Expenditures of the Fund for the Protection of the Insured in Vietnam

Expenditures of the Fund for the Protection of the Insured in Vietnam (Internet image) 

1. Expenditures of the Fund for the Protection of the Insured

The expenditures of the Fund for the Protection of the Insured in Vietnam are outlined in Article 94 of Decree 46/2023/ND-CP as follows:

- The Insurance Policyholder Protection Fund may be used for the following purposes:

+ Payment of insurance benefits, return of surrender values, payment of insurance claims, or refund of insurance premiums in accordance with the insurance contract, where the insurer or the foreign non-life insurer's branch becomes insolvent at the time the Ministry of Finance issues a decision to terminate the application of measures to restore solvency (in the case of insurers or foreign non-life insurer's branches becoming insolvent) or at the time a judge issues a bankruptcy declaration decision for the insurer (in the case of the insurer's bankruptcy);

+ Cover the shortfall between assets and insurance liabilities, as well as shortfall in the corresponding technical reserves for insurers designated to receive the transfer of insurance contract portfolios from insolvent or bankrupt insurers;

+ Management expenses of the Insurance Policyholder Protection Fund, including: repair costs of assets, service costs, payment of commission fees, and other expenses. The level of expenses is executed in accordance with current legal regulations;

+ Expenses for duties of the Insurance Payment Review Council as decided by the Ministry of Finance in the plan for utilizing the Fund's assets to fulfill the duties assigned, as stipulated in point b clause 4 Article 93 of Decree 46/2023/ND-CP.

- The disbursement from the Insurance Policyholder Protection Fund according to points a and b of clause 1 Article 94 of Decree 46/2023/ND-CP is carried out based on the following principles:

+ The Fund only pays for original insurance contracts and makes a one-time payment for each claim for insurance benefits, return of surrender values, payment of insurance claims, or refund of insurance premiums;

+ In case of transferring insurance contracts from insolvent insurers, foreign non-life insurer's branches, or bankrupt insurers to other insurers, foreign non-life insurer's branches, the amount disbursed by the Fund as per the limit defined in Article 95 of Decree 46/2023/ND-CP is directly transferred to the receiving insurer or foreign non-life insurer's branch;

+ In case the insurer, foreign non-life insurer's branch is insolvent, the Fund only pays the difference between the amount the insurer, foreign non-life insurer's branch must pay under the insurance contract and the amount the insured receives from the insurer, foreign non-life insurer's branch;

+ In the event of insurer bankruptcy, the Fund only pays the difference between the amount the insurer must pay under the insurance contract and the amount the insured receives as per bankruptcy law;

+ If the insured has an obligation to pay debt to the insurer, foreign non-life insurer's branch as per the agreement in the insurance contract and legal regulations, the Fund only pays the difference between the amount the insured receives as per the limit defined in Article 95 of Decree 46/2023/ND-CP and the amount owed by the insured to the insurer, foreign non-life insurer's branch.

2. Payment limit of the Fund for the Protection of the Insured in Vietnam

The payment limit of the Fund for the Protection of the Insured in Vietnam is outlined in Article 95 of Decree 46/2023/ND-CP as follows:

- For life insurance contracts, the Fund pays up to 90% of the insurer's liability, but not more than 200 million VND per insured person per contract. The liability of the life insurer varies as follows:

+ For contracts where the insurance event has occurred but the benefits have not been paid, the insurer's liability is the insurance benefits entitled as per the agreement in the insurance contract;

+ For savings-type contracts with a surrender value and still in force, the insurer's liability corresponds to the surrender value of the contract at the time when the competent state authority declares the insurer insolvent or bankrupt;

+ For protection-type contracts without a surrender value and still in force, the insurer's liability corresponds to the amount of premium paid for the remaining term of the insurance contract;

+ For investment-linked insurance contracts still in force, the insurer's liability corresponds to the client's account value at the time when the competent state authority declares the insurer insolvent or bankrupt;

+ In cases where a life insurance contract covers multiple insured persons, the maximum payment limit of the Fund as stipulated at points a, b, c, and d clause 1 Article 95 of Decree 46/2023/ND-CP applies to each insured person, except where there is a different agreement between the insured persons and the insurer in the insurance contract.

- For health insurance contracts, the Fund pays up to 90% of the insurer's, foreign non-life insurer's branch's liability, but not more than 200 million VND per insured person per contract. The liability of the insurer, foreign non-life insurer's branch varies as follows:

+ For contracts where the insurance event has occurred but the benefits have not been paid, the liability of the insurer, foreign non-life insurer's branch is the entitled insurance benefits as per the agreement in the insurance contract;

+ For insurance contracts still in force, the liability of the insurer, foreign non-life insurer's branch corresponds to the premium paid for the remaining term of the insurance contract;

+ In cases where a health insurance contract covers multiple insured persons, the maximum payment limit of the Fund applies to each insured person, except where there is a different agreement between the insured persons and the insurer, foreign non-life insurer's branch in the insurance contract.

- For non-life insurance contracts:

+ For compulsory civil liability insurance contracts of motor vehicle owners, the Fund pays the maximum liability of the insurer, foreign non-life insurer's branch within the scope of coverage as per current legal regulations;

+ For insurance contracts under other insurance lines as stipulated by law, the Fund pays a maximum of 80% of the insurer's, foreign non-life insurer's branch's liability, but not more than 100 million VND per contract;

+ The liability for non-life insurance contracts of non-life insurers, foreign non-life insurer's branches includes insured benefits as per the agreement in the insurance contract and the premium paid corresponding to the remaining term of the insurance contract.

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