Rights and obligations of a reciprocal insurance organization in Vietnam

Rights and obligations of a reciprocal insurance organization in Vietnam (Internet image)

1. What is reciprocal insurance organization?

According to Clause 1, Article 2 of Decree 18/2005/ND-CP, reciprocal insurance organization is a legal corporation that is formed to carry out insurance business for the purpose of helping each other among members as Vietnamese organizations, individuals operating in the same area, branch or living in the same administrative division and facing the same type of risk.

2. Rights and obligations of a reciprocal insurance organization in Vietnam

2.1. Rights of a reciprocal insurance organization in Vietnam

A reciprocal insurance organization shall have the following rights:

- Possess, use and determine assets of its own.

- Carry out business activities according to the provisions of law

- Decide level of premium to be paid by its members; receive or reject premiums according to the provisions set out in the Statute of the reciprocal insurance organization and other relevant law provisions.

- Take the initiative in deciding on insurance services, operating areas, appropriate size and organizational structure.

- Decide distribution of earnings and handle losses in the reciprocal insurance organization according to the provisions set out in the Statute of the reciprocal insurance organization and other relevant law provisions.

- Other rights

(Article 3 of Decree 18/2005/ND-CP)

2.2. Obligations of a reciprocal insurance organization in Vietnam

Specifically, in Article 4 of Decree 18/2005/ND-CP, a reciprocal insurance organization shall have the following obligations:

- Carry out its business within scope, administrative division and services as defined in the establishment and operation license.

- Comply with the provisions of the Law on Accounting and Financial Regime

- Maintain and develop business capital according to the provisions of law.

- Be responsible for payables and other financial obligations in the company with its own scope of assets.

- Ensure the rights of its members and make commitments to them

- Pay taxes and fulfill financial obligations according to the provisions of law.

- Other obligations

3. Statute of a reciprocal insurance organization in Vietnam

According to Clause 3, Article 14 of Decree 18/2005/ND-CP, statute of a reciprocal insurance organization shall include the following information:

- Name and location where headquarter of a reciprocal insurance organization is situated; symbol of a reciprocal insurance organization (if any).

- Purpose of the formation of a reciprocal insurance organization

- Scope, operating area and duration;

- Determination of membership status, rights and obligations of members of a reciprocal insurance organization;

- Voting by members;

- Name, address, rights and obligations of founder members of a reciprocal insurance organization; legal representatives;

- Capital contributed for the formation of a reciprocal insurance organization; method of contribution and refund of capital, other expenses pertaining to the formation of a reciprocal insurance organization;

- Financial regulations; principles and foundations for reduction of insurance premium; division of business performance outcome;

- Organizational structure, apparatus and working regulations of the general membership meeting, Board of Directors and the Control Board; entitlements of managers, executive officials; manner of voting, ratification of resolutions; principles for settling internal disputes;

- Other provisions of the Statute suggested by members but not running contrary to relevant law provisions.

Thanh Rin

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