Decision No. 1235/TC-QĐ-TCNH on mandatory reinsurance

Pursuant to …;

On Compulsory Reinsurance

THE MINISTER OF FINANCE

Pursuant to the Government's Decree No. 178/CP dated October 28, 1994 on the functions, tasks, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 100/CP dated December 18, 1993 of the Government on insurance business;

Considering the current situation of the Vietnamese insurance market;

At the proposal of the Director of the Department of Finance of Banks and Financial Institutions,

DECISION:

Article 1. Insurance enterprises operating in Vietnam (original insurance enterprises) shall be responsible for compulsory reinsurance for the National Reinsurance Corporation of Vietnam a portion of the liability arising from business operations that require reinsurance.

Article 2. The compulsory reinsurance ratio for the National Reinsurance Corporation of Vietnam is defined as 30% of the value of insurance exceeding the retention level of the original insurance enterprise; To facilitate the implementation by insurance enterprises and align with international practices on compulsory reinsurance, it is now agreed to convert this to 20% of the value of the original insurance policy and in the form of a contract number.

In cases where insurance or compulsory reinsurance is required according to the designation of foreign insured parties, the compulsory reinsurance ratio will be calculated based on the portion of responsibility of the insurance enterprise in the original insurance contract.

Article 3. The National Reinsurance Corporation of Vietnam shall be responsible for accepting compulsory reinsurance from original insurance enterprises at a minimum level as prescribed in Article 2.

Article 4. The rights and obligations of the National Reinsurance Corporation of Vietnam regarding each risk related to the contract of accepting compulsory reinsurance will commence and terminate concurrently with the original insurance contract of the insurance enterprises.

Article 5. After arranging the compulsory reinsurance contract, all insurance enterprises (including the National Reinsurance Corporation of Vietnam) must prioritize voluntary reinsurance for domestic insurance enterprises before arranging reinsurance contracts abroad. In necessary cases, proof of such priority must be provided to the competent state management agency.

Article 6. The commission rate for compulsory reinsurance is stipulated as follows:

- For fixed-term reinsurance contracts (excluding aviation insurance business): The compulsory reinsurance commission rate shall be applied according to the table of compulsory reinsurance commission rates issued together with this Decision.

- For temporary reinsurance contracts and aviation insurance business: The compulsory reinsurance commission rate equals the income tax rate plus 85% of the reinsurance commission rate (after deducting the income tax rate) of the same type of service on the international market.

Article 7. The payment of reinsurance premiums, reinsurance commissions, and reinsurance indemnities related to the portion of compulsory reinsurance liability between the insurance enterprise and the National Reinsurance Corporation of Vietnam shall be conducted quarterly based on the statistical report of the original insurance enterprise and through offsetting within ten days from the date of receipt of the notice as stipulated in the reinsurance contract.

Official payments will be made according to the annual settlement figures of the original insurance enterprise approved by the competent authority.

Article 8. Other provisions in the compulsory reinsurance contract agreed upon by the original insurance enterprise and the National Reinsurance Corporation of Vietnam based on the original insurance contract but not contrary to the provisions of this Decision.

Article 9.

9.1. In case of intentional non-compliance with the compulsory reinsurance transfer as prescribed in Article 1, the original insurance enterprise must pay the compulsory reinsurance premium to the National Reinsurance Corporation of Vietnam while still bearing the responsibility under the compulsory reinsurance contract.

9.2. In case of intentional non-compliance with the acceptance of compulsory reinsurance as prescribed in Article 3, the National Reinsurance Corporation of Vietnam must bear the responsibility under the compulsory reinsurance contract and shall not receive the compulsory reinsurance premium.

9.3. In case the original insurance enterprise or the National Reinsurance Corporation of Vietnam fails to comply with the payment deadlines, they shall be subject to a penalty for late payment as stipulated by the State Bank of Vietnam.

Article 10. This Decision takes effect from the date of signature and applies to insurance policies generated from January 1, 1996, replacing Decision No. 1314/TC/QĐ/TCNH dated December 21, 1994. The Director of the Department of Finance of Banks and Financial Institutions, the General Director of the General Bureau of Capital and Asset Management at State-Owned Enterprises, the Head of the Ministry's Office, the Directors of insurance enterprises, and the heads of relevant units are responsible for implementing this Decision.