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Decree on Insurance Business

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					    Legal document: 100/CP

    * */Date:/* 12/18/93
    * */Number:/*100/CP
    * */Name of Document:/* Decree On Insurance Business


 GOVERNMENT                            SOCIALIST REPUBLIC OF VIETNAM
 No.100-CP                                       Independence - Freedom -
Happiness

                                                                       Hanoi, 18
December 1993

                                               DECREE
                             ON INSURANCE BUSINESS

                                   THE GOVERNMENT

Pursuant to the Law on the Organization of the Government dated 30
September 1992;

In order to promote insurance business activities and strengthen state
administration of the insurance business for the purpose of promoting
socio-economic development;

On the proposal of the Minister of Finance.


                             DECREES

CHAPTER I

General Provisions

Article 1

Insurance business means an insurance enterprise's acceptance of risk
in consideration of a sum of money paid by the secured in order that
the insurance enterprise shall compensate or make an insurance payment
to it when a risk covered by the insurance materializes.

Insurance business may include reinsurance business and insurance
broking.

Article 2

In this decree the following concepts shall have the meanings ascribed
to them as follows:

1.Insurance enterprise includes State enterprises, share-holding
companies, mutual insurance companies, insurance joint venture
companies, branches of foreign insurance organizations and insurance
companies with one hundred (100) per cent foreign owned capital
operating in Vietnam.
1.1 Mutual insurance company means a company conducting insurance
business for its members on the principles of mutual benefit and non
profit.

1.2 An insurance joint venture company is one which is formed on the
basis of capital contributions made by a Vietnamese party and a
foreign party.

1.3 A branch of a foreign insurance organization means that part of a
foreign insurance organization which is operating in Vietnam.

1.4 A foreign insurance company with one hundred (100) per cent
foreign-owned capital means an insurance company which is established
in Vietnam with one hundred (100) per cent capital owned by a foreign
insurance company.

2. The Vietnam National Reinsurance Company is a State owned
enterprise and legal entity specializing in the business of
re-insurance.

3. An insurance broking organization includes State owned
enterprises, share-holding companies, limited liability companies,
private enterprises, insurance broking joint venture companies,
branches of foreign insurance broking organizations and insurance
broking companies with one hundred (100) per cent foreign owned
capital.

3.1 An insurance broking joint venture company means an insurance
broking company established in Vietnam on the basis of capital
contributions made by both a Vietnamese party and a foreign party.

3.2 A branch of a foreign insurance broking company means that part
of a foreign insurance broking organization which is operating in
Vietnam.

3.3 An insurance broking company with one hundred (100) per cent
foreign owned capital is an insurance broking company established in
Vietnam with one hundred (100) per cent capital owned by a foreign
insurance broking company.

4.   An insurance agent is an individual qualified in accordance with
article 19 of this Decree acting as an insurance agent.

Article 3

This Decree applies to insurance enterprises, insurance broking
organizations and insurance agents, but does not apply to health
insurance which is issued in conjunction with Decree No. 299-HDBT of
the Council of Ministers (now the Government) and social insurance
which is issued in conjunction with Decree No.43-CP of the Government
dated 21 June 1993.

An insurance enterprise shall be responsible for the operation of its
agents.

Article 4
The State shall protect the legitimate rights and interests of the
insured.

Article 5

Insurance enterprises and insurance broking organizations which wish
to conduct insurance business in Vietnam must be granted by the
Ministry of Finance a certificate of satisfaction of the
qualifications and conditions required for conducting insurance
business.

Article 6

An insurance enterprise may reinsure for other insurance enterprises.

In cases where an insurance enterprise reinsures for an insurance
organization abroad, the former must reinsure part of the liability
under that reinsurance contract with the Vietnam National Reinsurance
Company in accordance with the detailed guidelines issued by the
Ministry of Finance.

Regulations governing the organization and activities of the Vietnam
National Reinsurance Company shall be stipulated by the Ministry of
Finance


CHAPTER II

Content and Scope of Insurance Business

Article 7

The kinds of insurance which are permitted to be conducted are as
follows:

1. Life insurance

2. Voluntary health insurance and personal accident insurance.

3. Property insurance and loss insurance.

4. Cargo insurance covering land, marine, fluvial, railway, and air
transportation.

5. Hull insurance and civil liability for ship owners.

6. Co-insurance.

7. Aviation insurance.

8.   Automobile insurance.

9.   Fire insurance.

10. Credit insurance and financial risk insurance.

11. Business loss insurance.
12. Agriculture insurance.

13. Other insurance which shall be stipulated by the Ministry of
Finance.

Insurance services stipulated in (2) to (13) are collectively referred
to as non-life insurance.

Article 8

1. Apart from the insurance services stated in article 7 of this
Decree, an insurance enterprise is permitted to conduct the
assessment, inspection, calculation for loss distribution and act as
agent in the assessment and settlement of compensation.

2. An insurance enterprise is permitted only to conduct these
services in accordance with the manner and conditions set out in the
certificate granted by the Ministry of Finance of satisfaction of the
qualifications and conditions required for conducting insurance
business.

Article 9

An insurance enterprise must lodge a security deposit with a bank
which is permitted to operate in Vietnam.

The insurance enterprise shall be entitled to receive the interest on
the money so deposited. The Ministry of Finance shall stipulate the
amount of money to be deposited as a security deposit.

Article 10

In its operations, an insurance enterprise must always ensure its
payment ability and establish technical reserves sufficient to fulfill
its commitments to its insurers.

Article 11

Insurance enterprises and an insurance broking enterprises shall
deduct 5% from their net profits annually and establish a compulsory
reserve fund until such time as the fund reaches the equivalent of 10%
of its chartered capital. In the case of branches of foreign insurance
organizations and insurance broking organizations such funds must
reach the equivalent of 10% of the level of capital stipulated in
article 22 of this Decree.

Article 12

1. Insurance enterprises and insurance broking organizations may
invest surplus capital in accordance with provisions of the law.

2. The technical reserves referred to Article 10 of this Decree shall
only be invested in Vietnam in the following areas:

2.1   Purchasing public bonds and State treasury bonds;
2.2   Trading in real estate;

2.3   Purchasing securities (stocks, bonds etc.);

2.4   Contributing as capital to joint ventures;

2.5 Providing loans in accordance with the Ordinance on Banks, Credit
Cooperatives and Financial Companies dated 23 May 1990.

2.6 Interest earning deposits with banks, credit organizations or the
State treasury.

The Ministry of Finance shall stipulate the proportion of capital
which is permitted to be invested in each of the above areas in order
to ensure payment ability.

Article 13

Insurance joint venture companies, insurance broking joint venture
companies, branches of foreign insurance companies and foreign
insurance broking companies, and insurance companies with one hundred
(100) per cent foreign owned capital shall be entitled to transfer
abroad the following:

1.   The profit remaining after deduction has been made for the
establishment of compulsory or voluntary funds and reserve amounts
which are stated in their charter and for the fulfillment of financial
obligations to the Government in accordance with the laws.
2.   Assets remaining after liquidation.

Article 14

In their operations, insurance enterprises and insurance broking
organizations must obtain in writing the approval of the Ministry of
Finance of any changes to the following:

1.    Name and Charter;

2.    Any reduction or increase in chartered capital;

3.    Any change of principal office or branch office;

4.    Any opening or closing of branches;

5.   Any change in the content of the Certificate of satisfaction of
qualifications and conditions required for conducting insurance
business.


CHAPTER III

State Administration in Respect
of Insurance Business

Article 15

State administration in respect of insurance business includes:
1.   Formulating and submitting to authorized State bodies, policies
and laws concerning the conduct of insurance business.

2.   Formulating and issuing regulations on the qualifications and
conditions necessary for the conduct of insurance business.

3.   The granting and withdrawal of the Certificate of satisfaction of
qualifications and conditions required for conducting insurance
business.

4.   Monitoring and inspecting the observance of regulations and rules
concerning insurance business.

7.   Responsibility for international relations regarding insurance
business.

Article 16

The Government shall uniformly conduct state administration in respect
of insurance business. The Ministry of Finance is the Government body
in charge of conducting state administration in respect of insurance
business and performing the specific duties stipulated in this Decree.

Article 17

The Certificate of satisfaction of qualifications and conditions
required for conducting insurance business shall be granted by the
Ministry of Finance which, in so doing, shall take into account the
following:

1.    In respect of a Vietnamese organization.

1.1   The objectives and areas of activity must be clear;

1.2 The chartered capital must be not less than the legal capital
stipulated in Article 22 of this Decree;

1.3 The form of business organization must accord with the provisions
of Article 2 of this Decree;

1.4    Its headquarters must be suitable for its business activities.

1.5   Its managers must have proper qualifications in management and
the professional skills appropriate to the insurance business;

1.6   Whether the type of insurance services for which the economic
organization is applying is necessary for the national economy.

2.    In respect of insurance joint venture companies and insurance
broking companies, apart from the conditions stipulated in Paragraph 1
of this Article, parties to the joint venture must also be economic
organizations which are operating lawfully and which are in a sound
financial position.

3.     Where branches of foreign insurance organizations, foreign
insurance broking organizations, insurance companies with one hundred
(100) per cent foreign owned capital and insurance broking companies
with one hundred (100) per cent foreign owned capital are operating in
Vietnam then, apart from the conditions stipulated in paragraph 1 of
this Article, the foreign insurance and foreign insurance broking
companies must also be organizations which are operating lawfully in
their original countries and which are in a sound financial position.

Article 18

Documents submitted with the application for a Certificate shall
include:

1.      In respect of Vietnamese economic organizations:

1.1.     An application for the certificate which clearly states the
name proposed to be used in commercial transactions, the address of
the principal office, chartered capital, method of capital
contribution, the scope and projected duration of operation, the
objectives of the operation and the types of service intended to be
offered.

1.2.    The rules, conditions, insurance clauses, fee schedules and
insurance commissions to be applied in respect of the specified
insurance services proposed to be conducted.

1.3.    A business plan for at least the first 5 years, in which it is
clearly stated the fee rates, commission rates for each kind of
service, proposed compensation, projections on the development and
scope of operations, method of calculating insurance and technical
reserve to be established.

1.4.   A charter concerning the organization and its activities;

1.5. The documents and qualifications disclosing the qualifications
of the members of the Board of Management and the manager.

1.6. Any other documents required by the Ministry of Finance for the
purpose of clarifying any issues relating to the documents required
above.

2.    In respect of insurance joint venture companies and insurance
broking joint venture companies, apart from the provisions of
paragraph 1 of this article, the following legally certified documents
must also be filed:

2.1.   The charter of the foreign party to the joint venture;

2.2. License of operation of the foreign party in its country of
origin;

2.3.   The joint venture contract;

2.4. The balance sheets, profit and loss statements and annual
reports on the operations of the parties to the joint venture for the
preceding three years.

3.     In respect of branches of insurance organizations, of
insurance-broking organizations, insurance companies and insurance
broking companies with one hundred percent foreign owned capital,
apart from the provisions of paragraph 1 of this Article, the
following legally certified documents must also be filed:

3.1. The license for operation in the country of origin of the
insurance organization or insurance broking organization;

3.2.     A letter of authorization in favor of the manager in Vietnam.

3.3. The balance sheets, profit and loss statements and annual
reports of the foreign insurance or foreign insurance broking
organization for the preceding three years in its country of origin.

Article 19

An insurance agency shall be established pursuant to an agency
contract signed with an insurance enterprise. An individual acting as
an insurance agent must meet the following requirements:

1.       Be a Vietnamese citizen and reside in Vietnam.

2.       Have a senior high school degree or higher degree.

3.    Not have been subject to criminal prosecution or have served a
criminal sentence or be mentally unsound.

Article 20

The charter governing the organization and operation of an insurance
enterprise or an insurance-broking organization must contain the
following details:

1.       The name and address of the principal office or branch office.

2.       The content and scope of operations.

3.       The duration of operation.

4.       The Chartered capital and method of capital contribution.

5.       Its organizational structure and proposed management.

6. The representative of the insurance enterprise or
insurance-broking enterprise

7.     Principles concerning finance and accounting standards.

8.     Conditions for dissolution and procedures for dissolution.

9.     Procedure for charter's amendment.

Article 21

1. Within 90 days from the date of receipt of the application, fully
documented, for the certificate, the Ministry of Finance shall decide
whether to grant to the certificate. In the event of refusal, the
applicant, the body authorized to grant the investment license (where
the applicant is a foreign enterprise) and the State body authorized
to set up the insurance business in Vietnam must all be informed of
the reasons for that refusal.

2. Insurance organizations and an insurance-broking organizations
must pay a fee for the issue of the certificate which is equal to two
(2) per cent of the prescribed capital as stipulated in Article 22 of
this Decree and which shall be no less than 10 million Vietnamese
Dong.

The application fee shall be paid in two stages: fifty (50) per cent
upon filing the application for the Certificate, and fifty (50) per
cent upon receipt of the Certificate. In cases where the Certificate
is not granted or the insurance organization or insurance-broking
organization withdraws its application, the initial fifty (50) per
cent shall be forfeited.

3. Upon the issue of the Certificate by the Ministry of Finance, the
insurance organization or insurance-broking organization must carry
out the procedures necessary for establishment and business
registration and apply for an investment license (in respect of
foreign enterprises) in accordance with the provisions of the law.

Article 22

The legal capital of an insurance enterprise or an insurance-broking
enterprise shall be as follows:

1. 20 billion Vietnamese dong or US$ 2 million in respect of a
Vietnamese insurance enterprise or insurance joint venture company.

2. US$5 million in respect of a branch of a foreign insurance
organization or an insurance company with one hundred (100) per cent
foreign owned capital.

3. One (1) billion Vietnamese dong or US$100,000 in respect of a
Vietnamese insurance broking organization or insurance-broking joint
venture company.

4. US$ 300,000 in respect of a branch of a foreign insurance broking
organization or insurance-broking company with one hundred (100) per
cent foreign owned capital.

Article 23

An insurance enterprise or an insurance-broking organization shall,
prior to its commencement of business, cause to be published in local
newspapers details of its certificate.

Article 24

The Ministry of Finance may withdraw the Certificate of an insurance
enterprise or insurance-broking enterprise in the following cases:

1. Where the insurance enterprise does not meet all of the conditions
set-out in its Certificate or does not commence operations within 12
months from the date of issue thereof.

2. Where the insurance enterprise is not able to satisfy the
conditions for its operation.

3. Where the insurance enterprise has insufficient funds to fulfill
commitments to its policy holders.

4. In addition, the Certificate issued to a branch of foreign
insurance organization or an insurance-broking organization in Vietnam
shall be withdrawn where the Certificate of the foreign insurance
organization or insurance-broking organization granted in its country
of origin is withdrawn.


CHAPTER IV

Supervision of Insurance Business

Article 25

The financial year of an insurance enterprise and insurance-broking
enterprise shall commence on 1 January and end on 31 December of each
year. In cases where the financial year is different from that
provided in this article, the approval of the Ministry of Finance must
be obtained.

Article 26

In cases where insurance enterprises simultaneously conduct life and
non-life insurance, separate accounts for each type of insurance
business shall be maintained.

Article 27

1. Insurance enterprises and insurance-broking enterprises must apply
accounting standards in accordance with the provisions and regulations
of Vietnam. Any application of another system of accounts must be
approved by the Ministry of Finance.

2. A balance sheet and a profit and loss statement of each insurance
enterprise or insurance-broking enterprise must be maintained.

3. Insurance enterprises and insurance-broking enterprises must
fulfill their financial obligations to the State in accordance with
the law.

Article 28

Within 90 days of the end of each financial year, insurance
enterprises and insurance-broking organizations must file with the
Ministry of Finance the following documents.

1.   An annual report on their operations.

2.   A balance sheet.
3.   A profit and loss statement.

4. All other documents clarifying the above documents as required by
the Ministry of Finance.

Apart from the above documents the insurance joint-venture companies,
insurance-broking joint-venture companies, branches of insurance
organizations and insurance-broking organizations, insurance and
insurance-broking companies with one hundred (100) percent foreign
owned capital must file annual reports on their operations, balance
sheets and the profit and loss statements of their parent
organizations.

Article 29

The Ministry of Finance may request an insurance enterprise or
insurance-broking organization to report on, and may conduct an
inspection of, their operations at any time. Such inspections shall
not interfere with the normal operations of the insurance enterprise
or insurance broking enterprise.

Article 30

Where the financial situation of an insurance enterprise deteriorates
to the point that there is a danger of a default in payment of policy
holders occurring, the Ministry of Finance may recommend to the
insurance enterprise that it consolidate its business and take
appropriate measures to restore its financial situation. The Ministry
of Finance shall withdraw the Certificate of an insurance enterprise
if in its opinion the enterprise can not be restored to its original
position.

Article 31

The dissolution or winding up of an insurance enterprise or an
insurance-broking organization must be conducted promptly.

Article 32

In the event of dissolution, winding up, liquidation, separation or
merger of an insurance enterprise or an insurance-broking organization
it must report to, and be subject to the supervision of, the Ministry
of Finance.

Article 33

Insurance enterprises and insurance-broking organizations shall be
subject to the supervision of, and inspection by, the Ministry of
Finance. Such inspection shall be conducted in accordance with the
Ordinance on Inspection and other legal provisions.


CHAPTER V

Dealing with Breaches

Article 34
1. Insurance enterprises, insurance-broking organizations or
insurance agents which breach the provisions of their Certificates or
any other provision in this Decree shall be dealt with by
administrative penalty or prosecuted for criminal responsibility in
accordance with the seriousness of their offense.

2. In cases where the breaches seriously infringe upon the interests
and rights of the insured, then in addition to the measures stipulated
in paragraph 1 of this article, the Ministry of Finance may take the
following measures:

2.1. Require an increase in the assets of the insurance enterprise.

2.2. Impose restrictions on the scope and sphere of its operations.

2.3. Require an authorized state body to freeze its assets.

2.4. Require the insurance organization to change its manager, or the
members of its Board of Management.


CHAPTER VI

Final Provision

Article 35

This decree shall take effect as from 1 January 1994. Previous
provisions inconsistent with this Decree are hereby repealed.

Article 36

The Minister of the Ministry of Finance shall be responsible for
guiding the implementation of this Decree.

Article 37

Ministers, Heads of Department at ministerial level, Heads of
Departments under the Government and Chairmen of the people's
committees of provinces and cities under central authority shall be
responsible for the implementation of this Decree.


For The Government
Deputy Prime Minister

PHAN VAN KHAI
(signed)


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Description: Vietnamese government issued this decree to promote insurance business by strengthening state administration in view of promoting socio-economic development