Decree No. 41/2009/NĐ-CP On Administrative Sanctions for Violations in the Insurance Business Sector

DECREE

On administrative penalties for violations in the insurance business sector

_________________________

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;

Pursuant to the Inspection Law dated June 15, 2004;

Based on the Ordinance on Handling Administrative Violations dated July 2, 2002, and the Ordinance Amending and Supplementing Certain Provisions of the Ordinance on Handling Administrative Violations dated April 2, 2008;

Considering the proposal of the Minister of Finance,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Application and Coverage

1. Administrative penalties for violations in the insurance business sector shall be applied to individuals, agencies, organizations (hereinafter referred to collectively as individuals, organizations) who intentionally or negligently violate provisions of laws on insurance activities that do not constitute criminal offenses and which according to law must be subject to administrative penalties.

2. This Decree applies to:

a. Individuals, organizations committing administrative violations in the insurance business sector as stipulated in Chapter II of this Decree.

b. Foreign individuals, organizations operating within the territory of Vietnam committing administrative violations in the insurance business sector as stipulated in this Decree, except where international treaties to which Vietnam is a party provide otherwise.

Article 2. Principles of Administrative Sanctions

1. All administrative violations in the insurance business sector must be discovered promptly and stopped immediately. The imposition of administrative penalties for violations in the insurance business sector must be carried out swiftly, impartially, and thoroughly; all consequences caused by administrative violations must be remedied in accordance with the provisions of the law.

2. The imposition of administrative penalties for violations in the insurance business sector shall be carried out by persons authorized pursuant to this Decree.

3. A single administrative violation in the insurance business sector shall only be subject to one administrative penalty. Organizations, individuals committing multiple administrative violations shall be penalized for each individual violation.

4. The imposition of administrative penalties for violations in the insurance business sector must be based on the nature and degree of the violation, the identity of the violator, and mitigating or aggravating circumstances as provided for in Articles 8 and 9 of the Ordinance on Handling Administrative Violations to determine appropriate forms and measures of punishment.

Time Limit for Administrative Penalties

1. The statute of limitations for administrative penalties for violations in the insurance business sector is two years, counted from the date when the individual or organization commits an administrative violation in the insurance business sector. If beyond this period, no penalty will be imposed but the remedial measures prescribed at point a and point đ clause 3 Article 12 of the Ordinance on Handling Administrative Violations and clause 3 Article 5 of this Decree shall still apply.

2. For individuals who have been indicted, prosecuted, or had a case initiated for trial under criminal proceedings, but subsequently have a decision to terminate the investigation or terminate the case where the act has signs of administrative violations, they shall be subject to administrative penalties; the statute of limitations for administrative penalties is three months, counted from the date the competent authority imposing penalties receives the decision to terminate and the file of the violation.

3. Within the time limit specified in clauses 1 and 2 of this Article, if individuals, organizations continue to commit administrative violations or deliberately evade or obstruct the imposition of penalties, then the statute of limitations for administrative penalties as stipulated in clauses 1 and 2 of this Article shall not apply; the statute of limitations for administrative penalties shall be recalculated from the date of the new administrative violation or the date when the act of evading or obstructing the imposition of penalties ceases.

Article 4. Time Limit Considered as Not Having Been Subject to Administrative Penalties

An individual, organization subject to administrative penalties, if within one year from the date of completion of the execution of the penalty decision or from the date the effectiveness of the penalty decision expires without reoffending, shall be considered as not having been subject to administrative penalties.

Article 5. Forms of Administrative Sanctions and Measures to Mitigate Consequences for Administrative Violations in the Insurance Business Sector

1. For each administrative violation in the insurance business sector, the violator must bear the main form of administrative sanction which is a fine.

2. Depending on the nature and degree of the violation, individuals and organizations committing administrative violations may also be subject to one or more of the following supplementary forms of administrative sanctions:

a. Confiscation of all revenues from the implementation of administrative violations.

b. Confiscation of objects and means used for administrative violations.

c. Revocation or revocation of the right to use the License for Establishment and Operation for a part or the entire scope of activities of the insurance company or insurance brokerage company for a limited period.

3. In addition to the forms of administrative sanctions prescribed in Clause 1 and Clause 2 of this Article, depending on the nature and degree of the violation, individuals and organizations committing violations may also be subject to one or more of the following measures to mitigate consequences:

a. Compel compliance with the provisions of the law regarding administrative violations.

b. Compel cancellation or correction of false or inaccurate information.

c. Compel recovery of funds paid out or compensated in contravention of the law.

d. Compel cessation of the position appointed by the insurance company or insurance brokerage company; e. Compel removal of the position of management, operation, or calculation specialist approved by the Ministry of Finance.

Chapter II

VIOLATIONS AND FORMS OF PENALTIES AND AMOUNTS OF PENALTIES

Section 1

VIOLATIONS OF REGULATIONS ON ESTABLISHMENT AND OPERATION

Article 6. Administrative Sanctions for Violations of Regulations on Licensing Documents

1. A fine of 30,000,000 VND shall be imposed on organizations or individuals who commit acts of altering, falsifying, or counterfeiting documents in the licensing application file.

2. Additional forms of punishment:

a. Confiscation of altered, falsified, or counterfeit documents.

b. Revocation or revocation of the right to use the License for Establishment and Operation for a period of from 90 days to 180 days concerning the scope of activities related to the act of falsification or counterfeiting documents to obtain a license.

3. Application of measures to remedy consequences:

a. Compel removal of the position of management or operation approved by the Ministry of Finance.

b. Compel supplementation of documents in the file in accordance with the provisions of the law.

Article 7. Administrative Sanctions for Violations of Regulations on Licensing Documents for Establishing Representative Offices of Foreign Insurance Companies and Insurance Brokers

1. A fine of 30,000,000 VND shall be imposed on foreign insurance companies or insurance brokers who commit acts of altering, falsifying, or counterfeiting documents in the licensing application file for establishing representative offices.

2. Additional forms of punishment:

a. Confiscation of altered, falsified, or counterfeit documents.

b. Revocation of the License to establish a representative office.

Article 8. Administrative Sanctions for Violations of Regulations on Management and Use of Licenses for Establishment and Operation, and Licenses to Establish Representative Offices

1. A fine of 30,000,000 VND shall be imposed on insurance companies or insurance brokers who commit one of the following violations:

a. Failure to publish in five consecutive daily newspapers of central and local levels where the headquarters of the enterprise is located, within one month, one of the following contents:

- Name and address of the headquarters, branch, and representative office of the insurance company;

- Scope and duration of operations; - Registered capital and contributed capital;

- Name of the legal representative of the enterprise;

- License number and date of issuance of the License for Establishment and Operation;

- Permitted insurance and insurance brokerage businesses.

b. Failure to announce, announce beyond the deadline, or announce inaccurately one of the following operational contents and changes approved by the Ministry of Finance:

- Name of enterprise;

- Registered capital;

- Opening or ceasing operations of branches or representative offices;

- Location of headquarters, branches, and representative offices;

- Scope and duration of operations;

- Transfer of shares or contributions accounting for 10% or more of the registered capital;

- Chairman of the Board of Directors, General Director (Director);

- Splitting, merging, consolidating, dissolving, or converting the form of the enterprise.

c. Failure to announce the contents specified in the License to Establish a Representative Office;

d. Failure to operate within 12 months from the date of issuance of the License for Establishment and Operation or the License to Establish a Representative Office.

2. A fine of 50,000,000 VND shall be imposed on insurance companies or insurance brokers who commit acts of altering the License for Establishment and Operation or the License to Establish a Representative Office.

3. A fine of 70,000,000 VND shall be imposed on organizations that commit one of the following violations:

a. Engaging in insurance, insurance brokerage, or reinsurance without a License for Establishment and Operation;

b. Continuing operations or business when the License for Establishment and Operation has been revoked or the right to use it has been revoked for a limited period concerning the scope of activities of the insurance company or insurance broker, or the License to Establish a Representative Office has been revoked;

c. Continuing operations when the License for Establishment and Operation or the License to Establish a Representative Office has expired.

4. Additional forms of administrative punishment:

a. Confiscation of all revenues from the implementation of administrative violations.

b. Revocation of the right to use the License for Establishment and Operation for a period of from 90 days to 180 days concerning a part of the scope of activities for violations stipulated in Clause 2 of this Article;

c. Revocation of the License for Establishment and Operation, or the License to Establish a Representative Office for violations stipulated in Point d Clause 1, Point b and Point c Clause 3 of this Article.

5. Application of measures to mitigate consequences: Compel compliance with the provisions of the law for cases of violations stipulated in Clause 1, Clause 2, and Clause 3 of this Article.

Section 2

VIOLATIONS OF MANAGEMENT AND OPERATIONAL REGULATIONS

Article 10. Penalties for violations concerning management, operation, and supervision

1. A fine of 30,000,000 VND shall be imposed on insurance enterprises, insurance brokerage enterprises, or the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director, and related persons of insurance enterprises, insurance brokerage enterprises who commit any of the following violations:

a. Appointing the General Director (Director) or Deputy General Director (Deputy Director) of an insurance enterprise or insurance brokerage enterprise to work for another insurance enterprise or insurance brokerage enterprise operating in the same field;

b. Appointing the General Director (Director) of an insurance enterprise or insurance brokerage enterprise as a member of the Board of Directors or Board of Members of another insurance enterprise or insurance brokerage enterprise operating in the same field that is not a subsidiary;

c. Appointing members of the Board of Directors or Board of Members of an insurance enterprise or insurance brokerage enterprise as members of the Board of Directors or Board of Members of another insurance enterprise or insurance brokerage enterprise operating in the same field that is not a subsidiary;

d. The General Director (Director), Deputy General Director (Deputy Director), Branch Manager, Representative Office Director, Chief Accountant, Head of the Supervisory Board appointed but not residing in Vietnam during their term of office.

2. A fine of 50,000,000 VND shall be imposed on insurance enterprises, insurance brokerage enterprises, or the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director, and related persons of insurance enterprises, insurance brokerage enterprises who commit any of the following violations:

a. Appointing Deputy General Directors (Deputy Directors), Branch Managers, Representative Office Directors, Heads of the Supervisory Board, heads of departments responsible for insurance business operations, insurance claims, investment, members of the Board of Directors, Board of Members who do not meet the standards prescribed by law;

b. Not issuing internal inspection and control procedures of the insurance enterprise and other procedures as prescribed by law;

c. Internal inspection and control procedures of the insurance enterprise do not comply with the contents prescribed by law.

3. A fine of 70,000,000 VND shall be imposed on insurance enterprises, insurance brokerage enterprises who commit any of the following violations:

a. Appointing the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director) who do not meet the standards prescribed by law;

b. Not appointing the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director) as prescribed by law;

c. Changing the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director) without written approval from the Ministry of Finance;

4. Apply remedial measures:

a. Compel the removal of the position of management or operation personnel approved by the Ministry of Finance in cases of violation stipulated in Clause 1 of this Article;

b. Compel the suspension of positions already appointed by the enterprise in cases of violation stipulated in Clause 1 and Point a Clause 2 of this Article;

c. Compel compliance with the provisions of law in cases of violation stipulated in Clause 1, Clause 2, and Clause 3 of this Article;

Article 11. Sanctions for violations concerning Appointed Actuaries

1. A fine of seventy million Vietnamese dong shall be imposed on life insurance enterprises that commit any of the following violations:

a. Not appointing an appointed actuary as prescribed by law;

b. Not complying with the procedures for changing an appointed actuary as prescribed by law.

2. A fine of seventy million Vietnamese dong shall be imposed on the appointed actuary of a life insurance enterprise who fails to perform or performs inadequately any of the following tasks:

a. Establishing rules, terms, and calculating premiums for insurance products;

b. Setting up reserve funds for life insurance contracts;

c. Separating funds and distributing annual surplus of the policyholder fund;

d. Preparing periodic reports monthly, quarterly, and annually as prescribed;

đ. Preparing reports on unusual issues as prescribed;

e. Evaluating reinsurance programs, reinsurance contracts, and other tasks to ensure financial safety for the insurance enterprise.

3. Additional sanctions: Revoking part of the content and scope of operation of the License for Establishment and Operation until the enterprise appoints an actuary meeting the standards in cases of violation stipulated in Clause 1 of this Article.

4. Apply remedial measures:

a. Compelling the removal of the title of appointed actuary approved by the Ministry of Finance in cases of violation stipulated in Clause 2 of this Article;

b. Compelling compliance with the legal provisions on appointed actuaries in cases of violation stipulated in Clause 1 of this Article.

Article 12. Sanctions for violations concerning changes in the content of operations of insurance enterprises and insurance brokerage enterprises

1. A fine of 30,000,000 VND shall be imposed on insurance companies or insurance brokers who commit one of the following violations:

a. Altering, falsifying, or forging documents in the application file for establishing a Branch or Representative Office;

b. Changing the name, location of the headquarters, Branch, or Representative Office of an insurance enterprise or insurance brokerage enterprise without the written approval of the Ministry of Finance.

2. A fine of seventy million Vietnamese dong shall be imposed on insurance enterprises and insurance brokerage enterprises that change any of the following contents without the written approval of the Ministry of Finance:

a. The charter capital;

b. Content, scope, and duration of operations.

3. A fine of seventy million Vietnamese dong shall be imposed on insurance enterprises and insurance brokerage enterprises, or their Chairmen of the Board of Directors (Chairman of the Members' Council, Chairman of the Company), General Directors (Directors), and related persons who change any of the following contents without the written approval of the Ministry of Finance:

a. Establishing or ceasing the operation of a Branch or Representative Office;

b. Transferring shares or contributions accounting for ten percent or more of the charter capital.

4. Additional forms of administrative punishment:

a. Confiscation of altered, falsified, or counterfeit documents.

b. Confiscation of all revenues from the implementation of administrative violations;

c. Revoking the right to use the License for Establishment and Operation for a period of sixty to ninety days for part of the content and scope of operation in cases of violation stipulated in Clause 2 and Clause 3 of this Article.

5. Applying measures to remedy consequences:

a. Compelling the removal of the title of management personnel approved by the Ministry of Finance in cases of violation stipulated in Clause 3 of this Article;

b. Compelling compliance with legal provisions in cases of violation stipulated in Clause 1, Clause 2, and Clause 3 of this Article.

Article 13. Sanctions for violations of reinsurance regulations

1. A fine of 50,000,000 VND shall be imposed on the Chairman of the Board of Directors (Chairman of the Members' Council, Chairman of the Company), General Director (Director) and related persons of insurance enterprises that commit any of the following violations:

a. Not approving the reinsurance program;

b. Not issuing or issuing internal procedures and guidelines on reinsurance business operations that do not comply with legal provisions;

c. Not conducting reinsurance according to the reinsurance program and internal procedures and guidelines on reinsurance business operations.

2. A fine of 70,000,000 VND shall be imposed on the General Director (Director) and related persons of insurance enterprises that commit any of the following violations:

a. Ceding reinsurance contrary to legal provisions;

b. Retaining maximum liability on each risk or individual loss exceeding 10% of the enterprise's capital;

c. Accepting reinsurance for risks already ceded; ceding all responsibility under an insurance contract to another insurance enterprise;

d. The reinsurer is not included in the list of enterprises intended to cede reinsurance;

đ. Ceding reinsurance to an overseas reinsurer that has not been rated at least "BBB" by Standard & Poor's, "B++" by A.M.Best, "Baa" by Moody's or equivalent ratings at the most recent fiscal year compared to the time of entering into the reinsurance contract.

3. Additional sanctions: Revocation of the right to use the License for Establishment and Operation for a period of from 60 to 90 days for part of the content and scope of activities in cases of violation of the provisions of Clause 2 of this Article.

4. Apply remedial measures:

a. Compelling the removal of the position of management or control personnel who have been approved by the Ministry of Finance in cases of violation of the provisions of Clause 2 of this Article;

b. Compelling compliance with legal provisions on reinsurance in cases of violation of the provisions of Clause 1 and Clause 2 of this Article.

Article 14. Sanctions for violations of insurance contract transfer regulations

1. A fine of 70,000,000 VND shall be imposed on insurance enterprises that commit any of the following violations:

a. Conducting the transfer of insurance contracts without fully meeting the conditions for transfer as stipulated in Article 75 of the Insurance Business Law;

b. Conducting the transfer of insurance contracts without fully complying with the procedures for transfer as stipulated in Article 76 of the Insurance Business Law.

2. Additional forms of punishment:

a. Confiscation of all revenues from the implementation of administrative violations.

b. Revocation of the right to use the License for Establishment and Operation for a period of from 90 to 180 days for part of the content and scope of activities in cases of violation of the provisions of Clause 1 of this Article.

3. Application of measures to remedy consequences: Compelling compliance with legal provisions in cases of violation of the provisions of Clause 1 of this Article.

Article 15. Sanctions for violations of insurance compensation and payment regulations

1. A fine of 30,000,000 VND shall be imposed on insurance enterprises or General Director (Director), persons assigned responsibilities, and related persons of insurance enterprises that commit the act of compensating customers late than the time limit prescribed by law.

2. A fine of 60,000,000 VND to 70,000,000 VND shall be imposed on insurance enterprises or General Director (Director), persons assigned responsibilities, and related persons of insurance enterprises that commit any of the following violations:

a. Requesting the beneficiary of insurance benefits to pay remuneration or other material benefits contrary to the law during the process of compensation and payment;

b. Colluding with the beneficiary of insurance benefits to compensate and pay insurance benefits contrary to the law;

3. A fine of 70,000,000 VND shall be imposed on organizations or individuals who have received compensation or payment due to fraudulent or forged documents in claims for compensation and payment.

4. Apply remedial measures:

a. Compelling the removal of the position of management or control personnel who have been approved by the Ministry of Finance in cases of violation of the provisions of Clause 1 and Clause 2 of this Article;

b. Compelling the suspension of positions appointed by the enterprise in violation of the provisions of Clause 1 and Clause 2 of this Article;

c. Compelling the recovery of the entire amount compensated in cases of violation of the provisions of Clause 2 and Clause 3 of this Article.

Section 3

VIOLATIONS IN THE EXPLOITATION OF INSURANCE

Article 16. Sanctions for violations of competition regulations

1. A fine of VND 50,000,000 shall be imposed on insurance enterprises that commit any of the following violations:

a. Providing false information or advertising about the content, scope of operations, and insurance conditions;

b. Engaging in unfair competition through promotional activities as prescribed by law;

c. Providing information that affects the legitimate rights and interests of other insurance enterprises.

2. A fine of VND 70,000,000 shall be imposed on insurance enterprises or their General Directors (Directors) and related persons who commit any of the following violations:

a. Agreeing to limit competition, causing damage to the interests of policyholders;

b. Soliciting customers under forms that obstruct, lure, bribe, or threaten employees or customers of other insurance enterprises, insurance agents, or insurance brokerage enterprises.

3. Additional sanctions: Revocation of the right to use the License for Establishment and Operation for a period of from 60 to 90 days for part of the content and scope of activities in cases of violation of the provisions of Clause 2 of this Article.

4. Apply remedial measures:

a. Compelling the removal of the position of management or control personnel who have been approved by the Ministry of Finance in cases of violation of the provisions of Clause 2 of this Article;

b. Order the cessation of positions appointed by the enterprise for cases violating Clause 2 of this Article;

c. Order compliance with legal provisions for cases violating Clause 1 and Clause 2 of this Article.

Article 17. Sanctions for violations of non-life insurance exploitation regulations

1. A fine of VND 50,000,000 shall be imposed on non-life insurance enterprises that commit any of the following violations:

a. Not being transparent in sales, leading customers to misunderstand products and services provided by the enterprise;

b. Discriminating in insurance conditions and premium rates between insured objects with the same level of risk.

2. A fine of VND 70,000,000 shall be imposed on non-life insurance enterprises or their General Directors (Directors) and related persons who commit any of the following violations:

a. Not conducting bidding for the purchase or sale of insurance between the insurance enterprise and investors holding at least 20% of the charter capital of the enterprise or co-insurance with other insurance enterprises;

b. Leveraging the influence of superior management agencies or investors to provide insurance services, affecting the legitimate rights and interests of policyholders.

3. A fine of VND 70,000,000 shall be imposed on organizations, individuals, superior management agencies, or investors who commit any of the following violations:

a. Illegally interfering with the choice of insurance enterprises or insurance brokerage enterprises by policyholders;

b. Using their influence to require, prevent, or compel subordinate units or related persons to participate in insurance at a specific insurance enterprise in any form.

4. Apply remedial measures:

a. Compelling the removal of the position of management or control personnel who have been approved by the Ministry of Finance in cases of violation of the provisions of Clause 2 of this Article;

b. Order compliance with legal provisions on insurance exploitation for cases violating Clause 1 and Clause 2 of this Article.

Article 18. Sanctions for violations of life insurance exploitation regulations

1. A fine of VND 50,000,000 shall be imposed on life insurance enterprises that commit any of the following violations:

a. Product and service introduction materials of the enterprise are unclear, difficult to understand, and contain misleading information;

b. Sales illustration materials are unclear, incomplete, and inaccurate, failing to assist customers in making appropriate choices;

c. Sales illustration materials of the enterprise do not clearly distinguish between guaranteed benefits and non-guaranteed benefits; do not inform customers of the total amount of insurance benefits they may receive from non-guaranteed contracts which may differ;

d. Not reviewing annually the assumptions used in sales illustrations; not updating sales illustrations if the assumptions are no longer consistent with reality;

đ. Product and service introduction materials, sales illustration materials contain information about insurance benefits contrary to rules and terms approved by the Ministry of Finance.

2. A fine of VND 70,000,000 shall be imposed on life insurance enterprises that commit any of the following violations:

a. Not providing sufficient information related to insurance contracts, not explaining insurance conditions and terms to policyholders when concluding insurance contracts;

b. Not notifying policyholders of the status of their contracts as required;

c. Requiring the conclusion of supplementary insurance contracts as a mandatory condition to maintain the validity of primary insurance contracts;

d. Violating regulations on the implementation of investment-linked insurance products.

3. Additional sanctions: Revocation of the right to use the License for Establishment and Operation for a period of from 60 to 90 days for part of the content and scope of activities in cases of violation of the provisions of Clause 2 of this Article.

4. Apply remedial measures:

a. Order the removal of managerial positions approved by the Ministry of Finance for cases violating Clause 2 of this Article.

b. Order compliance with legal provisions for cases violating Clause 1 and Clause 2 of this Article.

Article 19. Penalties for violations of provisions on insurance products and insurance commissions

1. A fine of thirty million Vietnamese dong shall be imposed on a non-life insurance company that fails to report or reports inaccurately the list of new products launched in the preceding month.

2. A fine of VND 70,000,000 shall be imposed on life insurance enterprises that commit any of the following violations:

a. Failure to comply with rules, terms, and premium rates approved by the Ministry of Finance;

b. Amending or supplementing rules, terms, and premium rates without the written consent of the Ministry of Finance.

3. A fine of seventy million Vietnamese dong shall be imposed on an insurance company that pays insurance commissions higher than the prescribed ratio, or pays insurance commissions to incorrect recipients or business activities as stipulated by law.

4. Additional penalty form: Suspension of the right to use the License for Establishment and Operation for a period of sixty to ninety days for part of the scope of operations in cases of violation of the provisions of Clause 2 and Clause 3 of this Article.

5. Applying measures to remedy consequences:

a. Compel the recovery of commission payments not in accordance with regulations;

b. Compel compliance with legal provisions in cases of violation of the provisions of Clause 1, Clause 2, and Clause 3 of this Article;

Article 20. Penalties for violations of mandatory insurance provisions by non-life insurance companies

1. A fine of VND 50,000,000 shall be imposed on non-life insurance enterprises that commit any of the following violations:

a. A non-life insurance company authorized to operate mandatory insurance refuses to sell mandatory insurance to individuals or organizations;

b. A non-life insurance company authorized to operate mandatory insurance fails to comply with rules, terms, and premium rates issued by the Ministry of Finance;

c. A non-life insurance company authorized to operate mandatory insurance fails to separately list compulsory fire and explosion insurance within a comprehensive insurance contract as required.

2. Additional penalty form: Suspension of the right to use the License for Establishment and Operation for a period of sixty to ninety days for part or all of the business activities in cases of violation of the provisions of Clause 1 of this Article.

SECTION 4

VIOLATIONS CONCERNING INSURANCE INTERMEDIARY, AGENT ACTIVITIES AND REPRESENTATIVE OFFICES

Article 21. Penalties for violations of mandatory insurance provisions by insurance intermediary companies

1. A fine of thirty million Vietnamese dong shall be imposed on an insurance intermediary company that fails to fulfill the obligation to purchase professional liability insurance for its intermediary activities at an insurance company operating in Vietnam.

2. Measures to remedy consequences: Compel compliance with legal provisions in cases of violation of the provisions of Clause 1 of this Article.

Article 22. Penalties for violations of insurance intermediary provisions

1. A fine of fifty million Vietnamese dong shall be imposed on an insurance intermediary company or its General Director (Director) and related persons who commit any of the following violations:

a. Obstructing the insured from providing information related to the insurance contract or inciting the insured not to disclose details related to the insurance contract;

b. Promoting customers through illegal promises to induce them to enter into insurance contracts;

c. Inciting the insured to cancel existing insurance contracts to purchase new ones;

d. Advising customers to purchase insurance from an insurance company with less competitive conditions and terms compared to other insurance companies to obtain higher brokerage commissions;

e. Advising or introducing the insured to life insurance rules and terms not yet approved by the Ministry of Finance; rules and terms for compulsory insurance that do not conform to those issued by the Ministry of Finance or those inconsistent with Clause 4 of Article 20 of Decree No. 45/2007/NĐ-CP dated March 27, 2007 detailing certain provisions of the Insurance Business Law.

2. A fine of seventy million Vietnamese dong shall be imposed on the General Director (Director) and related persons of an insurance intermediary company using collaborators or any other form to act on behalf of the insurance intermediary company in one or all stages of the original insurance brokerage process or reinsurance brokerage.

3. Additional penalty form: Suspension of the right to use the License for Establishment and Operation for a period of sixty to ninety days for part or all of the scope of operations in cases of violation of the provisions of Clause 1 and Clause 2 of this Article.

4. Apply remedial measures:

a. Compelling the removal of the title of management personnel approved by the Ministry of Finance in cases of violation stipulated in Clause 3 of this Article;

b. Compel compliance with legal provisions in cases of violation under Clause 1 and Clause 2 of this Article.

Article 23. Penalties for violations of insurance agency regulations

1. A fine of 30,000,000 VND shall be imposed on an insurance agency that commits any of the following violations:

a. Simultaneously acting as an agent for another insurance company without the written consent of the current insurance company it represents;

b. Providing false information or advertising about the content, scope of operations, conditions, and terms of insurance of the insurance company, thereby harming the legitimate rights and interests of the policyholder;

c. Obstructing the policyholder from providing information related to the insurance contract or inciting the policyholder not to disclose details related to the insurance contract;

d. Competing for customers through obstructive, enticing, bribing, or threatening methods against customers of other insurance companies, insurance agencies, or insurance brokers;

đ. Promising to reduce insurance premiums, refund insurance premiums, or other benefits that the insurance company has not committed to with the customer;

e. Inciting the policyholder to terminate existing insurance contracts to purchase new ones.

2. A fine of 40,000,000 VND shall be imposed on training organizations that commit any of the following violations:

a. Training insurance agents to issue certificates of practice without the written approval of the Ministry of Finance;

b. Not adhering to the minimum duration and content of the insurance agency training program approved by the Ministry of Finance;

c. Not reporting to the Ministry of Finance on the number of training courses organized, the number of trained insurance agents, and the number of certificates issued in the year according to the prescribed form of the Ministry of Finance;

d. Not reporting to the Ministry of Finance and notifying the Vietnam Insurance Association of the list of active insurance agents and the list of agents violating the code of conduct or violating the law and whose contracts have been terminated by the business.

3. A fine of 70,000,000 VND shall be imposed on an insurance company using organizations or individuals to carry out insurance agency activities without meeting the conditions stipulated in Articles 84 and 86 of the Law on Insurance Business.

MỤC 5

VIOLATIONS IN MANAGEMENT AND USE OF CAPITAL AND ASSETS

Article 25. Penalties for violations of the provisions on charter capital

1. A fine of 70,000,000 VND shall be imposed on an insurance company or insurance brokerage company that commits any of the following violations:

a. Failing to maintain the minimum contributed charter capital equal to the statutory capital as prescribed in Article 4 of Decree No. 46/2007/ND-CP dated March 27, 2007 of the Government on financial systems for insurance companies and insurance brokerage companies (hereinafter referred to as Decree No. 46/2007/ND-CP);

b. Failing to ensure that the contributed charter capital is commensurate with the content, scope, and geographical area of operations;

c. An individual shareholder owning more than 10% of the charter capital;

d. An organizational shareholder owning more than 20% of the charter capital;

đ. Shareholders and persons related to those shareholders owning more than 20% of the charter capital.

e. Founding shareholders owning less than 50% of the charter capital within three years from the date the enterprise was granted the License for Establishment and Operation.

2. Additional forms of punishment:

Revocation or suspension of the right to use the License for Establishment and Operation for a period of ninety to one hundred eighty days for part of the content and scope of operations in cases of violation of the provisions of Clause 1 of this Article.

3. Application of measures to remedy consequences:

a. Compelling the removal of the position of management or operation of the enterprise that has been approved by the Ministry of Finance in cases of violation of the provisions of point a and b Clause 1 of this Article.

b. Compelling compliance with the provisions of the law in cases of violation of the provisions of Clause 1 of this Article.

Article 26. Sanctions for violations concerning the deposit guarantee

1. A fine of 10,000,000 VND shall be imposed on insurance enterprises that fail to submit or misuse the deposit guarantee funds contrary to the provisions stipulated in Clause 3, Article 6 of Decree No. 46/2007/NĐ-CP.

2. Remedial measures shall be applied: Compel compliance with legal regulations in cases of violation as provided for in Clause 1 of this Article.

Article 27. Sanctions for violations concerning the establishment, management, and utilization of business reserves and mandatory reserves

1. A fine of 50,000,000 VND shall be imposed on insurance enterprises or the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), Chief Accountant, and related persons of insurance enterprises who commit any of the following violations:

a. Failure to register the method of establishing business reserves with the Ministry of Finance;

b. Failure to establish or insufficiently establish mandatory reserves, or misusing the mandatory reserve fund contrary to regulations.

2. A fine of 70,000,000 VND shall be imposed on insurance enterprises or the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), Chief Accountant, Actuary, and related persons of insurance enterprises who commit any of the following violations:

a. Failure to establish or insufficiently establish business reserves as prescribed;

b. Non-compliance with the established methods and bases for setting up business reserves registered with the Ministry of Finance;

c. Misuse of the business reserve fund contrary to regulations.

3. Additional sanctions: Suspension of the right to use the License for Establishment and Operation for a period from 90 to 180 days, partially or entirely, for activities covered under the violation stipulated in Clause 2 of this Article.

4. Apply remedial measures:

a. Compel the removal of the positions of managers, executives, and actuaries approved by the Ministry of Finance in cases of violation stipulated in Clause 2 of this Article.

b. Order the cessation of positions appointed by the enterprise for cases violating Clause 2 of this Article;

c. Order compliance with legal provisions for cases violating Clause 1 and Clause 2 of this Article.

Article 28. Sanctions for violations concerning capital investment regulations

1. A fine of 30,000,000 VND shall be imposed on insurance enterprises or the General Director (Director), Chief Accountant, and related persons of insurance enterprises who fail to separately account for investments made from own capital and business reserves.

2. A fine of 70,000,000 VND shall be imposed on insurance enterprises or the Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), and related persons of insurance enterprises, insurance brokerage enterprises who commit any of the following violations:

a. Investing outside permitted sources of capital as stipulated in Article 11 of Decree No. 46/2007/NĐ-CP;

b. Using own capital corresponding to the statutory capital of insurance enterprises, insurance brokerage enterprises to invest in loans or reinvesting in shareholders or related parties;

c. Using own capital corresponding to the minimum solvency margin of insurance enterprises to invest in loans or reinvesting in shareholders or related parties;

d. Exceeding the permissible investment ratio for idle business reserves in various fields as stipulated in Article 14 of Decree No. 46/2007/NĐ-CP.

e. Using business reserve funds to invest abroad;

3. Additional forms of punishment:

a. Confiscation of all revenues from the implementation of administrative violations.

f. Investing abroad not under the name of the enterprise and without written approval from the Ministry of Finance.

4. Apply remedial measures:

a. Order the removal of managerial positions approved by the Ministry of Finance for cases violating Clause 2 of this Article.

g. Recovery or revocation of the right to use the License for Establishment and Operation for a period from 90 to 180 days, partially or entirely, for activities covered under the violation stipulated in Clause 2 of this Article.

c. Order compliance with legal provisions for cases violating Clause 1 and Clause 2 of this Article.

PART 6

VIOLATIONS CONCERNING SOLVENCY AND ACCOUNTING RECORDS

Article 29. Sanctions for violations of financial safety regulations in insurance business operations

1. A fine of 50,000,000 VND shall be imposed on an insurance company or its Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), Actuary, Chief Accountant, and related persons who commit any of the following violations:

a. Failing to implement measures to restore payment capability when the company is at risk of losing its payment capability;

b. Failing to promptly report to the Ministry of Finance on the current financial status and reasons leading to the risk of losing payment capability;

2. A fine of 70,000,000 VND shall be imposed on an enterprise or its Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), actuary, Chief Accountant, and related persons who commit any of the following violations:

a. Failing to comply with the Ministry of Finance's requirements regarding the restoration of payment capability;

b. Failing to properly implement the plan to restore payment capability, consolidate organizational structure, and business operations that have been approved by the Ministry of Finance.

3. Additional sanctions: Revocation or suspension of the license for establishment and operation for a period of from ninety to one hundred eighty days, partially or entirely, for the scope of activities in cases of violation stipulated in Clause 1 and Clause 2 of this Article.

4. Apply remedial measures:

a. Compelling the removal of management and operational positions, actuaries that have been approved by the Ministry of Finance in cases of violation stipulated in Clause 2 of this Article.

g. Recovery or revocation of the right to use the License for Establishment and Operation for a period from 90 to 180 days, partially or entirely, for activities covered under the violation stipulated in Clause 2 of this Article.

c. Compelling compliance with legal provisions on restoring payment capability in cases of violation stipulated in Clause 1 and Clause 2 of this Article.

Article 30. Sanctions for violations of regulations on separating funds and distributing profits in life insurance

1. A fine of 30,000,000 VND shall be imposed on the General Director (Director) and Chief Accountant and related persons of a life insurance company who fail to report fund separation within the prescribed time limit.

2. A fine of 70,000,000 VND shall be imposed on a life insurance company or its Chairman of the Board of Directors (Chairman of the Board of Members, Company Chairman), General Director (Director), actuary, Chief Accountant, and related persons who commit any of the following violations:

a. Failing to separate the Owner Fund and Contract Owner Fund as prescribed;

b. Failing to comply with the profit distribution method approved by the Ministry of Finance or changing the profit distribution method without written approval from the Ministry of Finance.

3. Additional sanctions: Suspension of the right to use the License for Establishment and Operation for a period from 90 to 180 days, partially or entirely, for activities covered under the violation stipulated in Clause 2 of this Article.

4. Apply remedial measures:

a. Compelling the removal of management and operational positions, actuaries that have been approved by the Ministry of Finance in cases of violation stipulated in Clause 1 of this Article.

g. Recovery or revocation of the right to use the License for Establishment and Operation for a period from 90 to 180 days, partially or entirely, for activities covered under the violation stipulated in Clause 2 of this Article.

c. Compelling compliance with legal provisions on fund separation and profit distribution in cases of violation stipulated in Clause 1 and Clause 2 of this Article.

Section 7

VIOLATIONS REGARDING REPORTING REGIMES, INSPECTION AND AUDIT WORK

Article 32. Sanctions for violations of regulations on statistical reporting, business reporting, and supplementary reports on business conditions

1. A fine of 30,000,000 VND shall be imposed on insurance companies, insurance brokerage companies, and reinsurance companies that commit any of the following violations:

a. Submitting statistical reports, business reports, and supplementary reports not in accordance with the prescribed deadlines;

b. Information in statistical reports, business reports, and supplementary reports being incomplete or inaccurate;

2. Measures to remedy consequences: Compelling compliance with legal provisions on reporting regimes in cases of violation stipulated in Clause 1 of this Article.

Article 33. Penalties for violations of regulations on inspection, examination, and supervision by competent state agencies

1. A fine of VND 30,000,000 shall be imposed on the Chairman of the Board of Directors (Chairman of the Members' Council, Chairman of the Company), General Director (Director), Chief Accountant, actuary, and related persons of insurance enterprises and insurance brokerage enterprises who commit acts of delaying, evading, or failing to provide documents and data as required by the inspection agency, inspection team, or competent state agency during the inspection, examination, and supervision process; or using tactics to oppose inspectors or officials of competent state agencies performing their duties.

2. A fine of VND 70,000,000 shall be imposed on individuals or organizations that commit any of the following violations:

a. Failure to comply with the decision on handling issued by the inspection agency or examination agency;

b. Interfering with the handling process of the inspection agency or examination agency;

c. Concealing, altering vouchers, ledgers, or changing objects of evidence while being inspected or examined;

d. Removing, moving, or engaging in other acts that alter the sealed status of warehouses, funds, ledgers, accounting vouchers, insurance files, or sealed objects of evidence.

Chapter III

AUTHORITY TO IMPOSE SANCTIONS FOR ADMINISTRATIVE VIOLATIONS IN THE INSURANCE BUSINESS SECTOR

Article 34. Inspection of Insurance Business Activities

1. The Insurance Management and Supervision Department shall perform specialized inspection tasks concerning insurance business activities within the scope of its management under the Ministry of Finance according to the Law on Insurance Business.

2. The Minister of Finance shall specify detailed regulations on the organization and operation of specialized insurance inspections.

Article 35. Competence to Impose Administrative Sanctions in the Field of Insurance Business

1. The Chairman of the People's Committee of a province, within the scope of his authority stipulated in the Administrative Violation Handling Ordinance, has the right to impose administrative sanctions in the field of insurance business according to this Decree.

2. The Head of the Specialized Insurance Inspection Department under the Insurance Management and Supervision Department, Ministry of Finance, has the right:

a. To impose fines up to the highest level specified in this Decree;

b. To apply additional forms of administrative sanctions and measures to remedy consequences as prescribed in this Decree;

3. Authorities responsible for imposing sanctions shall be responsible for monitoring compliance with administrative violation handling decisions issued by themselves.

Chapter IV

PROCEDURES FOR IMPOSING PENALTIES, ENFORCING DECISIONS ON PENALTIES, AND APPEALS

Article 36. Procedures for Imposing Administrative Sanctions in the Field of Insurance Business

Procedures for imposing administrative sanctions in the field of insurance business shall be carried out in accordance with Chapter VI of the Administrative Violation Handling Ordinance dated July 2, 2002, and Article 1 of the Ordinance amending and supplementing certain articles of the Administrative Violation Handling Ordinance dated April 2, 2008.

Article 37. Enforcement of Administrative Sanction Decisions

The enforcement of administrative sanction decisions in the field of insurance business shall be carried out in accordance with Article 66 of the Administrative Violation Handling Ordinance dated July 2, 2002.

Article 38. Disclosure of Information Subject to Sanctions

Decisions on administrative sanctions in the field of insurance business shall be publicly announced on the website of the Ministry of Finance, the information page of the Vietnam Insurance Association, and the annual market report of the insurance market in Vietnam.

Article 39. Time Limit for Enforcement of Administrative Penalty Decisions

An administrative penalty decision in the insurance business sector shall cease to be enforceable one year from the date of issuance; however, this time limit shall not apply if the individual or organization subject to the penalty deliberately evades or delays compliance.

Article 40. Complaints and Reports

Appeals and complaints against decisions on administrative penalties in the field of insurance business and the resolution of such appeals and complaints shall be carried out in accordance with the laws on appeals and complaints.

Chapter V

IMPLEMENTING PROVISIONS

Article 41. Implementation Organization

The Minister of Finance is responsible for guiding, inspecting, and supervising the implementation of this Decree.

Article 42. Implementation Provisions

1. This Decree takes effect from June 22, 2009, and replaces Government Decree No. 118/2003/NĐ-CP dated October 13, 2003, on administrative penalties in the insurance business sector.

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