance indemnity; refunding insurance premiums according to the insurance contract stipulated by the insurance company or foreign non-life insurance branch which is unable to pay at the time when the Ministry of Finance decides to terminate the application of measures to restore solvency (in the case where the insurance company or foreign non-life insurance branch loses its ability to pay) or at the time when the Judge issues a decision declaring the bankruptcy of the insurance company (in the case where the insurance company goes bankrupt).

2. Managing the Fund for Protecting Insured Persons, including salary payments, allowances, purchasing and repairing expenses, service fees, and other expenses as guided by the Ministry of Finance.

Article 34. Procedures for Requesting the Use of the Fund for Protecting Insured Persons

1. Within five days from the date the Ministry of Finance decides to terminate the application of measures to restore solvency (in the case where the insurance company or foreign non-life insurance branch loses its ability to pay) or within five days from the date the results of asset liquidation and debt settlement are obtained (in the case where the insurance company goes bankrupt), the insurance company or foreign non-life insurance branch must submit to the Vietnam Insurance Association a request for using the Fund for Protecting Insured Persons along with the required documentation as guided by the Vietnam Insurance Association.

2. Within thirty days from the date of receiving the request for using the Fund for Protecting Insured Persons accompanied by the required documentation as stipulated in Clause 1 of this Article, the Vietnam Insurance Association shall decide on the use of the Fund for Protecting Insured Persons and report to the Ministry of Finance on the implementation results.

Article 35. Responsibilities of Insurance Companies and Foreign Non-Life Insurance Branches

1. Contribute to the Fund for Protecting Insured Persons according to the guidance of the Ministry of Finance.

2. Appoint representatives to participate in managing the Fund for Protecting Insured Persons at the Vietnam Insurance Association.

3. Submit to the Vietnam Insurance Association a request for using the Fund for Protecting Insured Persons and the required documentation as stipulated in Clause 1 of Article 34 of this Decree, accompanied by the decision of the Ministry of Finance terminating the application of measures to restore solvency or the decision of the Judge declaring the bankruptcy of the insurance company.

Article 36. Responsibilities of the Vietnam Insurance Association

1. Organize the management and use of the Fund for Protecting Insured Persons and bear legal responsibility for such management and use; conduct audits of the Fund for Protecting Insured Persons in accordance with the law.

2. Develop plans and determine payment limits for each claim for insurance money, return value; insurance indemnity; refunding insurance premiums when the insurance company goes bankrupt or the insurance company or foreign non-life insurance branch loses its ability to pay.

3. Carry out insurance payments and indemnities to insured persons in accordance with the provisions of this Decree.

4. Invest the Fund for Protecting Insured Persons in Vietnam through purchasing government bonds, corporate bonds guaranteed by the government, or depositing funds in commercial banks ensuring the principle of capital safety and investment efficiency.

5. Report quarterly to the Ministry of Finance on the management and use of the Fund for Protecting Insured Persons.

Article 37. Responsibilities of the Ministry of Finance

1. Guide, direct, manage, and supervise the Vietnam Insurance Association in the management and use of the Fund for Protecting Insured Persons.

2. Guide the annual contribution and accounting of the Fund for Protecting Insured Persons by insurance companies and foreign non-life insurance branches.

Section 5

INSURANCE OPERATIONS AND INSURANCE INTERMEDIATION

Article 38. Issuance of Licenses for the Establishment and Operation of Insurance Joint Stock Companies and Insurance Brokerage Joint Stock Companies

Organizations and individuals contributing capital to establish insurance joint stock companies and insurance brokerage joint stock companies shall comply with the provisions stipulated in Article 63 of the Law on Insurance Business, Article 6 and Article 7 of Decree No. 45/2007/NĐ-CP, and the guidance of the Ministry of Finance.

Article 39. Issuance of Licenses for the Establishment and Operation of Limited Liability Insurance Companies and Limited Liability Insurance Brokerage Companies

1. The establishment of limited liability insurance companies and limited liability insurance brokerage companies shall be carried out in accordance with the provisions stipulated in Article 63 of the Law on Insurance Business, Article 6 and Article 7 of Decree No. 45/2007/NĐ-CP, and the guidance of the Ministry of Finance.

2. Vietnamese organizations establishing limited liability insurance companies and limited liability insurance brokerage companies shall comply with the following regulations:

a) They must be enterprises operating in the financial, banking, and insurance sectors;

b) They must have total assets of at least VND 2,000 billion in the case of establishing a single-member limited liability company; and at least VND 1,500 billion in the case of establishing a multi-member limited liability company. This regulation does not apply to organizations establishing limited liability insurance brokerage companies;

c) They must have been profitable for three consecutive fiscal years prior to submitting the application for the License for Establishment and Operation;

d) Other conditions stipulated in Clause 1 of this Article.

Article 40. Statutory Capital Requirement for Enterprises Specializing in Health Insurance Business

The statutory capital requirement for enterprises exclusively engaged in health insurance business is VND 300 billion.

Article 41. Procedures and Formalities for Issuing Licenses for Establishment and Operation

The Ministry of Finance shall provide guidance on the procedures and formalities for issuing Licenses for Establishment and Operation for insurance enterprises and insurance brokerage enterprises.

Article 42. Conversion of Forms of Insurance Enterprises and Insurance Brokerage Enterprises

1. Joint venture insurance enterprises as stipulated in Clause 4 of Article 59 of the Law on Insurance Business No. 24/2000/QH10, and joint venture insurance brokerage enterprises may be converted into limited liability companies with two or more members.

2. Foreign-owned sole proprietorship insurance enterprises as stipulated in Clause 5 of Article 59 of the Law on Insurance Business, and foreign-owned sole proprietorship insurance brokerage enterprises may be converted into single-member limited liability companies.

3. In cases where insurance enterprises and insurance brokerage enterprises decide to convert their forms of enterprise as stipulated in Clauses 1 and 2 of this Article, such enterprises shall inherit all lawful rights and interests, and bear responsibility for commitments made to insured parties and other obligations of the insurance enterprise and insurance brokerage enterprise before conversion. The conversion procedures shall be carried out in accordance with the Law on Enterprises and the guidance of the Ministry of Finance.

4. In cases where insurance enterprises and insurance brokerage enterprises decide not to convert their forms of enterprise as stipulated in Clauses 1 and 2 of this Article, they may continue to operate under the License for Establishment and Operation issued by the Ministry of Finance; retain their enterprise name, seal, bank account, and tax registration number. Other rights and obligations shall be implemented in accordance with the law.

Chapter 6

REINSURANCE OPERATING ORGANIZATIONS

Article 43. Licensing for the establishment and operation of reinsurance enterprises

1. Organizations operating in the financial, banking, and insurance sectors may contribute capital to establish reinsurance enterprises in the forms prescribed in Clause 2 or Clause 3 of this Article.

2. The establishment of a joint-stock reinsurance company shall be carried out in accordance with the provisions of Article 63 of the Insurance Business Law, Articles 6 and 7 of Decree No. 45/2007/ND-CP, Clause 4 of this Article, and the guidance of the Ministry of Finance.

3. The establishment of a limited liability reinsurance company shall be carried out in accordance with the provisions of Article 39, Clause 4 of Article 43 of this Decree, and the guidance of the Ministry of Finance.

4. The minimum statutory capital of reinsurance enterprises:

a) Engaging in non-life reinsurance, health reinsurance, or both types of non-life reinsurance and health reinsurance: VND 400 billion;

b) Engaging in life reinsurance, or both types of life reinsurance and health reinsurance: VND 700 billion;

c) Engaging in all three types of life reinsurance, non-life reinsurance, and health reinsurance: VND 1,100 billion.

Article 44. Organization of operations and financial regime for reinsurance enterprises

1. The organization of operations of reinsurance enterprises shall be carried out in accordance with the provisions of Articles 10, 11, 12, 13, 15, 16, 23, 24, 25, 26, and 27 of Decree No. 45/2007/ND-CP and specific guidelines of the Ministry of Finance.

2. The financial regime for reinsurance enterprises shall be implemented in accordance with each type of reinsurance that the enterprise implements (life reinsurance, non-life reinsurance, health reinsurance) in accordance with current regulations and the guidance of the Ministry of Finance.

Section 7

AMENDMENTS AND SUPPLEMENTS TO CERTAIN ARTICLES OF DECREE NO. 45/2007/ND-CP

Article 45. Amendments and supplements to Article 11 of Decree No. 45/2007/ND-CP

1. Points b and c of Clause 1 of Article 11 shall be amended and supplemented as follows:

"b) Managers and executives must meet the conditions stipulated in Clause 1 of Article 13, and the internal inspection and control system must comply with the provisions of Article 15 of Decree No. 45/2007/ND-CP dated March 27, 2007, of the Government detailing the implementation of certain provisions of the Insurance Business Law;

c) Not having been administratively fined VND 200 million or more for violations in the insurance business within 12 months prior to the date of submitting the application. The insurance enterprise does not violate the solvency requirements;"

2. Point b of Clause 2 of Article 11 shall be deleted.

Chapter III

IMPLEMENTING PROVISIONS

Article 46. Effective Date

This Decree takes effect from February 15, 2012.

Article 47. Implementation organization

1. The Minister of Finance shall guide the implementation of the provisions assigned in this Decree; provide necessary guidance on other contents of the Decree to meet the needs of state management.

2. The Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of provincial People's Committees under the central government shall be responsible for enforcing this Decree./.