04 cases of termination of membership of mutual microinsurance organizations in Vietnam

04 cases of termination of membership of mutual microinsurance organizations in Vietnam (Internet image)

Regarding this issue, LawNet responded as follows:

1. What is mutual providing microinsurance product?

Mutual providing microinsurance product refers to an entity that has legal personality, independent accounting regime; is founded by members or institutional representatives of members to render not-for-profit microinsurance product in order for members participating in insurance to offer mutual aid or support to each other according to the mechanism of voluntary contribution, financial autonomy and self-responsibility before law if such aid or support is restricted to their assets generated from microinsurance product.

(Clause 23, Article 4 of the Law on Insurance Business 2022)

2. 04 cases of termination of membership of mutual microinsurance organizations in Vietnam

According to Clause 1, Article 33 of Decree 21/2023/ND-CP, membership of a mutual microinsurance organization shall be terminated in the following cases:

(1) The insurance contract signed between the member and the mutual microinsurance organization is terminated or transferred in accordance with regulations of law;

(2) Member of the mutual microinsurance organization that is an individual is dead;

(3) The mutual microinsurance organization is dissolved;

(4) In other cases specified in the Charter of the mutual microinsurance organization.

3. Rights and obligations of members participating in microinsurance in Vietnam

3.1. Rights of members participating in microinsurance in Vietnam

Members participating in microinsurance shall have the following rights:

- Enjoy benefits under the microinsurance contract signed by and between the member with the mutual microinsurance organization;

- Receive incomes distributed by the mutual microinsurance organization according to its charter;

- Be granted equal voting rights, regardless of their premiums paid, in respect of decisions on organizational structure, administration and operation of the mutual microinsurance organization; be provided with adequate, timely and accurate information on business operations, distribution of incomes (in case of positive income) and other matters of the mutual microinsurance organization as prescribed in its charter;

- Participate or authorize others to participate in the GMM of the mutual microinsurance organization;

- Receive part of the remaining assets in proportion to the member’s premiums paid when the mutual microinsurance organization is dissolved;

- Exercise other rights as prescribed by law, terms and conditions of signed microinsurance contracts and charter of the mutual microinsurance organization.

(Clause 1, Article 31 of Decree 21/2023/ND-CP)

3.2. Obligations of members participating in microinsurance in Vietnam

According to Clause 2, Article 31 of Decree 21/2023/ND-CP, members participating in microinsurance shall have the following obligations:

- Pay premiums in full according to payment method and frequency as agreed upon in the signed microinsurance contract;

- Comply with the charter, internal business rules and regulations of the mutual microinsurance organization, and resolutions ratified by the GMM;

- Take responsibility for debts and losses incurred by the mutual microinsurance organization in proportion to the member's premiums paid to the mutual microinsurance organization;

- Perform other obligations as prescribed by law, terms and conditions of signed microinsurance contracts and charter of the mutual microinsurance organization.

4. Regulations on number of members participating in microinsurance in Vietnam

According to Article 32 of Decree 21/2023/ND-CP, the number of members participating in microinsurance is as follows:

(i) After 06 months from the issue date of its license for establishment and operation, the mutual microinsurance organization must maintain a network of at least 1.000 members participating in microinsurance.

(ii) If the number of members of a mutual microinsurance organization is smaller than the minimum number required in Clause 1 of Article 32 of Decree 21/2023/ND-CP within a period of 06 consecutive months, the mutual microinsurance organization shall promptly submit a report to the Ministry of Finance of Vietnam on its actual status, causes, correction plan and period for implementation of such plan.

(iii) AAfter 06 months from the submission of the report specified in Clause 2 of Article 32 of Decree 21/2023/ND-CP, if the mutual microinsurance organization still fails to increase its number of members according to the plan submitted to the Ministry of Finance of Vietnam, the Ministry of Finance of Vietnam shall consider revoking its license for establishment and operation.

The revocation of the license for establishment and operation in this case shall comply with the provisions of Article 14 and Article 16 of Decree 21/2023/ND-CP.

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