Circular No. 28/1998/TT-BTC stipulates on the activities of insurance agents and representatives.

CIRCULAR
Provisions on insurance agency and brokerage activities

Implementing Decree No. 100/CP dated December 18, 1993 of the Government on insurance business, Decree No. 74/CP dated June 14, 1997 of the Government amending and supplementing certain provisions of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business; to protect the rights and legitimate interests of insurance participants, create favorable conditions for the business operations of insurance enterprises, ensure fair competition, the Ministry of Finance stipulates insurance agency and brokerage activities as follows:

I. GENERAL PROVISIONS:

1. Interpretation of terms.

In this Circular, the following terms shall be understood as follows:

Insurance agent (hereinafter referred to as agent) is an individual authorized by an insurance enterprise to sell insurance products to the public on behalf of the insurance enterprise and must meet all conditions prescribed in Clause 9, Article 1 of Decree No. 74/CP dated June 14, 1997 of the Government.

Insurance broker (hereinafter referred to as broker) is an economic organization with legal personality authorized by an insurance enterprise to sell insurance products to the public on behalf of the insurance enterprise based on a brokerage agreement and not being a subsidiary of the insurance enterprise.

Agency and brokerage activities are methods of selling insurance whereby the agent or broker is responsible for arranging the signing of insurance contracts between the insurance enterprise and the policyholder according to the authorization of the insurance enterprise based on an agency agreement or a brokerage agreement to earn commission.

2. Insurance enterprises are not permitted to use and pay commission to organizations and individuals who do not meet the conditions for engaging in brokerage and agency activities.

3. Insurance enterprises are liable under the law and towards insurance participants for the activities carried out by their agents and brokers pursuant to signed agency agreements and brokerage agreements and current laws.

4. The system of insurance commissions applicable to agents and brokers shall be implemented in accordance with Circular No. 76 TC/TCNH dated October 25, 1995 of the Ministry of Finance on the system of insurance commissions, Circular No. 02 TC/TCNH dated January 4, 1996 guiding amendments and supplements to the implementation of the system of insurance commissions, and current legal regulations.

II. CONDITIONS FOR AGENCY AND BROKERAGE ACTIVITIES:

1. Insurance agents:

Individuals engaged in agency activities must meet all conditions prescribed in Clause 9, Article 1 of Decree No. 74/CP dated June 14, 1997 of the Government amending and supplementing certain provisions of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business.

2. Insurance brokers:

Brokers are economic organizations with legal personality established and operating legally in Vietnam in accordance with current legal regulations.

The performance of brokerage activities does not conflict with the functions and tasks of the organization accepting the brokerage and does not contradict the interests of the insurance enterprise.

III. RIGHTS AND OBLIGATIONS OF INSURANCE ENTERPRISES AND INSURANCE AGENTS AND BROKERS:

Selecting agents and brokers, structuring and forms of agency and brokerage, signing agency and brokerage agreements.

1. The insurance enterprise has the following rights:

Specifying the level of commission payment in agency and brokerage agreements in accordance with current legal regulations.

Receiving and managing the deposit money or collateral assets of agents and brokers (if agreed upon in the agency or brokerage agreement).

Requesting agents and brokers to settle the collected insurance premiums according to the agreed method.

Authorizing agents and brokers to perform certain tasks within their responsibility as stipulated in the agency or brokerage agreement.

Monitoring and supervising the implementation of agency and brokerage agreements.

Enjoying other lawful benefits arising from agency and brokerage activities.

2. Insurance enterprises must fulfill the following obligations:

Signing agency and brokerage agreements in accordance with current legal regulations.

Organizing training and issuing certificates of completion for agency courses.

Providing necessary information related to agency and brokerage activities and being responsible for the accuracy of such information.

Fulfilling responsibilities arising from signed agency and brokerage agreements.

Paying commissions as committed in agency and brokerage agreements and in compliance with legal regulations.

Returning the deposit money or collateral assets (if agreed upon) to agents and brokers when terminating agency and brokerage agreements.

Being liable for damages or losses caused by their own agency and brokerage activities in accordance with agency agreements, brokerage agreements, and relevant legal regulations.

Separately tracking insurance contracts directly developed by the insurance enterprise and those arranged by agents and brokers to ensure commission payments in accordance with current legal regulations.

Subjecting to supervision by competent state agencies over activities conducted by agents and brokers of the insurance enterprise.

3. Agents and brokers have the following rights:

To choose and sign agency and brokerage agreements with suitable insurance enterprises in accordance with current legal regulations.

To participate in training, upgrading, and enhancing their qualifications organized by the insurance enterprise.

To receive necessary information for their activities and other conditions to implement agency and brokerage agreements.

To enjoy commissions and other lawful benefits arising from agency and brokerage activities. The insurance commission earned according to the brokerage agreement is considered income of the broker and may be used in accordance with current financial regulations.

To request the insurance enterprise to return the deposit money or collateral assets (if agreed upon in the agency or brokerage agreement) when the agreement expires.

4. Agents and brokers have the following obligations:

4. Agents and collaborators shall have the following obligations:

Introduce oneself, invite, and offer to sell insurance and related activities as required by the insurance company; provide full and accurate information to policyholders during the process of arranging and executing insurance contracts, handling complaints... within the scope of authorization in the agency or cooperative agreement.

Fulfill all commitments stipulated in the agency or cooperative agreement signed with the insurance company.

Shall not simultaneously act as an agent for another insurance company without the written approval of the current insurance company being represented.

Shall not engage in other activities that conflict with the interests of the insurance company being represented.

Post collateral or pledge assets to the insurance company (if agreed upon in the agency or cooperative agreement).

Be subject to inspection and supervision by the insurance company, implement periodic reporting systems for agency or cooperative activities as required by the insurance company.

Maintain accounting records and monitor income and expenses in accordance with current regulations on accounting and statistics.

Be subject to inspection and supervision by state agencies with competent authority and fulfill all financial obligations to the state in accordance with current laws.

IV. AGENCY AND COOPERATIVE AGREEMENTS:

1. The agency or cooperative agreement must be documented in writing.

2. The agency or cooperative agreement must include the following main contents:

Names and addresses of the parties signing the agency or cooperative agreement;

Types of products and services that the agent or cooperative member is permitted to conduct;

Scope and geographical area of operation of the agent or cooperative member;

Rights and obligations of the parties agreed upon based on the provisions in Section III of this Circular and relevant legal documents;

Commission system and other costs;

Payment method, payment time, and payment location:

Payment of insurance premiums collected;

Payment of remuneration and other costs;

Payment of deposit and return of pledged assets;

Reward, penalty, and compensation system;

Information and reporting system with the insurance company;

Duration of validity of the agency or cooperative agreement;

Dispute resolution.

In addition, the two parties may agree on other issues such as advertising, marketing, training, material support, funding... in compliance with current laws.

3. Any amendments or supplements to the agency or cooperative agreement shall only have legal effect if both parties accept them in writing.

4. The parties are obligated to fully comply with the commitments in the agreement. The party violating the agreement shall bear material responsibility towards the other party. If there are no other provisions in the agreement, penalties for breach of contract and compensation for damages shall be applied according to current laws.

5. The agency or cooperative agreement terminates in the following cases:

Expiration of the agreement's validity period and the parties do not agree to extend it;

Both parties agree to terminate the agreement before its expiration;

The agency or cooperative agreement is declared void under current laws regarding invalid economic contracts;

One party unilaterally terminates the agreement. In this case, the party unilaterally terminating the agency or cooperative agreement shall be responsible for compensating for any damage caused by the termination of the agreement to the other party.

V. EFFECTIVE PROVISIONS:

1. This Circular takes effect fifteen days from the date of issuance and applies to insurance agency and cooperative activities in Vietnam. Insurance companies, agents, and cooperative members are responsible for organizing agency and cooperative activities in compliance with the provisions of this Circular.

2. Any violations of this Circular will be handled according to current laws depending on the severity of the violation.

During implementation, any difficulties or obstacles should be promptly reported to the Ministry of Finance for consideration and resolution./.