Insurance fraud is an act of intentional deception or fraud that can be intentional right from the time of participating in insurance or arising after a risk has occurred to the insured in order to appropriate an amount of money from the insurance company that they should not be entitled to (According to the Canadian Insurance Association).
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According to Article 4, Section V of Circular No. 31/2004/TT-BTC of the Ministry of Finance of Vietnam guiding the implementation of Decree No. 118/2003/NĐ-CP of Vietnam’s Government, insurance fraud is defined as follows: “Acts of seeking personal profits in insurance participation, insurance indemnification, insurance sum payment and insurance-complaint settlement means deceitful acts deliberately committed by organizations or individuals in order to make illicit profits in insurance participation, insurance indemnification, insurance sum payment and insurance-complaint settlement”.
However, Circular No. 31/2004/TT-BTC has expired due to Decree No. 118/2003/NĐ-CP, and currently Vietnamese law does not have any specific regulations for insurance fraud.
The nature of insurance fraud is still understood as intentional acts of deception and fraud to get insurance payments. According to Vietnam’s regulations, this act will still be subject to administrative sanctions, or if it constitutes a crime, criminal liability will be prosecuted, specifically in the following regulations:
Administrative sanctions:
According to Decree No. 98/2013/NĐ-CP amended by Decree No. 48/2018/NĐ-CP of Vietnam’s Government:
“Article 14. Penalties for violations against regulations on payment of indemnities and insurance money
3. A fine of from VND 90,000,000 VND to VND 100,000,000 shall be imposed for frauds in insurance business with appropriated amount of under VND 20,000,000 or causing damage of under VND 50,000,000 or not to a degree subject to criminal prosecution, in particular:
a) Collaborating with beneficiary of insurance benefits to pay indemnities or insurance payout against the law;
b) Forging documents, deliberately falsifying information to refuse indemnities or insurance payout upon occurrence of insured events;
c) Forging documents, deliberately falsifying information in the claim on compensation or insurance payout;
d) Causing damage to assets and health for the purpose of claiming insurance benefit unless otherwise prescribed by law.”
Thus, insurance fraud, which is also known as a violation of fraud in the insurance business, where the amount of profiteering is less than VND 20 million will be subject to administrative sanctions with a fine from VND 90,000,000 to VND 100,000,000.
Criminal prosecution:
According to Article 213 of the Criminal Code 2015 amended by the Law on amendments to the Criminal Code 2017 of Vietnam, insurance fraud is prescribed as follows:
1. A person who commits any of the following acts and to illegally obtain an amount of insurance payout of from VND 20,000,000 to under VND 100,000,000 or causes a loss of from VND 50,000,000 to under VND 200,000,000, except in the circumstances specified in Articles 174, 353 and 355 hereof, shall be liable to a fine of from VND 30,000,000 to VND 100,000,000 or face a penalty of up to 03 years' community sentence:
a) Colluding with the insured to receive indemnity or insurance payout against the law;
b) Forging documents, falsifying information to reject insurance claims in an occurrence;
c) Forging documents, falsifying information in the request for indemnity or insurance payout;
d) Causing damage to the offender's property or health to receive insurance benefits unless otherwise prescribed by law.
2. This offense committed in any of the following circumstances carries a fine of from VND 100,000,000 to VND 300,000,000 or a penalty of 01 - 03 years' imprisonment:
a) The offense is committed by an organized group;
b) The offense involves the use of deceitful methods;
b) The amount of insurance payout illegally obtained is from VND 100,000,000 to under VND 500,000,000;
d) The property damage caused by the offense is assessed at from VND 200,000,000 to under VND 1,000,000,000;
dd) Dangerous recidivism.
3. This offense committed in any of the following circumstances carries a penalty of 03 - 07 years' imprisonment:
a) The amount of insurance payout illegally obtained is ≥ VND 500,000,000;
b) The damage is ≥ VND 1,000,000,000.
4. The offender might also be liable to a fine of from VND 10,000,000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 - 05 years.
Thus, when the amount of profit is over VND 20 million, and is enough to constitute a crime of fraud in the insurance business, the offender will be sentenced to non-custodial reform up to a maximum penalty of 07 years in prison.
Le Hai
