Expenditures of Motor Vehicle Insurance Fund in Vietnam

Expenditures of Motor Vehicle Insurance Fund in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Motor Vehicle Insurance Fund management and use principles in Vietnam

- Motor Vehicle Insurance Fund (MVIF) refers to a fund established to make humanitarian payments; prevent and limit damage and road traffic accidents; publicize and educate on road traffic safety, compulsory civil liability insurance by motor vehicle owners and relevant activities to protect public interest and ensure social safety.

- MVIF shall be contributed by insurers providing compulsory civil liability insurance of motor vehicles and managed at Insurance Association of Vietnam (IAV); have separate accounts in commercial banks operating in Vietnam and use seals of the IAV.

- MVIF shall be managed and used in a transparent, effective and proper manner according to regulations herein.

(Article 14 of Decree 67/2023/ND-CP)

2. Expenditures of Motor Vehicle Insurance Fund in Vietnam

- MVIF shall be allocated for:

+ Humanitarian assistance:

In cases where accidents are caused by uninsured and unknown vehicles, not covered by insurance and accidents are insurance exclusions according to Clause 2 Article 7 of Decree 67/2023/ND-CP (other than damage done intentionally by accident victims): 30% of maximum coverage per person in case of fatalities and victims with WPI of 81% or more; 10% of maximum coverage per person in case of person in an accident with WPI of from 31% to less than 81%.

Once insurers have paid advance indemnities according to Point b Clause 3 Article 12 of Decree 67/2023/ND-CP, MVIF is responsible for reimbursing the advance payments incurred by the insurers in case the accidents are insurance exclusions or not covered by insurance.

Expenditures must not exceed 30% of total contribution to MVIF each year and the balance of MVIF of preceding years (if any). In case the portion of MVIF allocated for humanitarian assistance for a year is not available, applications for expenditures on humanitarian assistance that are not processed in the year shall be carried forward to be processed in the next.

+ Assistance in construction and installation of equipment for preventing and minimizing damage and accidents in road traffic: Expenditures must not exceed 15% of total contribution to MVIF each year and the balance of MVIF of preceding years (if any).

+ Dissemination and education of road traffic safety and regulations on compulsory civil liability insurance by motor vehicle owners: Expenditures must not exceed 17% of total contribution to MVIF each year and the balance of MVIF of preceding years (if any).

+ Assistance for police authorities in cooperating with the IAV, the Management Council and insurers in prevention and remediation of damage and anti-fraud in insurance business and compliance with regulations on compulsory civil liability insurance by motor vehicle owners: Expenditures must not exceed 10% of total contribution to MVIF each year.

+ Commendation for organizations and individuals with merits in enforcing compulsory civil liability insurance by motor vehicle owners, thereby preventing and remediating damage, traffic accidents and ensuring road traffic safety: Expenditures must not exceed 5% of total contribution to MVIF each year.

+ Completion and maintenance of databases on compulsory civil liability insurance by motor vehicle owners: Expenditures must not exceed 10% of total contribution to MVIF each year.

+ Operations of SEAN Program for compulsory motor vehicle insurance and operations of Vietnamese agencies implementing Protocol No. 5 on ASEAN Program for compulsory motor vehicle insurance: Expenditures must not exceed 5% of total contribution to MVIF each year.

+ Management of MVIF including salary, allowances and other salary-based payments (social insurance, health insurance, unemployment insurance, union fees) and commendation for employees of offices of MVIF; responsibility allowances for individuals holding managerial positions in MVIF and multi-position employees of offices of MVIF; office renting, equipment purchase, banking and post services; auditor hiring; business trip expenses and meetings of MVIF: Expenditures must not exceed 8% of total contribution to MVIF each year.

+ In case the Prime Minister issues a decision on declaration of emergency situation of disasters according to regulations of law on prevention and control of natural disasters or declaration of class-A communicable diseases according to regulations of law on prevention and control of communicable diseases, the Management Council may use the balance of MVIF of preceding years for expenditure items prescribed in Points d, dd, e, g and h Clause 1 of Article 17 of Decree 67/2023/ND-CP; the total expenditure rate must not exceed the rates prescribed in Points d, dd, e, g and h Clause 1 of Article 17 of Decree 67/2023/ND-CP and is equivalent to 1% of contributions to MVIF.

- The IAV shall take priority over implemting items of expenditure for humanitarian assistance, prevention and remediation of damage and road traffic accidents, expenditure for dissemination and education, thereby ensuring compliance with the goal of establishing MVIF.

(Article 17 of Decree 67/2023/ND-CP)

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