Chapter III

INSURANCE ENTERPRISES

Section 1. GRANTING PERMITS FOR ESTABLISHMENT AND OPERATION

Article 58.- Establishment and operation of insurance enterprises

The insurance enterprises shall be established and operate under the provisions of this Law and other relevant law provisions.

Article 59.- Types of insurance enterprises

Types of insurance enterprise shall include:

1. State-run insurance enterprise;

2. Joint stock insurance company;

3. Mutual support insurance organization;

4. Joint venture insurance enterprise;

5. Insurance enterprises with 100% foreign investment capital.

Article 60.- Contents of operation of insurance enterprises

1. The operation of insurance enterprises shall cover the following contents:

a) Insurance business, re-insurance business;

b) Risk, loss prevention and limitation;

c) Damage expertise;

d) Damage expertise agency, consideration of indemnity settlement, request for refund by the third party;

e) Fund management and capital investment;

f) Other activities as prescribed by law.

2. The insurance enterprises may not concurrently carry out life insurance business and non-life insurance business, except for cases where the life insurance enterprises conduct health insurance and human accident insurance business operation in support of life insurance.

Article 61.- Contents of re-insurance business

The re-insurance business shall cover:

1. Transferring part of the insured liability to one or several other insurance enterprises;

2. Accepting the re-insurance of part or entire liability already insured by other insurance enterprises.

Article 62.- Competence to grant establishment and operation licenses

1. The Finance Ministry shall grant establishment and operation licenses to insurance enterprises according to the provisions of this Law and other relevant law provisions.

2. The granting of establishment and operation licenses to insurance enterprises must be in line with the planning and plans on orientation for the development of insurance market and the financial market of Vietnam.

Article 63.- Conditions for being granted the establishment and operation licenses

The conditions for being granted the establishment and operation licenses include:

1. Having the contributed legal capital not being lower than the legal capital amount prescribed by the Government;

2. Having the dossiers of application for establishment and operation licenses made according to the provisions in Article 64 of this Law.

3. Having types of enterprise and charters compatible with the provisions of this Law and other law provisions;

4. The administrative and executive personnel have the capabilities for management, insurance profession and operation.

Article 64.- Dossiers of application for establishment and operation licenses

A dossier of application for an establishment and operation license shall include:

1. The application for the establishment and operation license;

2. The draft charter of the enterprise;

3. The plan for operation in the first five years, clearly stating the modes of deduction for setting up professional reserves, re-insurance program, capital investment, business efficiency, solvency of the insurance enterprise and economic benefits of the establishment of the enterprise;

4. The list, curricula vitae and diplomas evidencing the capabilities as well as professional qualifications, of the administrators and executive officials of the enterprise;

5. The contributed capital level and mode of capital contribution, the list of organizations and individuals that hold 10% or more of the charter capital; the financial situation and other information relating to such organizations and individuals;

6. Insurance rules, terms, charge and commission rates of the insurance products planned for implementation.

Article 65.- Licensing time limit

Within 60 days after the receipt of the full dossiers of application for an establishment and operation license, the Finance Ministry shall have to grant or refuse to grant the license. In case of refusal to grant the license, the Finance Ministry must clearly explain in writing the reasons therefor.

The establishment and operation licenses shall also be valid as the business registration certificates.

Article 66.- Licensing fee

The insurance enterprises which are granted the establishment and operation licenses shall have to pay the licensing fees according to the provisions of law.

Article 67.- Disclosure of operation contents

After being granted the establishment and operation licenses, the insurance enterprises shall have to make public the business operation contents according to the provisions of law.

Article 68.- Withdrawal of establishment and operation licenses

1. Insurance enterprises may have their establishment and operation licenses withdrawn in one of the following cases:

a) The dossiers of application for establishment and operation licenses contain intentionally falsified information;

b) Past 12 months after being granted the establishment and operation licenses the insurance enterprises fail to start their operation;

c) The enterprises are dissolved according to the provisions in Article 82 of this Law;

d) The enterprises are divided, separated, merged, bankrupt, transformed in their types;

e) They operate for the wrong purposes or in contravention of the contents prescribed in their establishment and operation licenses;

f) They fail to meet the financial requirements for the fulfillment of their commitments with the insurance buyers.

2. In case of having their establishment and operation licenses withdrawn under the provisions at Points a, b, c, e and f, Clause 1 of this Article, the insurance enterprises shall have to immediately stop the conclusion of new insurance contracts, but still have the responsibility to pay the insurance money to the beneficiaries or the indemnities to the insured and have to perform the insurance contracts concluded before the withdrawal of their establishment and operation licenses.

Where the establishment and operation licenses are withdrawn under the provisions at Point d, Clause 1 of this Article, the rights and obligations of the parties shall comply with the provisions of law.

3. The decisions to withdraw establishment and operation licenses of insurance enterprises shall be announced by the Finance Ministry on the mass media.

Article 69.- Changes requiring approval

1. The insurance enterprises must get the Finance Ministry’s approval when changing one of the following contents:

a) The enterprises’ names;

b) The charter capital;

c) Setting up or closing branches and/or representative offices;

d) Locations of head-offices, branches, representative offices;

e) Operation contents, scope and duration;

f) Transfer of shares, contributed capital representing 10% or more of the charter capital;

g) Managing Board chairmen, general directors (directors);

h) Division, separation, merger, consolidation, dissolution, transformation of enterprise.

2. Within 30 days from the date the Finance Ministry approves the changes prescribed in Clause 1 of this Article, the insurance enterprises shall have to make public the approved changes as provided for by law.

Section 2. MUTUAL SUPPORT INSURANCE ORGANIZATIONS

Article 70.- Mutual support insurance organizations

The mutual support insurance organizations are those having the legal person status, which are established to conduct insurance business for the purpose of providing mutual support and assistance among members. The members of mutual support insurance organizations are the owners and the insurance buyers too.

Article 71.- Members of mutual support insurance organizations

1. Vietnamese organizations and citizens aged full 18 years or older, who have full capacity for civil acts, that operate in the same field, the same occupation and have the demand for insurance may all join in founding the mutual support insurance organizations in the capacity as the founding members.

2. Only organizations and individuals that enter into insurance contracts with mutual support insurance organizations can become members of the mutual support insurance organizations.

Article 72.- Limit of liability of the mutual support insurance organizations

The mutual support insurance organizations shall only be liable to their debts and other property obligations within their property.

Article 73.- Establishment, organization and operation of the mutual support insurance organizations

The establishment, organization and operation of the mutual support insurance organizations shall be stipulated by the Government.

Section 3. TRANSFER OF INSURANCE CONTRACTS

Article 74.- Transfer of insurance contracts

1. The transfer of an entire insurance contract on one or several insurance operations between insurance enterprises shall be effected in the following cases:

a) The insurance enterprise is in the danger of insolvency;

b) The insurance enterprise is split up, separated, consolidated, merged or dissolved;

c) It is so agreed upon between insurance enterprises.

2. Where the insurance enterprise is in danger of insolvency or dissolution and cannot reach agreement on the transfer of insurance contracts to other insurance enterprise, the Finance Ministry shall designate the insurance enterprise to be transferee.

Article 75.- Conditions for transfer of insurance contracts

The transfer of insurance contracts shall be carried out under the following conditions:

1. The transferee enterprises are dealing in the insurance operations to be transferred;

2. The rights and obligations under the to be- transferred insurance contracts shall not alter till the expiry of the insurance contracts;

3. The transfer of insurance contracts must be made together with the transfer of funds and professional reserves related to the entire insurance contracts to be transferred.

Article 76.- Procedures for transfer of insurance contracts

The transfer of insurance contracts shall comply with the following procedures:

1. The insurance enterprises transferring the insurance contracts must file their applications proposing the transfer of insurance contracts to the Finance Ministry, clearly stating the reasons and plans of transfer, together with the to be- transferred contracts. The transfer of insurance contracts shall be carried out only after it is approved in writing by the Finance Ministry;

2. Within 30 days from the date the Finance Ministry approves the transfer of insurance contracts, the insurance contract-transferring enterprises must make public the transfer and notify it in writing to the insurance buyers.

Section 4. RESTORATION OF SOLVENCY, DISSOLUTION AND BANKRUPTCY OF INSURANCE ENTERPRISES

Article 77.- Solvency

1. Insurance enterprises must always maintain their solvency throughout the process of their insurance business activities.

2. Insurance enterprises are considered solvent when they fully set up through deductions the professional reserves as provided for in Article 96 of this Law and have the solvency amplitude not lower than the minimum solvency amplitude prescribed by the Government.

3. The solvency amplitude of an insurance enterprise is the difference between the property value and the payable debts of that insurance enterprise.

Article 78.- Reporting on insolvency danger

1. An insurance enterprise is in danger of insolvency when its solvency amplitude is lower than the minimum solvency amplitude prescribed by the Government.

2. Where being in the danger of insolvency, insurance enterprises shall have to immediately report to the Finance Ministry on their real financial status, the causes leading to the danger of insolvency and the remedial measures.

Article 79.- Insurance enterprises’ liability in case of insolvency danger

In case of being in danger of insolvency, the insurance enterprises shall have to apply the following measures:

1. Drawing up plans for restoration of their solvency, consolidation of their organization and operation, reporting them to the Finance Ministry and implementing the plans already approved by the Finance Ministry;

2. Meeting the Finance Ministry’s request for restoration of solvency.

Article 80.- Control over the insurance enterprises being in danger of insolvency

1. Where an insurance enterprise cannot restore its solvency according to the approved plan, the Finance Ministry shall issue a decision to set up the solvency control board for the application of measures to restore the solvency of such insurance enterprise.

2. The solvency control board shall have the following tasks and powers:

a) To direct and supervise the application of measures for solvency restoration according to the approved plan;

b) To notify the concerned State bodies of the application of measures to restore the solvency for coordinated implementation;

c) To restrict the scope and domain of operation of the insurance enterprise;

d) To suspend the activities which may lead to the insolvency of the insurance enterprise;

e) To request the insurance enterprise to transfer the entire insurance contract on one or several insurance operations to other insurance enterprises;

f) To temporarily suspend the administrative and executive rights and request the insurance enterprise to replace Managing Board members, general director (director), deputy general director (deputy director) if deeming it necessary;

g) To request the Managing Board, the general director to discharge from position or work persons who commit acts of law offense, fail to abide by the solvency restoration plan already approved;

h) To propose the Finance Ministry to continue or terminate the solvency restoration measures;

i) To report to the Finance Ministry on the application of solvency restoration measures and the results thereof.

3. The solvency control board must bear responsibility for its decisions as provided for by law in the course of applying measures to restore the solvency of the insurance enterprise.

4. The insurance enterprise shall have to implement the requests and decisions of the solvency control board.

Article 81.- Terminating the application of solvency restoration measures

1. The application of solvency restoration measures shall terminate in the following cases:

a) The time limit for application of solvency restoration measures has expired;

b) The insurance enterprise’s operation has returned to normal;

c) The insurance enterprise has been consolidated or merged before the expiry of the time limit for application of solvency restoration measures;

d) The insurance enterprise falls into the state of bankruptcy.

2. The termination of application of solvency restoration measures shall comply with the decisions of the Finance Minister. Such decisions shall be notified to concerned bodies.

Article 82.- Dissolution of insurance enterprises

1. An insurance enterprise shall be dissolved in the following cases:

a) It voluntarily applies for dissolution if it is solvent;

b) Its operation duration prescribed in the establishment and operation license has expired without any decision on the extension thereof;

c) Its establishment and operation license has been withdrawn under the provisions at Points a, b, e and f, Clause 1, Article 68 of this Law;

d) Other cases prescribed by law.

2. The dissolution of insurance enterprises must be approved in writing by the Finance Ministry.

Article 83.- Bankruptcy of insurance enterprises

Where an insurance enterprise is incapable of paying its due debts and becomes insolvent even after the application of measures to restore its solvency, the bankruptcy of the insurance enterprise shall comply with the provisions of the legislation on bankruptcy of enterprises.