It is necessary to issue a Decree stipulating specifically the Law on Insurance Business to avoid the legal gap when the Law on Insurance Business comes into effect.. Photo: ST

On June 16, 2022, the 15th National Assembly passed the Law on Insurance Business (Law No. 08/2022/QH15). The Law on Insurance Business will take effect from January 1, 2023. It will continue to improve the legal framework on insurance business activities, ensuring conformity with the Party's guidelines and policies, and the State's policies; uniformity, consistency with the relevant legal system and in line with the development orientation and practical demand of the market, it is necessary to issue a Decree stipulating specifically the Law on Insurance Business to avoid the legal gap when the Law on Insurance Business comes into effect.

One of the essential points of the draft Decree is that it stipulates the management, supervision, inspection and examination of the branches of foreign insurance companies in Vietnam. Accordingly, the Ministry of Finance will coordinate with state management agencies in charge of foreign insurance management through sharing management and supervision information of foreign branches in Vietnam to protect the legitimate rights and interests of the parties in insurance business activities and ensure the healthy and sustainable development of Vietnam's insurance market. The information sharing with the state management agency in charge of foreign insurance management is based on a written request or request. The contents of international cooperation agreements and information sharing with foreign insurance management agencies must comply with regulations.

Regarding the inspection and examination of the insurance business activities of foreign insurance branches in Vietnam, inheriting the provisions of Decree No. 73/2016/ND-CP guiding the Law on Insurance Business and the Law on amending, supplementing the insurance business law on the establishment, operation and financial management of insurance enterprises, foreign branches and insurance brokers, the draft Decree regulating the Ministry of Finance of Vietnam inspect and examine the operation of foreign branches in Vietnam following the law. Therefore, in case the state management authority in charge of foreign insurance conducts an inspection and examination of the operation of the foreign branch in Vietnam at the place where the enterprise is headquartered, it must notify the inspection and examination plan to the Ministry of Finance and provide inspection and examination results to the Ministry of Finance.

With the Fund for Insured Protection, the draft Decree devoted a whole chapter to specifying this content. Accordingly, the draft stipulates that the Fund for Insured Protection may be spent on insurance payments, refunds, indemnifications, or insurance premiums under the provisions of the insurance contract that the insurance company and foreign branches become insolvent at the time the Ministry of Finance issues a decision on termination of application of measures to restore solvency (for the case that insurance enterprises, foreign branches are insolvency) or at the time the judge issues a decision declaring the insurance enterprise is bankrupted (for the case that the insurance enterprise being bankrupt). In addition, this fund will also cover the shortfall between insurance assets and liabilities, as well as the lack of corresponding professional reserves for the insurers designated to receive the portfolio of insurance policies from the insurers in bankruptcy or insolvency.

The draft Decree also stipulates that the expenditure management of the Fund for Insured Protection includes: salaries, allowances, purchasing and repairing properties, service costs and other expenses. The level of expenditure shall comply with the provisions of current law.