Time to recognize revenues from insurance according to Circular 67 in Vietnam

Time to recognize revenues from insurance according to Circular 67 in Vietnam (Internet image) 

On November 2, 2023, the Minister of Finance issued Circular 67/2023/TT-BTC guiding a number of articles of the Law on Insurance Business, Decree 46/2023/ND-CP detailing implementation of some articles of the Law on Insurance Business.

Time to recognize revenues from insurance according to Circular 67 in Vietnam

According to Article 41 of Circular 67/2023/TT-BTC, time to recognize revenues from non-life insurance, life insurance, and health insurance as follows:

(1) Insurers and foreign branches of non-life insurers in Vietnam shall record gross premiums as revenues from insurance business as follows:

- When the insurance policy has been concluded between the insurer or foreign branch of non-life insurer and the policyholder has paid the full premium;

- There is evidence that the insurance policy has been concluded and the policyholder has fully paid the premium;

- When the insurance policy has been concluded and the insurer or foreign branch of non-life insurer has an agreement with the policyholder on the premium payment period as prescribed in points a and c, clause 2, Article 26 of this Circular, the insurer or foreign branch of non-life insurer shall record revenues from the premium that the policyholder must pay according to the agreement in the insurance policy at the beginning of the insurance period;

- When the insurance policy has been concluded and there is an agreement for the policyholder to pay the premium in installments under the insurance policy, the insurer or foreign branch of non-life insurer shall record revenues from the premium corresponding to the period or periods of premium that have incurred, and shall not record revenues from the premium that has not yet come due for the policyholder to pay according to the agreement under the insurance policy.

(2) Time to recognize revenues in the case of co-insurance: non-life insurers and branches of foreign non-life insurers shall record revenues from the original premium collected according to the coinsurance ratio as prescribed in Clause 1 of this Article.

(3) Time to recognize revenues in the case of reinsurance: insurers, foreign branches in Vietnam, reinsurers shall record revenues from reinsurance premiums and other income arising from reinsurance activities according to the reinsurance payment statement that has been confirmed.

(4) Time to recognize revenues in the case of retrocession: insurers, foreign branches in Vietnam, reinsurers shall record retrocession fees, retrocession commissions and other revenues arising from retrocession activities in the same period as the quarterly accounting period in which the original premium or corresponding reinsurance premium is recorded as a revenue.

(5) As for the remaining revenues:  insurers, foreign branches in Vietnam, reinsurers shall record into revenues immediately when a transaction is completed, with evidence of payment approval from the parties, regardless of whether the money has been received or not.

(6) As for expenses recorded as decreases in revenue:  insurers, foreign branches in Vietnam, reinsurers shall record a decease in revenue immediately when a transaction is completed, with evidence of approval from the parties, regardless of whether the money has been received or not.

(7) Revenue from providing insurance auxiliary services: insurers, reinsurers, foreign branches in Vietnam shall record into revenue when the services are completed or when a part of the services are completed, regardless of whether the money has been received or not.

More details can be found in Circular 67/2023/TT-BTC taking effect on November 2, 2023, except for the following cases:

- Points a, b, c, d, dd, i Clause 1, Points b, d Clause 2, Points a, b Clause 3 Article 20, Points a, b Clause 1 Article 29, Articles 33, 34, 45, 46, 47, 48, 51, Clause 1, Article 52, Article 55, Section 3, and Section 4 Chapter IV of Circular 67/2023/TT-BTC come into force as of January 1, 2023.

- Clause 2 and Clause 3, Article 29 of Circular 67/2023/TT-BTC come into force as of July 1, 2024, sales illustration documents of universal linked products must at least have the information in the Appendix I to Circular No. 52/2016/TT-BTC; sales illustration documents of unit linked products must at least have the information in the Appendix II to Circular No. 135/2012/TT-BTC; sales illustration documents of retirement insurance products must at least have the information in the Appendix IV to Circular No. 115/2013/TT-BTC.

Ho Quoc Tuan

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