What is the payment limit of the Fund for the Protection of the Insured in Vietnam if the insurers go bankrupt?
What is the Fund for the Protection of the Insured in Vietnam?
Pursuant to Article 94 of Decree 46/2023/ND-CP stipulating the Fund for the Protection of the Insured may have the following expenditures:
- Insurance payout, refund of cash surrender value, insurance compensation, or premium refund as prescribed in the insurance policy upon request of the insolvent insurer or branch of foreign non-life insurer under the decision of the Ministry of Finance on termination of measures to restore solvency, or upon request of the bankrupt insurer under the judge’s decision on declaration of bankruptcy;
- The shortfall between the insurance assets and liabilities, as well as shortages of corresponding technical reserves for the insurer that is assigned to receive the transfer the portfolios of insurance policies from the bankrupt or insolvent insurers;
- Expenses for the management of the Fund for the Protection of the Insured, including Cost of property repair, service costs, payment of trust service fees and other expenses. The amount of expenditure shall comply with applicable law;
- Expenses for performing the tasks of the Council decided by the Ministry of Finance in the plan for using the Fund's assets to perform the assigned tasks as prescribed at Point b, Clause 4, Article 93 of Decree 46/2023/ND-CP.
What is the payment limit of the Fund for the Protection of the Insured in Vietnam if the insurers go bankrupt?
What is the payment limit of the Fund for the Protection of the Insured in Vietnam if the insurers go bankrupt?
Pursuant to Article 95, Decree 46/2023/ND-CP has the following provisions:
Payment limit of the Fund for the Protection of the Insured
1. As for life insurance policies, the Fund shall pay up to 90% of the extent of liability of the life insurer, but not more than 200 million VND/insured/policy. The extent of liability of the life insurer corresponding to each case is prescribed as follows:
a) As for policies where the insured event has occurred but the insurance benefits have not been paid, the extent of liability of the insurer is the insurance benefits to be enjoyed as agreed in the insurance policy;
b) As for policies that have savings feature, cash surrender value, and remain valid, the extent of liability of the insurer shall correspond to the cash surrender value of the policy at the time when the competent authority declares the insurer insolvent or bankrupt;
c) As for policies that only have protection feature, have no cash surrender value, and remain valid, the extent of liability of the insurer shall correspond to the premium paid for the remaining period of the insurance policy;
d) As for investment-linked insurance policies that remain valid, the extent of liability of the insurer shall correspond to the value of the customer’s account at the time when the competent authority declares the insurer insolvent or bankrupt;
dd) If a life insurance policy has multiple insured persons, the maximum payment limit of the Fund specified at Points a, b, c and d, Clause 1 of this Article shall apply to each insured person, unless otherwise agreed between the insured and the insurer in the insurance policy.
2. As for health insurance policies, the Fund shall pay up to 90% of the extent of liability of the insurer or branch of foreign non-life insurer, but not more than 200 million VND/insured/policy. The extent of liability of an insurer or a branch of foreign non-life insurer corresponding to each case is specified as follows:
a) As for policies where the insured event has occurred but the insurance benefits have not been paid, the extent of liability of the insurer or branch of foreign non-life insurer is the insurance benefits to be enjoyed as agreed in the insurance policy;
b) As for valid insurance policies, the extent of liability of the insurer or branch of foreign non-life insurer is in proportion to the premium paid for the remaining period of the insurance policy;
c) If a health insurance policy has multiple insured persons, the maximum payment limit of the Fund shall apply to each insured person, unless otherwise agreed between the insured and the insurer/branch in the insurance policy.
3. With respect to non-life insurance policies:
a) As for compulsory insurance policies for civil liability of motor vehicle owners, the Fund shall pay up to the limit of liability of insurers and branches of foreign non-life insurers within the scope of insurance in accordance with applicable laws;
b) As for insurance policies in other types of insurance, the Fund shall pay up to 80% of the extent of liability of the insurer or branch of foreign non-life insurer, but not more than 100 million VND/insured/policy;
c) The extent of liability for non-life insurance policies of non-life insurers and branches of foreign non-life insurers includes insurance benefits to be enjoyed as agreed upon in the insurance policy and premium paid in proportion to the remaining period of the insurance policy.
Thus, according to the provisions of Article 94 of Decree 46/2023/ND-CP and Article 95 of Decree 46/2023/ND-CP, the payment limit of the Fund to protect the insured is as follows:
- As for life insurance policies, the Fund shall pay up to 90% of the extent of liability of the life insurer, but not more than 200 million VND/insured/policy.
- As for non-life insurance policies:
- As for compulsory insurance policies for civil liability of motor vehicle owners, the Fund shall pay up to the limit of liability of insurers and branches of foreign non-life insurers within the scope of insurance in accordance with applicable laws;
- As for insurance policies in other types of insurance, the Fund shall pay up to 80% of the extent of liability of the insurer or branch of foreign non-life insurer, but not more than 100 million VND/insured/policy;
- The extent of liability for non-life insurance policies of non-life insurers and branches of foreign non-life insurers includes insurance benefits to be enjoyed as agreed upon in the insurance policy and premium paid in proportion to the remaining period of the insurance policy.
According to what principles is the payment from the Fund for the Protection of the Insured?
Pursuant to Clause 2, Article 94 of Decree 46/2023/ND-CP regulating the payment from the Fund for Protection of the Insured under Points a and b, Clause 1 of Article 94 of Decree 46/2023/ND-CPshall be made according to the following principles:
- The Fund only pays for the original insurance policy and pays once for each claim for insurance payout, refund of cash surrender value, insurance compensation, or premium refund;
- In case the insurance policies are transferred from the insolvent insurer or branch of foreign non-life insurer, or the bankrupt insurer to another insurer or branch, the amount paid by the Fund according to the limit specified in Article 95 of Decree 46/2023/ND-CP shall be transferred directly to receiving insurer or branch;
- In case the insurer or branch of foreign non-life insurer becomes insolvent, the Fund shall only pay the difference between the amount of money the insurer, branch of non-life insurer has to pay under the insurance policy and the amount the insured receives from the insurer or branch of the foreign non-life insurer;
- In case an insurer goes bankrupt, the Fund will only pay the difference between the amount the insurer has to pay under the insurance policy and the amount the insured receives in accordance with the law on bankruptcy;
- In case the insured is obliged to repay the debt of the insurer or branch of foreign non-life insurer as agreed in the insurance policy and regulations of law, the Fund shall only pay the difference between the amount of money the insured receives according to the limit specified in Article 95 of Decree 46/2023/ND-CP and the amount owed by the insured to the insurer or branch of foreign non-life insurer.
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