Circular No. 98/2004/TT-BTC guides the implementation of Decree No. 42/2001/NĐ-CP dated August 1, 2001 of the Government detailing certain provisions of the Insurance Business Law.

 

 

CIRCULAR

Guidelines for Implementing Decree No. 42/2001/NĐ-CP dated August 1, 2001 of the Government detailing certain provisions of the Insurance Business Law

________________________________

Pursuant to the Insurance Business Law No. 24/2000/QH10 dated December 9, 2000;

Pursuant to Decree No. 42/2001/NĐ-CP dated August 1, 2001 of the Government detailing the implementation of certain provisions of the Insurance Business Law;

BASED ON Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

I. SCOPE AND APPLICABLE SUBJECTS:

I. ESTABLISHMENT AND OPERATIONS OF INSURANCE COMPANIES AND INSURANCE BROKERS

1. Application for License to Establish and Operate

1.1. The application for license pursuant to Article 64 of the Insurance Business Law shall include the following documents:

1.1.1. An application form made according to the model attached as Appendix 1 to this Circular. The application must be signed by the legal representative or authorized person of the investor;

1.1.2. A five-year business plan specifying the method of establishing reserves, reinsurance program, capital investment, business effectiveness, solvency of the insurance company, and economic benefits of establishing the company;

1.1.3. A list of profiles, certificates, and other documents attesting to the qualifications and expertise of the management and operational personnel;

1.1.4. The amount of capital contribution and the method of contribution, a list of organizations and individuals holding 10% or more of the charter capital, financial status, and other relevant information about these organizations and individuals;

1.1.5. Rules, terms, premium rates, and commission rates for the types of insurance products intended to be operated;

1.1.6. For insurance brokers, the application for license does not include Point 1.1.5 above. Specifically, the five-year business plan for insurance brokers does not need to specify the method of establishing reserves, reinsurance program, capital investment, and solvency of the company;

1.2. In addition to the documents stipulated in Section 1.1 above, depending on the type of enterprise to be established, the application for license must include the following documents:

1.2.1. For state-owned insurance companies and state-owned insurance broker companies:

a) Draft articles of incorporation including the main contents prescribed by the State Enterprise Law and implementing regulations;

b) Written approval from the authority deciding to establish the enterprise for the enterprise's participation in insurance business and insurance brokerage activities;

c) Explanation of the source of capital for establishing the insurance company and insurance broker company, confirmed by the competent authority.

1.2.2. For joint-stock insurance companies, joint-stock insurance broker companies, limited liability insurance broker companies, private insurance broker enterprises, and partnership insurance broker companies:

a) Draft articles of incorporation including the main contents prescribed by the Enterprise Law and implementing regulations;

b) Minutes of meetings of investors regarding the establishment of joint-stock insurance companies, joint-stock insurance broker companies, limited liability insurance broker companies, private insurance broker enterprises, and partnership insurance broker companies;

c) Confirmation by the competent authority regarding the legal capacity of the investors who are founders:

- For corporate investors: certified copies of the decision to establish the enterprise, business registration certificate, investment permit (if applicable);

- For individual investors: criminal record according to the prescribed form by law.

d) Confirmation of the legality of the source of capital for establishing the company:

- For corporate investors: audited financial statements for the last three years.

- For individual investors: confirmation from the bank regarding the balance in the investor's account, or a savings certificate with at least six months remaining (from the date of submitting the application for license), or a deposit certificate in the name of the investor. Documents and papers related to real estate cannot be used to confirm the financial situation and capital contribution ability of the investors.

đ) Power of attorney for representatives of investors;

e) List of founding members of the company prepared according to the model prescribed by the Enterprise Law and implementing regulations.

1.2.3. For wholly foreign-owned insurance companies and insurance brokers:

a) Draft articles of incorporation of wholly foreign-owned insurance companies including the main contents prescribed by the Law on Foreign Investment in Vietnam and implementing regulations;

b) Articles of incorporation of foreign investors;

c) Operating permit of foreign investors;

d) Written documents from the competent authority of the foreign country:

- Approving the foreign investor to establish a wholly foreign-owned enterprise in Vietnam. If the regulations of the home country of the foreign investor do not require such approval, evidence confirming this must be provided;

- Confirming that the foreign investor is permitted to conduct the type of insurance business they intend to carry out in Vietnam;

- Confirming that the foreign investor is in sound financial condition and meets all regulatory requirements in their home country.

1.2.4. For joint venture insurance companies and insurance brokers:

a) Joint venture agreement including the main contents prescribed by the Law on Foreign Investment in Vietnam and implementing regulations;

b) Articles of incorporation of the joint venture including the main contents prescribed by the Law on Foreign Investment in Vietnam and implementing regulations;

c) Articles of incorporation of the foreign party participating in the joint venture;

d) Operating permit of the foreign party participating in the joint venture;

đ) Written documents from the competent authority of the foreign country:

- Approving the foreign investor to establish a joint venture insurance company in Vietnam. If the regulations of the home country of the foreign investor do not require such approval, evidence confirming this must be provided;

- Confirming that the foreign investor is permitted to conduct the type of insurance business they intend to carry out in Vietnam;

- Confirming that the foreign investor is in sound financial condition and meets all regulatory requirements in their home country.

e) Written approval from the competent authority of the Vietnamese side allowing participation in the joint venture.

g) Provide an explanation regarding the source of the capital contribution of the Vietnamese partner, with confirmation from the competent authority.

1.3. The application dossier for obtaining a license of an insurance company or an insurance brokerage company shall be established in three (3) sets, including one (1) original set and two (2) copies. The application dossier for obtaining a license of an insurance company or an insurance brokerage company with foreign investment capital shall be established in three (3) sets, each set consisting of one (1) copy in Vietnamese and one (1) copy in English. One (1) set shall be the original, and two (2) sets shall be copies. The investor shall be responsible for the accuracy of the application dossier for obtaining a license.

2. Procedures for receiving and processing the application dossier for obtaining a license

2.1. The application dossier for obtaining a license shall be received and examined by the Ministry of Finance on the basis of the following:

2.1.1. A list of documents required to be included in the dossier according to the regulations;

2.1.2. The validity of the application dossier for obtaining a license;

2.1.3. Documents confirming the legal status and financial situation of the investors.

2.2. Within sixty (60) days from the date of receipt of the complete application dossier for obtaining a license from the investors, the Ministry of Finance shall decide to issue a license or refuse to issue a license. In case of refusal to issue a license, the Ministry of Finance shall provide a written explanation of the reasons.

During the process of examining the application dossier for obtaining a license, within fifteen (15) working days from the date of receipt of the complete valid dossier as stipulated in point 2.1 above, the Ministry of Finance may send a notification requesting the investor to supplement or amend the dossier if deemed necessary.

The deadline for the investor to submit supplementary or amended documents for the application dossier for obtaining a license is thirty (30) working days from the date of receipt of the notification from the Ministry of Finance. Upon expiration of the period for supplementing or amending the application dossier for obtaining a license, including any extension periods, if the investor fails to complete the dossier as required, the application dossier for obtaining a license shall lose its consideration value.

2.3. The license shall be issued in accordance with the model specified in Appendix 2 attached to this Circular.

3. Examination of the application dossier for obtaining a license

3.1. The application dossier for obtaining a license shall be examined based on the following grounds:

The Law on Insurance Business and guiding documents;

Other relevant legal provisions.

3.2. Contents of the examination of the application dossier for obtaining a license:

3.2.1. Examination of the legal status and financial situation of the investors through:

a) Documents establishing the enterprise and the charter of organization and operation of the enterprise (for corporate investors) or documents proving the legal status (for individual investors);

b) Audited financial reports for the last three (3) years (for corporate investors currently operating), including revenue, asset value, annual profit; the ability of the investors to mobilize capital; confirmation from the bank regarding the balance in the investor's account (for individual investors); support from the parent company (if any).

c) The scale of capital, reserve funds, and other reserve funds established in accordance with the law, business activities, and business plans of the proposed insurance company or insurance brokerage company.

3.2.2. Examination of the appropriateness of establishing an insurance company or an insurance brokerage company in relation to planning and economic-social benefits:

a) The application dossier for obtaining a license is consistent with planning, plans, and development orientations for the insurance market and the financial market of Vietnam;

b) The appropriateness of establishing an enterprise is considered based on the following specific issues:

- Ensuring the healthy development of the insurance market;

- National economic needs for the type of insurance product that the enterprise intends to operate;

- Considering the ability to enhance the exploitation potential of domestic insurance and the ability to retain insurance premiums in the market; the ability to create jobs for workers;

- The progress of integration and the development of trade relations between Vietnam and other countries.

3.2.3. Examination of the business operations for the application dossier for obtaining a license:

a) Rules, terms, and premium rates for insurance policies are established in compliance with current legal provisions, ensuring economic and technical feasibility while being suitable to the socio-economic conditions and customs of Vietnam;

b) Encouraging the implementation of new insurance businesses that existing operating insurance companies have not been able to meet.

4. Licensing fees

Within seven (7) days from the date of issuance of the establishment and operation license, the insurance company or insurance brokerage company must pay the licensing fee in accordance with Appendix No. 2 of Circular No. 110/2002/TT-BTC of the Ministry of Finance dated December 12, 2002, guiding the collection, payment, management, and use of fees and licensing fees in the banking, securities, and insurance sectors.

5. Amending and Supplementing the License

The procedures for approving changes as stipulated in Article 69 of the Law on Insurance Business shall be implemented as follows:

5.1. Changing the name of the enterprise:

An insurance company or an insurance brokerage company wishing to change its name must submit to the Ministry of Finance a request for name change signed by the legal representative or authorized person of the enterprise and a confirmation document from the authorized agency or individual of the enterprise regarding the name change;

5.2. Increasing or decreasing the registered capital of the insurance company or insurance brokerage company:

An insurance company or an insurance brokerage company wishing to change its registered capital must submit to the Ministry of Finance:

5.2.1. An explanation regarding the adjustment of the increase or decrease in registered capital signed by the legal representative or authorized person of the enterprise, clearly stating the amount of increased (or decreased) capital, the reason for the increase (or decrease), the plan for using the capital, and the time frame for implementation;

5.2.2. A document of approval from the authorized agency or person of the enterprise regarding the increase or decrease in registered capital;

5.2.3. An explanation regarding the sources of finance used to increase capital in the case of increasing registered capital.

5.3. Opening or ceasing operations of a branch or representative office

5.3.1. The application for establishing a branch or representative office of an insurance company or insurance intermediary shall be carried out in accordance with the provisions of Article 11 and Article 12 of Decree No. 42/2001/NĐ-CP of the Government dated August 1, 2001 detailing certain provisions of the Law on Insurance Business.

5.3.2. The application for establishing a branch or representative office of an insurance company or insurance intermediary abroad shall comply with the relevant laws on foreign investment.

5.3.3. The application for ceasing operations of a branch or representative office of an insurance company or insurance intermediary includes:

- A request to cease operations;

- A report on the operation status of the branch or representative office in the last three years. In cases where the branch or representative office has been operating for less than three years, the report shall cover the period from the start of its operations;

- Responsibilities and issues arising when ceasing operations.

5.4. Changing the location of the headquarters, branches, or representative offices of an insurance company or insurance intermediary.

An insurance company or insurance intermediary wishing to change the location of its headquarters, branches, or representative offices must submit to the Ministry of Finance a document requesting such changes signed by the legal representative or authorized person of the enterprise.

5.5. Changing the scope, content, and duration of operations:

The procedures and documents for changing the scope, content, and duration of operations of an insurance company or insurance intermediary shall be carried out in accordance with the provisions of Article 13 of Decree No. 42/2001/NĐ-CP of the Government dated August 1, 2001 detailing the implementation of certain provisions of the Law on Insurance Business.

5.6. Transfer of shares or capital contributions:

The application for transferring shares or capital contributions representing ten percent (10%) or more of the charter capital shall be compiled into one (1) set and submitted to the Ministry of Finance, including the following documents:

5.6.1. A request for transferring shares or capital contributions representing ten percent (10%) or more of the charter capital, signed by the legal representative or authorized person of the enterprise, specifying the quantity, value of shares, and percentage of capital contribution to be transferred; reasons for the transfer;

5.6.2. Information related to the organization or individual receiving the transferred shares or capital contributions;

The share transfer agreement or capital contribution transfer agreement.

5.7. Changing the Chairman of the Board of Directors, General Director (Director).

5.7.1. At least fifteen (15) days before issuing a document appointing or dismissing the Chairman of the Board of Directors, General Director (Director) of an insurance company or insurance intermediary, the General Director (Director), Chairman of the Board of Directors, or a person authorized by the Chairman of the Board of Directors must send a document to the Ministry of Finance requesting approval for the change.

5.7.2. Documents for requesting the change of the Chairman of the Board of Directors, General Director (Director) include:

a) A request for approval of the change;

b) The proposed appointment or dismissal of personnel of the insurance company or insurance intermediary;

c) The curriculum vitae of the proposed appointee, confirmed by the Board of Directors or the authorized person of the insurance company or insurance intermediary;

d) Certificates proving the qualifications and professional competence of the proposed Chairman of the Board of Directors or General Director (Director);

đ) Minutes of the meeting regarding the appointment or dismissal of the Chairman of the Board of Directors or General Director (Director) of the insurance company or insurance intermediary, if any.

5.8. Splitting, dividing, merging, consolidating, dissolving, or converting the form of the enterprise:

The documents, procedures, and deadlines for handling requests for splitting, dividing, merging, consolidating, dissolving, or converting the form of an insurance company or insurance intermediary shall be carried out in accordance with the relevant laws.

5.9. Time limit for resolving requests to amend and supplement licenses:

Within thirty (30) days from the date the Ministry of Finance receives the complete application for amending and supplementing the license of an insurance company or insurance intermediary as stipulated in Points 5.1 to 5.8, Part I of this Circular, the Ministry of Finance shall issue a document approving or rejecting the enterprise's request. In case of rejection, the reason must be clearly stated in writing. In case of approval, the Ministry of Finance shall issue an amended license to the enterprise according to the model specified in Appendix 3 attached to this Circular. The amended license is an integral part of the establishment and operation license of the insurance enterprise.

II. INSURANCE OPERATIONS

1. Registration of rules, terms, and premium rates of insurance products.

1.1. The registration of rules, terms, and premium rates applies to insurance products as prescribed in Clause 3 of Article 18 of Decree No. 42/2001/NĐ-CP of the Government dated August 1, 2001 detailing certain provisions of the Law on Insurance Business.

1.2. An insurance company may only register rules, terms, and premium rates for insurance products within the permitted insurance business activities as specified in the Enterprise Establishment and Operation License (or Certificate of Compliance with Insurance Business Operating Standards and Conditions) issued by the Ministry of Finance.

1.3. An insurance company bears responsibility for the content and legality of the rules, terms, and premium rates of registered insurance products with the Ministry of Finance.

1.4. When registering the rules, terms, and premium rates of insurance products, an insurance company must submit to the Ministry of Finance the following documents:

1.4.1. A product registration request form in accordance with Appendix 12 attached to this Circular;

1.4.2. Rules, terms, and premium rates of the proposed insurance product (in Vietnamese). For insurance products provided according to international practices (such as marine, aviation insurance...), the insurance company may register the rules, terms, and premium rates in English.

1.5. Within three working days from the date of receipt of all registration documents for rules, terms, and insurance premium schedules, the Ministry of Finance shall confirm that the insurance company has completed the registration procedures for the rules, terms, and insurance premium schedules.

1.6. In cases where it is necessary to change or supplement the rules, terms, and premium schedules of an insurance product already registered with the Ministry of Finance, the insurance company must register such changes or supplements according to the procedure specified in point 1.4 above. For specific risks not fully covered in the rules, terms, and premium schedules already registered with the Ministry of Finance, the insurance company and the policyholder may negotiate about the insurance conditions and premium rates to cover such risks and complete the product registration procedures after the contract is concluded.

2. Approval of Insurance Products

2.1. Prior to implementing life insurance, health insurance, and personal accident insurance products, the insurance company must submit to the Ministry of Finance an application package for product approval including the following documents:

2.1.1. A request for the Ministry of Finance's approval before implementation;

2.1.2. The rules, terms, premium schedules, and commission rates of the proposed insurance product;

2.1.3. The formula, method, and explanation of the basis for calculating premiums and business reserves of the proposed insurance product;

2.1.4. Related documents including insurance claim forms, product and service introduction materials, sales illustration materials, and customer application forms signed when purchasing insurance.

For dividend-paying life insurance products, the insurance company must clearly specify in the basis for calculating premiums of the proposed insurance product the principles, methods, and dividend ratios that the company commits to paying to customers, but not less than seventy percent of total profits earned, according to the method approved by the Ministry of Finance. This provision applies only to dividend-paying life insurance contracts entered into on or after January 1, 2006.

2.2. The rules and terms submitted by the insurance company for approval by the Ministry of Finance must ensure:

2.2.1. The purchase of supplementary insurance products is not a mandatory condition to maintain the validity of the main insurance product;

2.2.2. Avoid using ambiguous or unclear terms that can be interpreted in multiple ways. If such terms are necessary, the insurance company must provide full definitions and clear explanations to avoid misleading customers.

2.3. The application package for approval of life insurance products must bear the signature of the company head or a duly authorized representative and the certification of the designated actuary as stipulated below in Part III.

3. Provisions on Life Insurance Operations

3.1. Product and Service Introduction Materials

The insurance company is responsible for:

3.1.1. Ensuring that product and service introduction materials are written in simple, clear, understandable language and do not contain any information that could lead to misunderstanding;

3.1.2. Ensuring that during sales illustrations, guaranteed benefits and non-guaranteed benefits are clearly distinguished; informing customers that the total amount of non-guaranteed benefits received under non-guaranteed insurance contracts may vary;

3.1.3. Reviewing at least once a year the assumptions used in sales illustrations. If these assumptions are no longer appropriate, the insurance company must update the sales illustrations accordingly;

3.1.4. Ensuring that product and service introduction materials of the insurance company do not contain information about benefits that contradict the rules and terms of insurance already approved by the Ministry of Finance.

3.2. Sales Illustration Materials

3.2.1. The insurance company must provide sales illustrations of insurance products directly or through licensed insurance agents and brokers in Vietnam;

3.2.2. Sales illustration materials must have the approval of the designated actuary of the insurance company regarding the assumptions used for calculations before being provided to customers. Sales illustration materials must be clear, comprehensive, and accurate to assist customers in making appropriate choices;

3.2.3. Insurance companies are responsible for the accuracy and up-to-date nature of product and service introduction materials, sales illustration materials, and other sales materials throughout their usage period;

3.2.4. The insurance company must disclose in sales illustration materials the conditions for receiving surrender values and the benefits, along with specific amounts, that customers will receive upon surrender, but must clearly state whether these benefits are guaranteed or non-guaranteed.

3.3. Providing Information Related to Insurance Contracts

If the insurance contract does not clearly stipulate otherwise, when issuing the insurance policy, the insurance company must notify the customer in writing of the following information:

3.3.1. The method and frequency of premium payments;

3.3.2. The name of the individual or unit within the company to contact in case the customer needs service or clarification regarding issues related to the contract;

3.3.3. The obligation of the customer to inform the company of any changes in the address of the insured party;

3.3.4. The address where the customer can contact to resolve complaints, inquiries, and disputes related to the conclusion, performance, and termination of the insurance contract.

Annually, the insurance company must notify the policyholders of the status of their contracts.

3.4. Surrender Value of Life Insurance Contracts

3.4.1. A life insurance contract only has a surrender value if it has been in effect for at least twenty-four months for periodic payment contracts;

3.4.2. The insurance company has the right to deduct outstanding debts before paying the surrender value to the policyholder.

4. Publication of the list of insurance products

Within 15 days at the beginning of each quarter, the Ministry of Finance shall publish the list of insurance products provided by insurance companies on the market up to the time of publication. The publication of the list of insurance products shall be publicly announced through mass media and sent to the Vietnam Insurance Association, insurance companies legally established and operating in Vietnam.

5. Commission for insurance

5.1. Insurance companies may only pay insurance commission from the actual premium collected according to the insurance commission rate prescribed by the Ministry of Finance for each type of insurance business to the entities specified in Article 20 of Decree No. 42/2001/NĐ-CP dated August 1, 2001, detailing certain provisions of the Law on Insurance Business.

5.2. Insurance commission includes expenses paid by insurance companies to insurance brokerage firms and insurance agents. Insurance companies may independently use insurance commissions for the following expense items:

5.2.1. Initial exploitation costs (understanding, persuading, and introducing customers);

5.2.2. Premium collection costs;

- Costs for monitoring contracts and persuading customers to maintain insurance contracts.

5.3. The maximum insurance commission rate that insurance companies are allowed to pay to insurance agents shall be implemented according to the table of insurance commission rates applicable to each type of insurance business as stipulated in Appendix 4 - Table of Maximum Insurance Commission Rates for Non-Life Insurance Businesses and Appendix 5 - Table of Maximum Insurance Commission Rates for Life Insurance Businesses attached to this Circular.

Insurance commission for comprehensive insurance contracts shall be calculated as the total amount of commission for each risk covered in the comprehensive insurance contract.

5.4. The insurance brokerage commission rate shall be determined based on the agreement between the insurance company and the insurance brokerage firm in accordance with Vietnamese law and international customs. Depending on the scope, level, and content of the insurance brokerage services provided, insurance brokerage commission can be paid up to 15% of the actual premium collected.

III. DESIGNATED ACTUARIES

1. Life insurance companies must use designated actuaries to perform the following tasks:

1.1. Jointly sign the application for approval of insurance products with the General Director (Director) of the life insurance company;

1.2. Establish mathematical reserves for life insurance contracts in accordance with the law;

1.3. Approve the distribution of surplus annually of the policyholder fund based on fairness, reasonableness, and compliance with the law;

1.4. Evaluate the financial capability of the life insurance company through the examination of the company's payment ability at the end of each accounting period;

1.5. Report in writing to the Board of Directors of the life insurance company on the financial situation of the company during each period; forecast the future financial situation of the life insurance company;

1.6. Promptly report in writing to the General Director (Director), and the Board of Directors of the life insurance company about any unusual issues that could adversely affect the financial situation of the company and propose remedial measures;

1.7. In case the life insurance company does not take appropriate measures to address its financial situation within a reasonable time frame as advised by the designated actuary, the designated actuary has the responsibility to send a copy of the aforementioned report to the Ministry of Finance for appropriate action.

2. Designated actuaries must meet the following criteria:

2.1. Trained and have at least five years of experience in actuarial calculations in the life insurance field and is a member of one of the internationally recognized actuarial associations (The Institute of Actuaries of the United Kingdom; The Faculty of Actuaries in Scotland; The Society of Actuaries in America; The Institute of Actuaries of Australia; The Canadian Institute of Actuaries) or another association approved by the Ministry of Finance;

2.2. Have good moral character; have not violated professional ethics; have not been criminally prosecuted for offenses related to their professional work;

2.3. Be an employee of an insurance company or an actuarial consulting firm, or operate independently as an individual.

3. Designated actuaries shall not concurrently hold the following positions:

3.1. General Director;

3.2. Chief Accountant;

3.3. Member of the Board of Directors.

4. Approval procedures for designated actuaries

4.1. The Board of Directors of the life insurance company or the General Director (Director) in cases where the company does not have a Board of Directors is responsible for appointing the designated actuary to carry out the tasks as specified in point 1 above. The appointment of the designated actuary must be approved in writing by the Ministry of Finance.

4.2. The application for approval of the designated actuary includes the following documents:

4.2.1. A letter requesting the Ministry of Finance to approve the designated actuary signed by the Chairman of the Board of Directors or the General Director (Director) in cases where the company does not have a Board of Directors;

4.2.2. Certificates, diplomas, and a resume proving the professional qualifications, expertise, and experience of the person proposed for the position of designated actuary;

4.2.3. A certified copy of the certificate confirming membership in a recognized actuarial association.

5. Approval procedures for changing designated actuaries

In the event of changing the designated actuary, the insurance company must submit to the Ministry of Finance an application for approval of the change including the following documents:

5.1. The document proposing the Ministry of Finance to relieve the designated actuary of their position has been approved by the Ministry of Finance and proposes the approval of a new designated actuary. The enterprise's proposal must be signed by the Chairman of the Board of Directors or the General Director (Director) in cases where the enterprise does not have a Board of Directors;

5.2. Credentials, certificates, and curriculum vitae proving the competence, qualifications, and professional experience of the person proposed to be the new designated actuary;

5.3. A certified copy of the certificate confirming membership status in the recognized association of actuaries;

6. Termination of the status of the designated actuary

The designated actuary will automatically terminate their legal status in the following circumstances:

6.1. Termination of membership status in the recognized association of actuaries;

6.2. The insurance enterprise submits a document requesting a change in the designated actuary;

Within fifteen days from the date of receipt of complete and valid files as specified above, the Ministry of Finance must respond in writing with its approval or rejection. In case of rejection, the Ministry of Finance must provide a written explanation for the reasons;

7. Provisions regarding the designated actuary shall take effect from January 1, 2006;

IV. REINSURANCE ACTIVITIES

1. Insurance enterprises implement mandatory reinsurance according to Article 22 of Decree No. 42/2001/NĐ-CP dated August 1, 2001, of the Government detailing the implementation of certain provisions of the Law on Insurance Business. The list of business activities subject to mandatory reinsurance includes:

1.1. Property insurance and liability insurance;

1.2. Cargo transportation insurance by road, sea, river, rail, and air;

1.3. Aviation insurance;

1.4. Fire and explosion insurance;

1.5. Hull insurance and civil liability insurance of ship owners.

2. Mandatory reinsurance commissions paid by the Vietnam National Reinsurance Corporation to the enterprise that has ceded mandatory reinsurance shall be implemented according to the provisions set out in Appendix 6 attached hereto;

3. Reinsurance business operations

3.1. When reinsuring abroad, insurance enterprises are only permitted to arrange reinsurance with companies that meet the following requirements:

3.1.1. Financial capacity and market experience;

3.1.2. At the time of reinsuring abroad, the leading company receiving reinsurance must be rated at least "BBB" by Standard & Poor's, "B++" by A.M. Best, "Baa" by Moody's, or equivalent ratings.

In cases where reinsurance is provided to foreign parent companies or companies within a group without credit rating assessments as stipulated in point b above, the insurance enterprise must report to the Ministry of Finance;

3.2. Insurance enterprises may retain maximum responsibility on each risk or individual loss not exceeding ten percent of total equity capital. Any portion of responsibility exceeding this ten percent ratio must be reinsured;

V. INSURANCE AGENTS

1. Responsibilities of insurance enterprises and the Vietnam Insurance Association (hereinafter referred to as the training institution for insurance agents) in the training of insurance agents

1.1. The training institution for insurance agents wishing to train insurance agents must submit a document to the Ministry of Finance for approval of the insurance agent training program in accordance with Clause 3 of Article 31 of Decree No. 42/2001/NĐ-CP dated August 1, 2001, of the Government detailing the implementation of certain provisions of the Law on Insurance Business;

1.2. Issuance of insurance agent training certificates

1.2.1. Only training institutions for insurance agents approved by the Ministry of Finance to operate may issue insurance agent training certificates. Individuals receiving the certificate must complete the insurance agent training program and pass the examination for the issuance of the insurance agent training certificate;

1.2.2. The insurance agent training certificate shall be issued in the format prescribed in Appendix 7 attached hereto;

1.3. Annually, no later than January 30 of the following year, the training institution for insurance agents must report to the Ministry of Finance on the number of training courses organized, the number of insurance agents trained, and the number of certificates issued in the year in the format prescribed in Appendix 8 attached hereto. Quarterly, no later than the fifteenth day of the first month of the quarter, insurance enterprises must report to the Ministry of Finance on the list of insurance agents of the enterprise in the format prescribed in Appendix 9 attached hereto;

2. Rights and obligations of insurance enterprises and insurance agents

2.1. The rights and obligations of insurance enterprises in managing insurance agent activities and the rights and obligations of insurance agents are stipulated in Articles 29 and 30 of Decree No. 42/2001/NĐ-CP dated August 1, 2001, of the Government detailing the implementation of certain provisions of the Law on Insurance Business;

2.2. Insurance enterprises are not allowed to enter into contracts with insurance agents who have previously had their agency contracts terminated by other insurance enterprises due to serious violations of laws and agency contracts within three years from the date of termination of the agency contract;

When terminating an agency contract for the reasons stated above, the insurance enterprise must notify the Vietnam Insurance Association to inform other insurance enterprises;

3. Strictly prohibited are the following actions by insurance agents:

3.1. Providing false information or advertising about the content and scope of activities of insurance enterprises; conditions and terms of insurance that harm the legitimate rights and interests of policyholders;

3.2. Obstructing policyholders from providing information related to insurance contracts or inciting policyholders not to disclose details related to insurance contracts;

3.3. Competing for customers through obstructive, enticing, bribing, or threatening employees or customers of insurance enterprises, insurance agents, or insurance brokerage enterprises;

3.4. Promoting customers through illegal means such as promising to reduce insurance premiums, refund insurance premiums, or other benefits that the insurance enterprise does not provide to customers.

3.5. Inducing the buyer of insurance to cancel existing insurance contracts to purchase new insurance contracts.

4. The supervision of the Ministry of Finance's activities regarding the training and utilization of insurance agents by insurance companies and the Vietnam Insurance Association.

4.1. Insurance companies and the Vietnam Insurance Association shall be responsible under the law for all activities related to the training and utilization of insurance agents.

4.2. The Ministry of Finance may conduct regular or spot inspections on the recruitment, training, management, and utilization of insurance agents by insurance companies and the Vietnam Insurance Association.

Such inspections shall not affect the normal operations of insurance companies and the Vietnam Insurance Association.

5. Organizations engaged in insurance agency activities must register their business operations in accordance with the provisions of the Enterprise Law and implementing regulations.

VI. INSURANCE BROKERS' ENTERPRISES

1. Principles of insurance brokerage activities

Insurance brokers' enterprises can only advise and introduce to the buyer of insurance the rules, terms, and premium rates of insurance that have been issued by the Ministry of Finance or registered with the Ministry of Finance by insurance companies.

2. Payment of insurance premiums and payment of insurance proceeds through insurance brokers' enterprises

2.1. Insurance companies may authorize insurance brokers' enterprises to collect insurance premiums, indemnities, or insurance proceeds.

2.2. In cases where insurance brokers' enterprises are authorized by insurance companies to collect insurance premiums, the obligation of the buyer of insurance to pay the insurance premium is fulfilled when the buyer of insurance has paid the insurance premium according to the insurance contract to the insurance broker's enterprise.

In cases where insurance brokers' enterprises are authorized by insurance companies to collect insurance premiums and the buyer of insurance has paid the insurance premium according to the insurance contract, the insurance broker's enterprise is responsible for paying the said insurance premium to the insurance company within the agreed time between the insurance company and the insurance broker's enterprise. If there is no agreement on the payment period, the insurance broker's enterprise must pay the said insurance premium to the insurance company as soon as possible but no later than 7 days from the date of receipt of the insurance premium.

2.3. In cases where insurance brokers' enterprises are authorized by insurance companies to pay insurance proceeds or indemnities, the insurance company still bears responsibility towards the insured person or beneficiary for the amount of insurance proceeds that the insurance company is obligated to pay to the insured person or beneficiary.

2.4. In cases where insurance brokers' enterprises are authorized by insurance companies to pay insurance proceeds or indemnities, the insurance broker's enterprise is responsible for immediately paying the said insurance proceeds to the insured person or beneficiary upon receipt of the insurance proceeds from the insurance company.

3. Insurance brokers' enterprises shall not engage in the following acts:

3.1. Preventing the buyer of insurance from providing information related to the insurance contract or inducing the buyer of insurance not to declare details related to the insurance contract.

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

3.3. Inducing the buyer of insurance to cancel existing insurance contracts to purchase new insurance contracts.

VII. REPRESENTATIVE OFFICES OF FOREIGN INSURANCE COMPANIES AND INSURANCE BROKERS' ENTERPRISES IN VIETNAM

1. Documents for applying for permission to establish a representative office

1.1. Foreign insurance companies and foreign insurance brokers' enterprises wishing to establish a representative office in Vietnam must submit to the Ministry of Finance a set of documents for applying for permission to establish a representative office in accordance with Article 110 of the Insurance Business Law.

1.2. The application for establishing a representative office in Vietnam must be signed by the Chairman of the Board of Directors or an authorized representative of the foreign insurance company or foreign insurance brokers' enterprise, in accordance with the form prescribed by the Ministry of Finance in Appendix 10 attached hereto.

1.3. Permission for foreign insurance companies and foreign insurance brokers' enterprises to establish a representative office in Vietnam shall be issued in accordance with the form prescribed in Appendix 11 attached hereto.

1.4. Within thirty days from the date of receiving complete documents for applying for permission to establish a representative office, the Ministry of Finance shall issue a written approval or rejection of the application. In case of rejection, the reasons must be stated in writing. In case of approval, the Ministry of Finance shall issue permission for foreign insurance companies and foreign insurance brokers' enterprises to establish a representative office in Vietnam.

1.5. Within seven days from the date of issuance of permission to establish a representative office or extension of operation, foreign insurance companies and foreign insurance brokers' enterprises must pay the fee for obtaining permission; the fee for obtaining permission or extending operation is one million Vietnamese dong in accordance with Article 43 of Decree No. 42/2001/NĐ-CP dated August 1, 2001 of the Government detailing the implementation of certain provisions of the Insurance Business Law.

2. Reports on the activities of representative offices

2.1. Representative offices of foreign insurance companies and foreign insurance brokers' enterprises in Vietnam must report to the Ministry of Finance on the activities of the representative offices semi-annually and annually to the Ministry of Finance and the People's Committee of the province or city where the representative office is located.

The mid-year report must be submitted before July 30 and the annual report must be submitted before March 1 of the following year.

2.2. Content of the report:

2.2.1. Organizational structure of the representative office, personnel, number of Vietnamese and foreign nationals working at the representative office;

2.2.2. Main activities:

a) Market access of the representative office;

b) Relations between the representative office and domestic insurance companies, insurance brokers' enterprises, and economic organizations;

c) Advisory and training work;

d) Other activities of the representative office.

2.2.3. Future directions for activities.

2.3. In case of necessity, the Ministry of Finance may require the representative office to submit ad hoc reports outside the regular reports mentioned above, provide documents, and explain issues related to its operations.

3. Modification of the contents of the license

3.1. When there is a need to modify any of the following contents in the license for establishing a representative office, foreign insurance companies and foreign insurance brokerage companies must submit a written request to the Ministry of Finance to amend and supplement the License:

3.1.1. Changing the name, nationality of the foreign insurance company, foreign insurance brokerage company, or the name of the representative office;

3.1.2. Modifying the scope of activities of the representative office.

Within seven days from the date of receipt of the written request from the foreign insurance company or foreign insurance brokerage company, the Ministry of Finance will issue a written response regarding approval or disapproval. In case of disapproval, the Ministry of Finance must issue a written explanation of the reasons.

3.2. In cases where the number of foreign staff working at the representative office increases or decreases, or when the location of the representative office's headquarters changes, the foreign insurance company or foreign insurance brokerage company must immediately notify the Ministry of Finance in writing.

4. Extension of the operation of the representative office:

4.1. Foreign insurance companies and foreign insurance brokerage companies wishing to extend the operation of their representative offices in Vietnam must submit to the Ministry of Finance the application dossier for extending the operation of the representative office thirty days before the expiration date of the Representative Office Establishment License. The extension application dossier includes:

4.1.1. A written request for extension signed by the Chairman of the Board of Directors or an authorized person of the foreign insurance company or foreign insurance brokerage company;

4.1.2. The establishment and operation permit of the foreign insurance company or foreign insurance brokerage company;

4.1.3. A copy of the Representative Office Establishment License in Vietnam and the decision on the previous extension of the representative office's operation of the foreign insurance company or foreign insurance brokerage company (if any);

4.1.4. A summary report on the representative office's activities in the last three years;

4.1.5. Financial statements of the foreign insurance company or foreign insurance brokerage company in the last two years;

4.1.6. Name and curriculum vitae of the Head of the Representative Office in case of change of the Head of the Representative Office.

4.2. Within thirty days from the date of receiving the complete extension application dossier, the Ministry of Finance will issue a written approval or rejection. In case of rejection, the Ministry of Finance will issue a written explanation of the reasons.

5. Termination of the operation of the representative office:

5.1. The representative office terminates its operation in the following cases:

5.1.1. At the request of the foreign insurance company or foreign insurance brokerage company;

5.1.2. When the foreign insurance company or foreign insurance brokerage company ceases operations;

5.1.3. When there is a decision to revoke or cancel the License issued by competent state agencies according to Vietnamese law.

5.2. In cases of termination of operations as stipulated in points a and b of Section 5.1 above, the foreign insurance company or foreign insurance brokerage company must send a written notice of termination of the representative office's operations to the Ministry of Finance within no more than thirty days before the termination date of the representative office's operations and must return the original Representative Office Establishment License and other licenses and decisions related to the representative office's operations during its operation to the Ministry of Finance.

Within seven days, the Ministry of Finance will issue a written approval of the termination of the representative office's operations and notify relevant agencies that have received copies of the Representative Office Establishment License.

5.3. In cases of termination of operations as stipulated in point c of Section 5.1 above, the Ministry of Finance will send the foreign insurance company or foreign insurance brokerage company a decision on revoking or canceling the Representative Office Establishment License at least thirty days before the representative office or branch is forced to terminate operations and send a copy of this decision to relevant agencies that have received copies of the Representative Office Establishment License.

VIII. PROCEDURES AND DOCUMENTS FOR TRANSFERRING INSURANCE CONTRACTS

1. Transfer of insurance contracts

1.1. During the course of operations, an insurance company may transfer all insurance contracts of one or several insurance businesses (hereinafter referred to as "transfer") to other insurance companies permitted to operate in Vietnam as stipulated in Section 3, Chapter III, Insurance Business Law.

1.2. The transfer must ensure the principle of not causing damage to the interests of the policyholder after the transfer is implemented.

2. Procedures for transferring

2.1. For the transferring insurance company (hereinafter referred to as "transferring company"): The transferring company must submit a written request for transfer to the Ministry of Finance, clearly stating the reasons for requesting the transfer, accompanied by the following documents:

Transfer plan, including:

a) Name and address of the insurance company receiving the transfer (hereinafter referred to as "receiving company");

b) Type of insurance business and quantity of insurance contracts being transferred;

c) Method of transferring funds, reserves, and claims related to the transferred contracts;

d) Expected time frame for implementing the transfer;

đ) Detailed explanation by the receiving company regarding its financial capacity after the transfer;

e) Transfer agreement between the transferring company and the receiving company, including the following main contents:

g) Object of the transfer;

h) Expected time frame for implementing the transfer;

i) Rights and obligations of the parties involved in the transfer;

k) Dispute resolution method.

2.1.2. Commitment of the receiving company to ensure the rights of the policyholder under the transferred insurance contract after the transfer takes effect.

2.2. Within fifteen days from the date on which the document requesting the transfer of insurance contracts is approved by the Ministry of Finance, the transferring enterprise must:

2.2.1. Publish a notice of the transfer on two central newspapers for five consecutive issues, containing mainly the following contents:

a) The name and address of the transferring enterprise and the receiving enterprise;

b) Type of insurance business and quantity of insurance contracts being transferred;

c) The anticipated time for implementing the transfer;

d) The address for handling complaints and inquiries from the insured party related to the transfer.

2.2.2. The transferring enterprise must send a notification along with a summary of the transfer plan to each insured party immediately after the Ministry of Finance approves the document requesting the transfer. The notification sent to the insured party must clearly state the period during which the insured party is permitted to cancel the insurance contract if they disagree with the transfer plan and the date on which the transfer plan officially becomes effective.

2.2.3. The insured party is permitted to cancel the insurance contract within fifteen days from the date of receipt of the notification regarding the transfer according to the postmark. In the event that the insured party cancels the insurance contract, the transferring enterprise must refund to the insured party the corresponding premium for the remaining period of the insurance contract after deducting reasonable costs related to non-life insurance; or the premium paid by the insured party after deducting reasonable costs related to life insurance.

2.3. From the date on which the Ministry of Finance approves the document requesting the transfer, the transferring enterprise may not continue to enter into new insurance contracts under the transferred business operations.

2.4. Within sixty days from the date on which the Ministry of Finance approves the transfer plan, the transferring enterprise must transfer to the receiving enterprise:

2.4.1. All valid insurance contracts belonging to the approved transfer plan;

2.4.2. Unresolved complaint files related to the transferred business operations;

2.4.3. All assets, funds, and reserves related to the transferred insurance contracts and unresolved complaint files related to the transferred business operations.

3. Approval of the document requesting the transfer of insurance contracts

3.1. Within thirty days from the date of receipt of all documents requesting the transfer, the Ministry of Finance shall issue a document approving, refusing approval, or requiring amendments and supplements to the document requesting the transfer. If the Ministry of Finance requires amendments and supplements to the document, within fifteen days from the date of receipt of the request for amendments and supplements, the transferring enterprise must complete the document and resubmit it to the Ministry of Finance. Beyond this deadline, the Ministry of Finance has the right to refuse approval of the document requesting the transfer. In the case of refusal to approve the document requesting the transfer, the Ministry of Finance must explain the reasons in writing.

3.2. After approving the document requesting the transfer, the Ministry of Finance will issue an adjustment permit according to the form attached as Appendix 3 to this Circular to the transferring enterprise in accordance with the insurance business operations that the transferring enterprise is still permitted to conduct.

4. Responsibilities of the receiving enterprise

4.1. The receiving enterprise is responsible for cooperating with the transferring enterprise in developing the transfer plan, determining the value of assets related to the funds and reserves of the transferred insurance contracts, and agreeing on the effective date of the transfer plan.

4.2. From the date of receipt of the transfer, the receiving enterprise is responsible for performing the obligations of the transferred insurance contracts in accordance with the terms agreed between the transferring enterprise and the insured party, including the responsibility to resolve any complaints that have occurred but have not yet been reported. The receiving enterprise has the right to accept assets related to the funds and reserves of the transferred insurance contracts and use these assets to fulfill the obligations under the transferred insurance contracts.

IX. PREVENTION AND MITIGATION OF LOSSES

1. Insurance enterprises are allowed to allocate up to 2% of the actual premiums collected in the fiscal year for measures to prevent and mitigate losses as specified in Clause 2, Article 25 of Decree No. 42/2001/NĐ-CP dated August 1, 2001, of the Government detailing the implementation of certain provisions of the Law on Insurance Business.

2. The expenses for prevention and mitigation of losses by insurance enterprises must be carried out in accordance with current regulations on corporate financial management and relevant laws.

X. IMPLEMENTATION ORGANIZATION

1. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

2. This Circular replaces Circular No. 71/2001/TT-BTC dated August 28, 2001, of the Ministry of Finance guiding the implementation of Decree No. 42/2001/NĐ-CP dated August 1, 2001, of the Government detailing certain provisions of the Law on Insurance Business.

3. During the implementation process, if there are difficulties or obstacles, they should be promptly reflected to the Ministry of Finance for consideration and resolution./.