Vietnam: What are the procedures for change of the method and basis of setting aside technical reserves in the following fiscal year?
- What are the requirements for establishment of technical reserves in Vietnam?
- Can insurers in Vietnam change their method of setting aside technical reserves during the fiscal year?
- Vietnam: What are the procedures for change of the method and basis of setting aside technical reserves in the following fiscal year?
What are the requirements for establishment of technical reserves in Vietnam?
Pursuant to the provisions of Article 97 of the Law on Insurance Business 2022, it is stipulated as follows:
Technical provisions
1. Technical provision is a sum of money that an insurance company, reinsurance company or foreign branch in Vietnam needs to set aside to serve the purposes of paying for insured liabilities that may arise from insurance contracts that have already been entered into.
2. Technical provisions can be made when the following requirements are satisfied:
a) They vary among insurance services;
b) Each technical provision is equivalent to part of committed liabilities agreed upon in an insurance contract;
c) They vary between insurance contracts against the subject matters insured inside Vietnam and those outside Vietnam, even in the same insurance service or insurance product, unless otherwise prescribed in law;
d) Property commensurate with the technical provision that has been made is always available and separate from the property commensurate with the provision specified in point c of this clause;
dd) An actuary may be employed to measure and make the technical provision;
e) Regularly conducting the review and assessment of technical provisioning; taking prompt measures to ensure adequate technical provisions used for paying for liabilities of insurance companies, reinsurance companies or foreign branches in Vietnam.
3. Insurance companies, reinsurance companies or foreign branches in Vietnam must apply to seek the approval of technical provisioning methods from the Ministry of Finance.
4. The Government shall impose detailed regulations on technical provisioning, documentation requirements, application procedures and processes for approval of technical provisioning methods.
Accordingly, the establishment of technical reserves must ensure the requirements according to the above regulations.
Vietnam: What are the procedures for change of the method and basis of setting aside technical reserves in the following fiscal year?
Can insurers in Vietnam change their method of setting aside technical reserves during the fiscal year?
Pursuant to the provisions of Clause 1, Article 45 of Decree 46/2023/ND-CP stipulates as follows:
Application and procedures for registration of the method of setting aside technical reserves
1. Insurers, reinsurers, and foreign branches in Vietnam must not change their method of setting aside technical reserves in a fiscal year. Insurers, reinsurers, and foreign branches in Vietnam must seek an approval before changing their method of setting aside technical reserves in the following fiscal year.
According to the above regulations, insurers in Vietnam must not change their method of setting aside technical reserves in a fiscal year
In case of changing, they must seek an approval before changing their method of setting aside technical reserves in the following fiscal year.
What does the dossier for changing the method of setting up professional reserves in the next fiscal year include?
Pursuant to the provisions of Clause 2, Article 45 of Decree 46/2023/ND-CP stipulating application for registration or change of the method and basis of setting aside technical reserves includes:
- Application form for registration or change of the method and basis of setting aside technical reserves;
- Documents explaining and illustrating the expected methods and basis for setting aside technical reserves, certified by Appointed Actuaries.
In case of changing the method or basis of setting aside technical reserves, the explanatory documents must prove that the new method or basis more accurately and comprehensively reflect the responsibilities of the insurer, reinsurer, or foreign branch in Vietnam than the old one.
Vietnam: What are the procedures for change of the method and basis of setting aside technical reserves in the following fiscal year?
Pursuant to the provisions of Article 45 of Decree 46/2023/ND-CP stipulating procedures for changing the method of setting up professional reserves in the next fiscal year as follows:
Application and procedures for registration of the method of setting aside technical reserves
1. Insurers, reinsurers, and foreign branches in Vietnam must not change their method of setting aside technical reserves in a fiscal year. Insurers, reinsurers, and foreign branches in Vietnam must seek an approval before changing their method of setting aside technical reserves in the following fiscal year.
2. Application for registration or change of the method and basis of setting aside technical reserves includes:
a) Application form for registration or change of the method and basis of setting aside technical reserves specified in Appendix IX issued herewith;
b) Documents explaining and illustrating the expected methods and basis for setting aside technical reserves, certified by Appointed Actuaries. In case of changing the method or basis of setting aside technical reserves, the explanatory documents must prove that the new method or basis more accurately and comprehensively reflect the responsibilities of the insurer, reinsurer, or foreign branch in Vietnam than the old one.
3. Within 30 working days of receiving a complete and valid application, the Ministry of Finance shall issue a written approval. If the application is rejected, the Ministry of Finance shall provide an explanation in writing.
....
Accordingly, the procedure for changing the method of setting up professional reserves in the next fiscal year is as follows:
Step 1: The insurance company submits an application to change the method of setting aside technical reserves in the following fiscal year
Step 2: Within 30 working days of receiving a complete and valid application, the Ministry of Finance shall issue a written approval. If the application is rejected, the Ministry of Finance shall provide an explanation in writing.
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