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Vietnam: The net premium to be adjusted may not account for more than 100% of insurance premium that has been earned

14:47, 18/11/2020

Recently, the Ministry of Finance of Vietnam has issued the Circular No. 89/2020/TT-BTC on amendments to Circular No. 50/2017/TT-BTC, Circular No. 105/2016/TT-BTC, Circular No. 195/2014/TT-BTC, Circular No. 115/2014/TT-BTC and abolishment of Circular No. 116/2014/TT-BTC.

According to Clause 3 Article 1 of the Circular No. 89/2020/TT-BTC of the Ministry of Finance of Vietnam, sub-point a Point 3.1 Clause 3 of Article 18 of Circular No. 50/2017/TT-BTC on method of setting aside term life insurance, term permanent life insurance, whole life insurance, endowment insurance, and annuity:

- Insurance policies with a term of less than or equal to 5 years: net premium valuation.

- Insurance policies with a term of more than 5 years:

● For term permanent life insurance, whole life insurance, endowment insurance, and annuity: The zillmerisation adjusts 3% of sum insured. The net premium to be adjusted may not account for more than 100% of insurance premium that has been earned. (according to previous provision, the net premium to be adjusted may not account for more than 90% of insurance premium that has been earned);

● For term life insurance: Net premium valuation with adjustment of 12-month full preliminary term.

View more details at the Circular No. 89/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from December 26, 2020.

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