When is the policyholder allowed to claim a reduction in insurance premium during days left to the expiry date of the insurance contract in Vietnam?
- When is the policyholder allowed to claim a reduction in insurance premium during days left to the expiry date of the insurance contract in Vietnam?
- What are the responsibilities and legal consequences of breach of information disclosure obligations about an insurance contract in Vietnam?
- What are the principles of conclusion and execution of insurance contracts according to current regulations?
When is the policyholder allowed to claim a reduction in insurance premium during days left to the expiry date of the insurance contract in Vietnam?
Pursuant to Clause 1, Article 23 of the 2022 Law on Insurance Business in Vietnam stipulating as follows:
Changes in levels of insurable risks
1. Whenever there is any change in threshold factors used for calculation of insurance premium that leads to any decrease in risks insured, under contractual terms and conditions, the policyholder may request the insurer or the foreign non-life insurer’s branch to perform one of the following tasks:
a) Reduce insurance premiums during days left to the expiry date of the insurance contract;
b) Increase the sum insured during days left to the expiry date of the insurance contract;
c) Extend the insurance policy period;
d) Expand the scope of insurance cover during days left to the expiry date of the insurance contract.
Thus, whenever there is any change in threshold factors used for calculation of insurance premium that leads to any decrease in risks insured, under contractual terms and conditions, the policyholder may request the insurer or the foreign non-life insurer’s branch to reduce insurance premiums during days left to the expiry date of the insurance contract.
On the contrary, according to the provisions of Clause 3, Article 23 of the 2022 Law on Insurance Business in Vietnam, whenever there is any change in threshold factors used for calculation of insurance premium that results in any increase in insurable risks, under contractual terms and conditions, the insurer or the foreign non-life insurer’s branch may take one of the following actions:
- Re-compute insurance premiums during days left to the expiry date of the insurance contract;
- Decrease the sum insured during days left to the expiry date of the insurance contract;
- Shorten the insurance policy period;
- Limit the scope of insurance cover during days left to the expiry date of the insurance contract.
When is the policyholder allowed to claim a reduction in insurance premium during days left to the expiry date of the insurance contract in Vietnam?
What are the responsibilities and legal consequences of breach of information disclosure obligations about an insurance contract in Vietnam?
Article 22 of the 2022 Law on Insurance Business in Vietnam stipulates the responsibilities and legal consequences for breach of information disclosure obligations as follows:
- When entering into insurance contracts, insurers and foreign non-life insurers’ branches shall have the burden of providing full and accurate information related to insurance contracts; give explanations about contractual terms and conditions to policyholders. Meanwhile, policyholders shall have the burden of providing full and accurate information related to subject matters of insurance for insurers and foreign non-life insurers’ branches.
- Where any policyholder deliberately provides inadequate or untrue information with the aim of concluding an insurance contract to receive insurance indemnity or coverage, the insurer or foreign non-life insurer’s branch may nullify the insurance contract.
To such extent, the insurer or the foreign non-life insurer’s branch shall not be obliged to pay insurance indemnity or coverage and must reimburse insurance premiums that the policyholder pays after deducting reasonable expenses (if any) under contractual terms and conditions. The policyholder is bound to compensate for any possible loss that the insurer or the foreign non-life insurer's branch incurs due to such act.
- Where the insurer or the foreign non-life insurer’s branch deliberately fails to discharge its information disclosure obligations or provides untrue information with the intention of obtaining the insurance contract, the policyholder can terminate the insurance contract and be repaid insurance premiums.
The insurer or the foreign non-life insurer’s branch is bound to compensate for any loss that the policyholder may suffer due to such act.
What are the principles of conclusion and execution of insurance contracts according to current regulations?
Pursuant to the provisions of Article 16 of the 2022 Law on Insurance Business in Vietnam, the conclusion and execution of insurance contracts must adhere to the fundamental principles in civil law and the following principles:
(1) Principle of utmost good faith: Parties to an insurance contract must provide information and implement contractual rights and obligations in a most honest and trustful manner, and must place the absolute mutual trust in each other during the period of conclusion and implementation of insurance contracts;
(2) Principle of insurable interest: Policyholders must be entitled to the insurable benefit varying according to specific types of insurance contract under this Law;
(3) Principle of indemnity: The amount of coverage or indemnity that the insured can get shall not exceed the actual loss incurred in a policy event, unless otherwise agreed upon in the insurance contract;
(4) Principle of subrogation: the insured shall be responsible for giving the insurer or foreign non-life insurer the right to claim the amount of loss from the third party responsible for such loss if such amount falls within the permissible loss limit. This principle shall not apply to life and health insurance contracts;
(5) Principle of unpredictable risk: in order for a risk to be covered or insured against, it must be a sudden or unanticipated one.
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