Decision No. 581/a-TC-QĐ-TCNH Issuing the Interim Regulation on General Provisions of Insurance Contracts

Pursuant to …;

Issuing the Interim Regulation on General Provisions of Insurance Contracts
_____________________

THE MINISTER OF FINANCE

Pursuant to the Civil Code promulgated by Decree No. 44/CTN dated January 9, 1995 of the President of the Socialist Republic of Vietnam;
Pursuant to Decree No. 178/CP dated October 28, 1994 of the Government stipulating the tasks, powers, and organizational structure of the Ministry of Finance;
Pursuant to Decree No. 100/CP dated December 18, 1993 of the Government stipulating insurance business operations;
Considering the actual situation of insurance business operations and aiming to protect the interests of insured persons;
At the proposal of the Director of the Department of Banking and Financial Organizations.

Pursuant to …;

Article 1: This Decision issues the Interim Regulation on General Provisions of Insurance Contracts.

Article 2: This Decision takes effect from the date of signing. The Director of the Department of Banking Finance, the Head of the Ministry's Office, and the Directors of insurance enterprises are responsible for implementing this Decision.

INTERIM REGULATION

General provisions of insurance contracts

(Issued together with Decision No. 581a/TC/QĐ/TCNH dated July 1, 1996 of the Minister of Finance)

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

The provisions in this Regulation apply generally to all insurance contracts except for marine insurance contracts regulated by the Vietnamese Maritime Law dated July 12, 1990.

An insurance contract is an agreement between the insured party (hereinafter referred to as the policyholder) and the insurer (hereinafter referred to as the insurance enterprise) whereby the insurance enterprise accepts risks based on collecting insurance premiums from the policyholder to assume liability for compensation or payment of insurance benefits upon occurrence of unforeseen events within the scope of insurance liability (hereinafter referred to as insurance incidents).

The insurance enterprise is solely responsible towards the policyholder even if it reinsures the accepted risks.

II. PROVISIONS APPLICABLE TO ALL TYPES OF INSURANCE CONTRACTS

1. Form of insurance contract:

- The insurance contract must be established in writing. Only when the insurance contract has been signed, the certificate or insurance application has been issued and become effective, or when the insurance enterprise has issued a written acceptance of insurance based on collecting insurance premiums does the commitment of insurance liability take effect.

- A written request from the policyholder to extend, renew, amend, or continue a suspended contract shall be deemed accepted unless rejected within 15 (fifteen) days from the date the insurance enterprise receives such request, except where the insurance contract contains other agreements.

- In cases where the insurance enterprise combines with other service types such as passenger transport, tourism... to conduct insurance, the insurance enterprise and the authorized person conducting combined services must still sign a basic insurance contract containing all required contents. In this case, the ticket (at a price including insurance fee) sold to the service user will be considered as evidence of the insurance contract between the insurance enterprise and the policyholder.

2. Insurance application or insurance certificate: serves as evidence of the insurance contract and must be made in clear writing, issued by the insurance enterprise at the request of the policyholder.

3. Contents of the insurance application

- The insurance application must indicate the date, month, year of issuance and must include the following main contents:

- Name and address of the insurance enterprise, the policyholder, and the beneficiary of insurance rights.

- Risks covered by insurance.

- Conditions of insurance.

- Amount of insurance.

- Premium and method of payment.

- Start date of insurance and duration of insurance.

- Place and method of compensation or payment of insurance benefits.

- Exclusions, if any, must be clearly stated.

4. Types of insurance applications

- The insurance application may name one or more policyholders and separately record the name of the holder of the insurance application, if appropriate.

- The insurance application may be transferred or assigned according to the terms or conditions specified in the application.

- Depending on the terms, conditions, and exclusions specified in the insurance application, the insurance enterprise must bear responsibility for compensating or paying insurance benefits for losses suffered by the insured object caused by others, regardless of the nature and degree of fault of that person.

5. Obligations of the insurance enterprise:

- When an insurance incident occurs during the insurance period, the insurance enterprise must compensate or pay insurance benefits as stipulated in the contract according to the terms and conditions of the contract.

- The maximum time limit for compensation or payment of insurance benefits shall not exceed ninety (90) days from the date of receipt of complete complaint documents. In cases where the documents are complete and clearly determine the insurance liability, the insurance enterprise may advance or pay insurance benefits earlier than the prescribed time limit to help the policyholder quickly mitigate the consequences caused by the insurance incident.

- The insurance enterprise is not required to pay more than the amount of insurance unless otherwise agreed.

6. Obligations of the policyholder.

- The policyholder is responsible for:

- Providing accurate, complete, and truthful information about all details as requested by the insurance enterprise so that the insurance enterprise can enter into an insurance contract for risks they accept responsibility for.

- Paying insurance premiums fully and on time as agreed in the contract.

- Reporting special circumstances that may increase risk, requiring a reassessment of premium rates, or causing the insurance enterprise to refuse to issue an insurance application.

- Notifying the insurance enterprise immediately upon knowledge of the incident and no later than five (5) days after the occurrence of the insurance incident, except for justifiable reasons preventing the policyholder from fulfilling this obligation. For theft insurance, the notification period is 24 hours excluding holidays and Sundays.

- The policyholder is responsible for taking preventive measures to minimize losses prudently as if they were uninsured.

7. Statute of limitations

- The statute of limitations related to insurance contracts is governed by current laws and is calculated from the date of occurrence of the insurance incident.

a. In case the insured person does not notify the insurance company about the occurrence of an insured event, reports inaccurately, or omits important details of such an event, the statute of limitations for filing a lawsuit shall be calculated from the day when the insurance company would have known about the event.

b. If the insured event occurs and the insured person can prove that they were unaware of it beforehand, the statute of limitations for filing a lawsuit shall be calculated from the day the insured person becomes aware of the event.

- In cases where a third party claims against the insured person for damages within the scope of insurance coverage, the statute of limitations for filing a lawsuit shall be calculated from the day the third party makes the claim or from the reasonable date when the third party could have made the claim against the insured person.

8. Dispute Resolution

Disputes arising from insurance contracts may be resolved through negotiation or agreement between the parties involved. Should the parties fail to negotiate or agree, the dispute will be resolved by the Civil Court, Economic Court, or arbitration agreed upon by both parties.

III. PROVISIONS APPLICABLE TO PROPERTY AND CIVIL LIABILITY INSURANCE CONTRACTS

In addition to the provisions set forth in Section II above, property and liability insurance contracts must also meet the following conditions:

1. Civil Liability Insurance Contract

- In civil liability insurance, the insurer's liability arises only when a third party demands compensation from the insured person.

- The settlement of compensation by the insurer does not imply the insurer's acknowledgment of liability towards the insured person.

- Within the limit of the insurance amount, the insurer must compensate or pay the insured person for legal costs related to litigation against the responsible party in the loss incident.

2. Property Insurance Contract

A property insurance contract is a compensatory contract, and the compensation amount payable by the insurer to the insured person shall not exceed the value of the insured property at the time and place of the accident.

3. Overinsurance

- In cases of overinsurance due to fraud or intentional misrepresentation by the insured person when signing the insurance contract, the insurer has the right to terminate the contract and seek compensation for losses.

- In cases of overinsurance without fraud, the liability limit is the actual value of the insured object, and the insured person has no right to claim premiums paid for the excess value.

4. Underinsurance

In cases of underinsurance, the insurer's liability is limited to the proportionate share of the loss based on the ratio between the insurance amount and the insured value.

5. Duplicate Insurance

In cases of duplicate insurance for the same insured object, the insured person must immediately inform the insurer of the names of other insurers and the insurance amounts of each contract, unless otherwise stipulated in the insurance contract.

In cases of duplicate insurance, the liability of each insurer shall be based on the corresponding ratio of the insurance amount received by the insurer compared to the total insurance amount, and all insurers are liable up to the actual value of the insured object.

6. Loss Due to Inherent Nature

The insurer shall not be liable for loss or damage caused by the inherent nature or natural wear and tear of the insured object, unless otherwise provided in the insurance contract.

7. Loss Due to Uninsured Risk

In cases where the insured object suffers total loss due to an event not covered in the contract, the insurance contract shall automatically terminate from the date of the total loss, and upon receiving notice from the insured person, the insurer must refund the premium collected for the remaining period.

8. Assignment of Claim Rights

- After compensating the insured person for losses caused by a third party, within the amount compensated, the insurer has the right to claim against the third party. The assignment of this right to the insurer must be in writing and signed by the insured person.

- The insurer has the right to refuse partial or full compensation for losses caused by a third party if the insured person reduces their rights or fails to reserve the right to claim for the insurer as stipulated above.

- The insurer shall not have the right to assign claims against the insured person's children, grandchildren, parents, spouse, or employees, except in cases of intentional misconduct by them.

9. Compensation Amount and Loss Determination

- The compensation amount payable by the insurer to the insured person is determined based on the value of the insured object and the extent of the loss at the time and place of the loss, unless otherwise specified in the insurance contract.

- The expenses necessary to determine the loss mentioned above shall be borne by the insurer if the loss falls within the scope of insurance liability.

10. Prevention and Mitigation of Loss

- In cases of incidents directly related to the insured object, the insured person is obligated to take all necessary measures to minimize the loss.

- In addition to the compensation for loss, the insurer must also pay the insured person reasonable and necessary expenses incurred in fulfilling their obligations and expenses resulting from following the insurer's instructions.

11. Abandonment of Insured Object

- The insured person may not abandon the insured object, unless otherwise provided in the insurance contract.

- After compensating for total loss, the insurer has the right to recover the remaining part of the object abandoned by the insured person to offset the compensation paid to the insured person.

12. Non-Existence of Risk

The insurance contract shall be void if, after the conclusion of the insurance contract, the insured object no longer exists or cannot be subject to risk. The insurer must refund the corresponding premium for the remaining term of the insurance contract to the insured person.

IV. PROVISIONS APPLICABLE TO PERSONAL INSURANCE

Human insurance under this Regulation refers to life insurance, work accident insurance, voluntary health insurance, and other types of insurance related to human life, health, and longevity. In addition to the provisions in Section II, human insurance contracts must also meet the following requirements:

1. Insurance amount

In human insurance, the insurance amount is determined in advance and recorded in the insurance application.

2. No subrogation rights

After paying the insurance proceeds to the insured person or the beneficiary designated by the insured person, the insurer may not exercise subrogation rights against third parties responsible for accidents involving the insured person.

3. Contract based on third party's death

If a life insurance contract is entered into for the death of an insured person who is not the owner of the policy, it must be agreed to in writing by that person specifying the insurance amount; otherwise, the insurance contract will have no effect even if the insurance premium has been paid.

4. Prohibition on entering into life insurance contracts for the death of children under 16 years old, except when their parents or legal guardians (if there are no parents) agree in writing.

5. No claim for non-payment of premiums

Specifically for life insurance, the insurer has no right to sue or demand payment of the insurance premium from the insured person. If the insurance contract has been effective for less than two years, the insurance contract will be terminated. If the contract has been effective for two years, both parties may negotiate the extent of reduced benefits if the insured person fails to pay the insurance premium.

V. IMPLEMENTATION PROVISIONS

This Regulation takes effect from July 1, 1996.

Insurers are responsible for reviewing and amending all rules and insurance terms to comply with this Regulation. In cases where foreign rules and terms are applied, the content of such rules and terms must also comply with this Regulation.

For insurance contracts signed before the date this Regulation takes effect, they still retain their legal binding force between the insured person and the insurer.

During implementation, if there are difficulties or obstacles, they should be promptly reported to the Ministry of Finance for review and amendment.