What are regulations on technical provisions regarding finance, accounting and financial reporting of insurance companies in Vietnam?

What are regulations on technical provisions regarding finance, accounting and financial reporting of insurance companies in Vietnam?

Pursuant to Article 97 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating technical provisions regarding finance, accounting and financial reporting of insurance companies in Vietnam as follows:

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.

What are regulations on reserve funds regarding finance, accounting and financial reporting of insurance companies in Vietnam?

Pursuant to Article 98 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating reserve funds regarding finance, accounting and financial reporting of insurance companies in Vietnam as follows:

1. Insurance companies, reinsurance companies or foreign branches in Vietnam must establish compulsory reserve funds to supplement equity and ensure conformance to solvency requirements.

2. Each year, a compulsory reserve fund shall receive 05% of total after-tax profit set aside until it meets the maximum limit prescribed in the Government’s regulations.

3. In addition to compulsory reserve funds, insurance companies, reinsurance companies and foreign branches in Vietnam may set up other reserve funds that receive fiscal years' after-tax profits set aside according to charters of insurance companies, reinsurance companies, or organizational and operational statutes of foreign branches in Vietnam.

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