What is compulsory insurance? What are the classes of compulsory insurance in Vietnam

What is compulsory insurance?

According to the provisions of Clause 1, Article 8 of the Law on Insurance Business 2022, compulsory insurance means an insurance product or plan serving the purposes of protection of public interest, environment and social safety.

Classes of compulsory insurance in Vietnam

According to the provisions of Clause 2, Article 8 of the Law on Insurance Business 2022, classes of compulsory insurance, including:

- Compulsory insurance against civil liability of vehicle owner;

- Compulsory fire and explosion insurance;

- Compulsory insurance in the construction industry;

- Classes of compulsory insurance prescribed in other laws that meet the regulations laid down above.

Entities and persons eligible for participation in compulsory insurance schemes shall be obliged to buy compulsory insurance schemes and may opt to take compulsory insurance with authorized insurers and foreign non-life insurers' branches.

Insurers and foreign non-life insurers’ branches obtaining permission to provide compulsory insurance shall not be allowed to refuse to sell their insurance to entities and persons fully meeting the eligibility conditions for buying compulsory insurance under law.

Vietnam: What is compulsory insurance? (Image from the internet)

Prohibited acts regarding insurance business activities in Vietnam

Insurance business includes insurance, reinsurance, reinsurance ceding and insurance brokerage business activities related to insurance business including insurance agency, insurance brokerage, insurance ancillary services.

Organizations and individuals engaged in insurance business are strictly prohibited from performing the following acts:

- Insurance, reinsurance, reinsurance ceding and insurance brokerage business activities are performed when none of establishment permits or business licences is obtained.

- Insurance, reinsurance, reinsurance ceding and insurance brokerage business activities are performed outside of the permissible scope of business.

- Insurance brokerage, insurance ancillary service business is done when eligibility conditions for doing so as prescribed in law are not met.

- The following fraudulent acts are committed:

+ Conspire with insurance beneficiaries to settle insurance claims and pay insurance illegally;

+ Forge documents, intentionally falsify information shown in documents required for filing claims for insurance coverage and payout;

+ Forge documents, deliberately falsify information to reject payment of insurance indemnities and insurance when insurable events happen;

+ Cause self-harm or bodily self-injury or deliberately self-inflicted loss or damage to property to claim insurance benefits.

- Using threats and force to obtain the consent to insurance contracts.

Mai Thanh Loi

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