Decree 46/2023/ND-CP detailing the implementation of a number of articles of the Law on Insurance Business

Recently, on July 1, 2023, the Government issued a Decree guiding the Law on Insurance Business with number 46/2023/ND-CP (“Decree 46”). Accordingly, the Decree is issued to detail a number of Articles of the Law on Insurance Business issued in 2022. Decree 46/2023 of the Government is issued to replace Decree 73/2016/ND-CP (“Decree 73”).

Full text of Decree 46/2023/ND-CP detailing a number of articles of the Law on Insurance Business

Basic information of Decree 46/2023/ND-CP

Number of symbols: 46/2023/ND-CP

Issuance date: 1/7/2023

Effective date: July 1, 2023, except for the following regulations that take effect from January 1, 2023, including: Article 33, Section 6, Chapter II, Articles 81, 82, 83, Clauses 1, 2, 3, 4, 5 and 6 Article 93 of Decree 46/2023/ND-CP.

Type of document: Decree

Issuer: Government

Signed by: Le Minh Khai

New points of Decree 46/2023/ND-CP

Subjects of application

The scope of the Decree only stipulates in detail a few articles of the Law on Insurance Business along with applicable subjects including:

• Non-life insurance enterprises, life insurance enterprises, health insurance enterprises (hereinafter referred to as insurance enterprises), reinsurance enterprises, insurance agents, insurance brokerage enterprises, organizations and individuals providing auxiliary insurance services, mutual organizations providing micro-insurance.
• Branches of foreign non-life insurance enterprises, branches of foreign reinsurance enterprises (hereinafter referred to as foreign branches in Vietnam); Representative offices of foreign insurance enterprises, foreign reinsurance enterprises, foreign insurance brokerage enterprises, foreign financial and insurance groups in Vietnam (hereinafter referred to as representative offices) foreigners in Vietnam.
• The policyholder, the insured, the beneficiary.
• State management agency in charge of insurance business activities.
• Organizations and individuals involved in insurance business activities.

Accordingly, Decree 46 has expanded the regulated subjects compared to Decree 73 to include insurance businesses (non-life, life, health insurance); Foreign branches (foreign non-life, foreign reinsurance); the state management agency in charge of insurance business activities; the buyer, the beneficiary. This expansion has helped the scope of the provisions of the Law on Insurance Business to cover more subjects, avoiding the case that there are objects not covered by the provisions of the Law on Insurance Business, which makes it difficult to comply with the law.

Minimum charter capital of the enterprise

• The minimum charter capital of life insurance and health insurance enterprises must be 750 billion VND.
• For life insurance, health insurance and unit-linked insurance or retirement insurance business, the minimum charter capital is 1,000 billion VND.
• Insurance enterprises dealing in life insurance, health insurance, unit-linked insurance and retirement insurance require a minimum charter capital of 1,300 billion VND.

The reduction of charter capital, which is granted to insurers, reinsurers and foreign branches in Vietnam, has opened up the financial services industry for insurance business. However, when contributing capital, investors still need to fully meet the financial requirements, capital regulations, solvency margin according to the provisions of law and the conditions on shareholder structure. Article 66 Law on insurance business for joint-stock companies.

Previously, Decree 73 did not specify the minimum charter capital of enterprises, Decree 43 added this provision to make it easier for enterprises to determine capital and increase and decrease the charter capital in case of the company wants to change its charter capital.

Limit of payment to the insured when the life insurance enterprise goes bankrupt, unable to pay

Pursuant to Clause 1, Article 95 of Decree No. 46/2023/ND-CP, which guides as follows: For life insurance contracts, the fund only pays up to 90% of the liability of the life insurer, but not more than VND 200 million/insured/contract.

Liability of the life insurance business

The level of liability of the life insurance enterprise corresponds to each case. Specifically:

• For contracts where an insured event has occurred but only insurance benefits have not been paid, the liability level of the insurance enterprise is the insurance benefits to be enjoyed as agreed upon in the insurance contract.
• For thrift, refundable and still valid contracts, the level of liability of the insurance enterprise shall correspond to the refundable value of the contract at the time which a competent state agency announces an insolvent or bankrupt of insurance enterprise.
• For protective, non-refundable and valid contracts, the liability level of the insurer corresponds to the premium paid for the remaining period of the insurance policy.
• For investment-linked insurance contracts that are still valid, the liability level of the insurance enterprise corresponds to the value of the customer’s account at the time the competent state agency announces the insurance enterprise. insolvency or bankruptcy.
• In the case of a life insurance contract with many insureds, the maximum payment limit of the Fund as prescribed above shall be applied to each insured, except for the case between the insured and the insurance enterprise. otherwise agreed upon in the insurance contract.

Clearly defining each case for each type of contract of a life insurance enterprise helps the enterprise understand its rights and obligations towards the insurance buyer. Besides, this change of Decree 46 also aims to ensure the interests of insurance buyers.

Conditions for diplomas and certificates

The certificate for loss assessment activities in Decree 46 of the Government has the additional condition that the certificate of insurance loss assessment must be obtained by an insurance training institution established and operating legally issued by domestic and foreign laws corresponding to types of non-life insurance operations to conduct insurance loss assessment.

In addition, Decree 46 also stipulates that: Certificates for insurance claim settlement activities must be issued by an insurance training institution legally established and operating at home and abroad corresponding to the type of insurance that supports the settlement of claims.

Decree 73 only stipulates that individuals who directly conduct insurance consulting activities must meet one of the qualification requirements such as having a university degree or higher in insurance majors or other majors and a certificate in insurance consulting. As an insurance consultant, Decree 46 adds that there is a certificate of insurance risk assessment issued by an insurance training institution legally established and operating at home and abroad, corresponding to the type of insurance performed risk assessment.

The additional regulation on the conditions of certificates and diplomas in Decree 46 helps to increase the prestige of insurance businesses and individuals performing insurance consulting activities, protecting the interests of service user.

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