Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

1. This Law shall govern the organization and operation of insurance business and define the rights and obligations of organizations as well as individuals participating in insurance.

2. This Law shall not apply to social insurance, health insurance, deposit insurance and other types of insurance, which are provided by the State and do not bear the commercial nature.

Article 2.- Application of the Law on Insurance Business, relevant legislation, international treaties and international practices

1. The organization and operation of insurance business in the territory of the Socialist Republic of Vietnam must comply with the provisions of this Law and other provisions of relevant legislation.

2. In cases where the international treaties which the Socialist Republic of Vietnam has signed or acceded to contain provisions different from the provisions of this Law, the provisions of such international treaties shall apply.

3. Parties participating in insurance may agree to apply international practices if such practices do not run counter to Vietnamese laws.

Article 3.- Interpretation of terms

In this Law, the following terms shall be construed as follows:

1. Insurance business means the operation carried out by insurance enterprises for the purpose of profit generation, whereby the insurance enterprises accept risks incurred by the insured on the basis of insurance premium payment by the insurance buyers so that the insurance enterprises shall pay the insurance money to the beneficiary or indemnify the insured when the insured events occur.

2. Reinsurance business means the operation carried out by insurance enterprises for the purpose of profit generation, whereby the insurance enterprises receive an amount of premium paid by other insurance enterprises for the commitment to pay compensation for the liabilities which the former have accepted for insurance.

3. Insurance agency activities mean the activities of introducing, offering and selling insurance, arranging the conclusion of insurance contracts and other activities aiming to perform the insurance contracts under authorization of insurance enterprises.

4. Insurance brokerage activities mean the provision of information and consultancy to the insurance buyers on insurance products, insurance conditions, premium rates, insurance enterprises and activities relating to the negotiation, arrangement and performance of insurance contracts at the request of the insurance buyers.

5. Insurance enterprises are those which are established, organized and operate under the provisions of this Law and other provisions of relevant legislation, for insurance or reinsurance business.

6. Insurance buyers are organizations or individuals that enter into insurance contracts with insurance enterprises and pay premium. An insurance buyer may also be concurrently the insured or the beneficiary.

7. The insured means organizations or individuals that have property, civil liabilities and/or life are insured under insurance contracts. The insured may also be concurrently the beneficiary.

8. The beneficiaries mean organizations or individuals designated by the insurance buyers to receive insurance money under person insurance contracts.

9. Insurable interests mean the rights to ownership, the rights to possession, the right to use, the property rights; the rights and obligations to foster and provide financial support for insured objects.

10. Insured events mean objective events mutually agreed upon by the parties or prescribed by law upon the occurrence of which the insurance enterprises shall have to pay the insurance money to the beneficiaries or pay indemnities to the insured.

11. Premium means a sum of money to be paid by the insurance buyers to insurance enterprises according to time limits and by modes mutually agreed upon by the parties in the insurance contracts.

12. Life insurance means a class of insurance provided to cases where the insured is alive or dead.

13. Endowment insurance means a class of insurance provided to cases where the insured lives till a certain point of time, whereby the insurance enterprises shall have to pay insurance money to the beneficiaries, should the insured remain alive till the time limit agreed upon in the insurance contracts.

14. Term insurance means a class of insurance provided to cases where the insured dies within a certain period of time, whereby the insurance enterprises shall have to pay insurance money to the beneficiaries, should the insured die within the time limits agreed upon in the insurance contracts.

15. Combined insurance means a class of insurance which combines endowment insurance and term insurance.

16. Whole life insurance means a class of insurance provided to cases where the insured dies at any time during his/her life.

17. Annuity means a class of insurance provided to cases where the insured lives for a certain time limit; then after such time limit the insurance enterprises shall have to pay insurance money periodically to the beneficiaries as agreed upon in the insurance contracts.

18. Non-life insurance means a class of property, civil liability and other insurances other than life insurance.

Article 4.- The States guarantee for insurance business

1. The State shall protect the legitimate rights and interests of organizations and individuals participating in insurance and organizations engaged in insurance business.

2. The State shall invest capital and other resources for the State enterprises engaged in insurance business to develop and play the leading role on the insurance market.

3. The State shall adopt the policies to develop the insurance market in Vietnam, the policies of preferences for insurance operations in service of the socio-economic development objectives, especially the programs for development of agriculture, forestry and fishery.

Article 5.- International cooperation in the field of insurance business

The State shall exercise the uniform management of and work out policies for expanding, the international cooperation in the field of insurance business on the basis of respect for each others independence, sovereignty, equality and mutual benefits along the direction of multilateralization and diversification; encourage foreign insurance enterprises and insurance brokerage enterprises to attract foreign investors, to invest their capital in Vietnam and reinvest their profits earned from insurance business activities in service of the cause of socio-economic development in Vietnam; create conditions for insurance enterprises and insurance brokerage enterprises to promote cooperation with foreign countries in order to raise the efficiency of insurance business.

Article 6.- Basic principles in insurance activities

1. Organizations and individuals having demands for insurance may only participate in the insurance at insurance enterprises operating in Vietnam.

2. The insurance enterprises must satisfy all financial requirements in order to fulfill their commitments to the insurance buyers.

Article 7.- Types of insurance operation

1. Life insurance shall include:

a) Whole life insurance;

b) Endowment insurance;

c) Term insurance;

d) Combined insurance;

e) Annuity;

f) Other life insurance operations prescribed by the Government.

2. Non-life insurance shall include:

a) Health insurance and human accident insurance;

b) Property insurance and damage insurance;

c) Land, marine, river, railway and air cargo transport insurance;

d) Aviation insurance;

e) Motorized vehicle insurance;

f) Fire and explosion insurance;

g) Hull insurance and ship-owners civil liability insurance;

h) Common liability insurance;

i) Credit insurance and financial risks insurance;

j) Business loss insurance;

k) Agricultural insurance;

l) Other non-life insurance operations prescribed by the Government.

3. The Finance Ministry shall make a detailed list of insurance products.

Article 8.- Compulsory insurance

1. The compulsory insurance means a type of insurance for which the conditions, premium rates and minimum insurance sum are prescribed by law for compulsory implementation by both the organizations or individuals participating in insurance and the insurance enterprises.

The compulsory insurance shall only apply to a number of insurance types for the purpose of protecting the public interests and social safety.

2. The compulsory insurance shall include:

a) Motorized vehicle owners civil liability insurance, insurance of air carriers civil liability toward passengers;

b) Professional liability insurance for legal consultancy operations;

c) Insurance brokerage enterprises professional liability insurance;

d) Fire and explosion insurance.

3. Depending on the socio-economic development demands of each period, the Government shall submit to the National Assembly Standing Committee other types of compulsory insurance for its prescription.

Article 9.- Reinsurance

1. Insurance enterprises may provide reinsurance for other insurance enterprises, including foreign insurance enterprises.

2. Where reinsurance is provided for insurance enterprises overseas, the insurance enterprises shall have to reinsure part of the liability they have insured to domestic reinsurance enterprises as provided for by the Government.

Article 10.- Cooperation and competition in insurance business

1. Insurance enterprises, insurance agents and insurance brokerage enterprises may engage in cooperation and lawful competition in insurance business.

2 The following acts shall be strictly forbidden:

a) Providing untruthful information or advertisement on insurance contents, operation scope and terms, which cause harms to the legitimate rights and interests of the insurance buyers;

b) Competing for customers by means of obstructing, inducing, buying off or intimidating employees or customers of other insurance enterprises, agents or brokerage enterprises;

c) Making illegal sale promotions;

d) Conducting other illegal competitions.

Article 11.- Right to join socio-professional insurance business associations

Insurance enterprises, insurance agents and insurance brokerage enterprises may join socio-professional insurance business associations for the purpose of developing the insurance markets and protecting the legitimate rights and interests of members under the provisions of law.