Vietnam: What are the regulations on insurance brokerage commission according to Circular 67/2023/TT-BTC?
What is the definition of insurance brokerage in Vietnam? What are the insurance brokerage activities?
Under the provisions of Clause 6, Article 4 of the Law on Insurance Business 2022, the definition of insurance brokerage is stated as follows:
Insurance brokerage refers to the practice of providing a policyholder with information and advice or counsel on the type of insurance, line of insurance business, insurance product, insurance schemes, terms and conditions, insurance premium, insurer, reinsurer, foreign insurance branch in Vietnam; other service activities related to the negotiation, arrangement for conclusion and execution of insurance or reinsurance contracts or policies.
Thus, the insurance brokerage activities include:
- Providing a policyholder with information and advice or counsel on the type of insurance, line of insurance business, insurance product, insurance schemes, terms and conditions, insurance premium, insurer, reinsurer, and foreign insurance branch in Vietnam;
- Other service activities related to the negotiation, arrangement for conclusion and execution of insurance or reinsurance contracts or policies.
What are the regulations on insurance brokerage commission in Vietnam according to Circular 67/2023/TT-BTC?
Under Circular 67/2023/TT-BTC guiding the Law on Insurance Business and Decree 46/2023/ND-CP as follows:
The regulations on insurance brokerage commission in Vietnam are specified in Article 55 of Circular 67/2023/TT-BTC as follows:
Insurance brokerage commission
1. Insurance brokers are entitled to receive original insurance brokerage commission from insurance premiums.
2. The rate of original insurance brokerage commission and the payment of original insurance brokerage commission are determined based on a written agreement between the insurer, foreign non-life insurance branch, and the insurance broker.
When the policyholder has paid the insurance premium, the insurer or foreign non-life insurance branch is responsible for paying the above-mentioned original insurance brokerage commission from the insurance premium received within the agreed period, but no more than 30 days from the date of receipt of the insurance premium.
3. In all cases, the original insurance brokerage commission shall not exceed 15% of the insurance premiums actually collected by the insurer, foreign non-life insurance branch of each insurance transaction within each insurance policy arranged through the insurance broker.
4. Reinsurance brokerage commission shall be agreed by the parties in accordance with international practice.
Thus, the regulations on insurance brokerage commission in Vietnam are specified above. Insurance brokers are entitled to receive original insurance brokerage commission from insurance premiums.
What are the required contents of an insurance brokerage agreement in Vietnam?
Under the provisions in Article 54 of Circular 67/2023/TT-BTC as follows:
Provision of insurance products through insurance brokers
1. Insurance brokers must enter into a written agreement with customers when providing insurance brokerage services. The agreement must specify the content of the insurance brokerage activities, the term of the agreement, the rights, and obligations of each party.
2. In case an insurance broker is authorized by an insurer or foreign non-life insurance branch to collect insurance premiums, pay insurance benefits or insurance payouts, the authorization must comply with the following principles:
a) The authorization must be made in writing, clearly stating the duration and scope of authorized activities, rights, and obligations of each party;
b) In case an insurance broker is authorized by an insurer or foreign non-life insurance branch to collect insurance premiums:
- The policyholder's responsibility to pay insurance premiums is fulfilled when the policyholder has paid the insurance premiums agreed upon in the insurance policy to the insurance broker;
- When the policyholder has paid the insurance premium, the insurance broker is responsible for paying the above-mentioned insurance premium to the insurer or foreign non-life insurance branch within the agreed period between the insurer or foreign non-life insurance branch and the insurance broker, but no more than 30 days from the date of receipt of the insurance premium.
c) In case an insurance broker is authorized by an insurer or foreign non-life insurance branch to pay insurance benefits or insurance payouts:
- The insurer or foreign non-life insurance branch is still responsible to the insured person or beneficiary for the sum insured that the insurer or foreign non-life insurance branch is obliged to pay to the insured person or beneficiary;
- The insurance broker enterprise is responsible for paying the sum insured to the insured or beneficiary within no more than 5 working days from the date of receiving the sum insured from the insurer or branch of a foreign non-life insurer and not more than the payment period for insurance benefit or insurance payout as prescribed by law.
Insurance brokers may only carry out the authorized activities specified in points b and c of this paragraph if the authorized activities are related to insurance policies arranged by the insurance brokers. Insurance brokers are not allowed to receive remuneration from insurers or foreign non-life insurance branches to carry out the authorized activities specified in points b and c of this clause.
3. Insurance brokers are allowed to cooperate with other insurance brokers that are allowed to operate in Vietnam to carry out original insurance brokerage activities. This cooperation must be agreed in writing, specifying the obligations, rights and interests and the ratio of sharing insurance brokerage commissions of each party.
Thus, the insurance brokerage agreement in Vietnam must specify the content of the insurance brokerage activities, the term of the agreement, and the rights, and obligations of each party.
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