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

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

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

What are cases eligible to use Fund for the Protection of the Insured in Vietnam?

According to Clause 5, Article 93 of Decree 46/2023/ND-CP, the Fund for the Protection of the Insured is used in the following cases:

- In case an insurer or a branch of foreign non-life insurer becomes insolvent and has taken measures to restore solvency but still cannot rectify it, the insurer or branch may use the Fund for Protection of the Insured under the decision of the Ministry of Finance on termination of measures to restore solvency;

- The insurer goes bankrupt and the Fund for Protection of the Insured is used from the time the judge issues a decision declaring the insurer bankrupt;

- In case the insurer receives the transfer the portfolios of insurance policies from the bankrupt or insolvent insurers, The Fund for the Protection of the Insured will be used to cover the shortfall between the insurance assets and liabilities, as well as shortages of corresponding technical reserves.

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

Specifically, Article 95 of Decree 46/2023/ND-CP stipulates the payment limit of the Fund for the Protection of the Insured as follows:

(1) As for life insurance policies, the Fund shall pay up to 90% of the extent of liability of the life insurer, but not more than 200 million VND/insured/policy. The extent of liability of the life insurer corresponding to each case is prescribed as follows:

- As for policies where the insured event has occurred but the insurance benefits have not been paid, the extent of liability of the insurer is the insurance benefits to be enjoyed as agreed in the insurance policy;

- As for policies that have savings feature, cash surrender value, and remain valid, the extent of liability of the insurer shall correspond to the cash surrender value of the policy at the time when the competent authority declares the insurer insolvent or bankrupt;

- As for policies that only have protection feature, have no cash surrender value, and remain valid, the extent of liability of the insurer shall correspond to the premium paid for the remaining period of the insurance policy;

- As for investment-linked insurance policies that remain valid, the extent of liability of the insurer shall correspond to the value of the customer’s account at the time when the competent authority declares the insurer insolvent or bankrupt;

- If a life insurance policy has multiple insured persons, the maximum payment limit of the Fund specified at Points a, b, c and d, Clause 1 of this Article shall apply to each insured person, unless otherwise agreed between the insured and the insurer in the insurance policy.

(2) As for health insurance policies, the Fund shall pay up to 90% of the extent of liability of the insurer or branch of foreign non-life insurer, but not more than 200 million VND/insured/policy. The extent of liability of an insurer or a branch of foreign non-life insurer corresponding to each case is specified as follows:

- As for policies where the insured event has occurred but the insurance benefits have not been paid, the extent of liability of the insurer or branch of foreign non-life insurer is the insurance benefits to be enjoyed as agreed in the insurance policy;

- As for valid insurance policies, the extent of liability of the insurer or branch of foreign non-life insurer is in proportion to the premium paid for the remaining period of the insurance policy;

- If a health insurance policy has multiple insured persons, the maximum payment limit of the Fund shall apply to each insured person, unless otherwise agreed between the insured and the insurer/branch in the insurance policy.

(3) With respect to non-life insurance policies:

- As for compulsory insurance policies for civil liability of motor vehicle owners, the Fund shall pay up to the limit of liability of insurers and branches of foreign non-life insurers within the scope of insurance in accordance with applicable laws;

- As for insurance policies in other types of insurance, the Fund shall pay up to 80% of the extent of liability of the insurer or branch of foreign non-life insurer, but not more than 100 million VND/insured/policy;

- The extent of liability for non-life insurance policies of non-life insurers and branches of foreign non-life insurers includes insurance benefits to be enjoyed as agreed upon in the insurance policy and premium paid in proportion to the remaining period of the insurance policy.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE