Rate of expenses made by motor vehicle fund in Vietnam

Rate of expenses made by motor vehicle fund in Vietnam (Internet image)

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

1. What is Motor vehicle insurance fund?

According to Clause 1, Article 24 of Decree 03/2021/ND-CP,  the Motor vehicle insurance fund refers to 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 of motor vehicles and relevant activities to protect public interest and ensure social safety.

2. Rate of expenses made by motor vehicle fund in Vietnam

Specifically, in Article 5 of Circular 04/2021/TT-BTC (amended in Circular 14/2022/TT-BTC), the rate of expenses made by motor vehicle fund is as follows:

(1) Humanitarian payments: No lower than 25% of total annual contribution to motor vehicle fund and balance of motor vehicle fund in previous years (if any).

(2) Road traffic accident prevention and mitigation: No more than 20% of total annual contribution to motor vehicle fund and balance of motor vehicle fund in previous years (if any).

(3) Organization of education about road traffic safety and compulsory civil liability insurance of motor vehicle users: No more than 15% of total annual contribution to motor vehicle fund and balance of motor vehicle fund of previous years (if any).

(4) Financing for police authorities in cooperating with the Insurance Association of Vietnam (IAV), Council for managing motor vehicle insurance fund and non-life insurance enterprises in preventing, remediating and countering fraud in insurance business and complying with regulations on compulsory civil liability insurance of motor vehicle users: No more than 10% of total annual contribution to motor vehicle fund.

(5) Commendation for organizations and individuals with merits in implementing compulsory civil liability insurance of motor vehicle users, preventing and remediating damage, traffic accidents and ensuring road traffic safety: No more than 5% of total annual contribution to motor vehicle fund. 

(6) Completion and maintenance of database on compulsory civil liability insurance of motor vehicle users: No more than 10% of total annual contribution to motor vehicle fund. 

(7) Operation of ASEAN Program for compulsory civil liability insurance and operation of Vietnamese agency implementing Protocol No. 5 on ASEAN Program for compulsory civil liability insurance: No more than 5% of total annual contribution to motor vehicle fund.

(8) Management of motor vehicle fund: No more than 8% of total annual contribution to motor vehicle fund.

(9) Within the period from March 01, 2021 till the end of COVID-19 as informed by the Prime Minister, the Fund Management Council may propose the Vietnam Insurance Association to report to the Ministry of Finance for consideration and permission to use the Fund balance of previous years for the expenditures specified in  (4), (5), (6), (7), (8);

The expenditure level of each item must not exceed the rate specified in (4), (5), (6), (7), (8) corresponding to a maximum rate 1% as prescribed in Clause 1, Article 26 of Decree 03/2021/ND-CP.

3. Expenses of the Motor Vehicle Insurance Fund in Vietnam

Motor vehicle insurance fund shall be used for:

- Performing humanitarian purposes, to be specific:

In case vehicles that cause accidents cannot be identified, vehicles are not benefitting from insurance and cases of exclusion of insurance liabilities according to Article 13 of Decree 03/2021/ND-CP (other than damage done intentionally by motor vehicle users, operators or accident victims): 30% of insurance liabilities as per the law/person/case in accidents with fatalities; 10% of insurance liabilities as per the law/person/case in case of bodily injuries receiving emergency medical treatment.

Once insurance enterprises have paid advance compensation according to Point b Clause 2 Article 14 of Decree 03/2021/ND-CP, Board for operating motor vehicle insurance fund are responsible for reimbursing the advance payment incurred by the insurance enterprises in case accidents are identified to be within insurance liability exclusion or in case the advance payment exceeds insurance claims when the accidents are within scope of compensation.

- Preventing and remediating traffic accidents.

- Publicizing and educating on road traffic and compulsory civil liability insurance of motor vehicle users.

- Assisting police authorities financially in cooperating with the IAV, Council for managing motor vehicle insurance fund and non-life insurance enterprises in preventing, remediating and anti-fraud in insurance business and compulsory civil liability insurance of motor vehicle users.

- Commending organizations and individuals with merits in implementing compulsory civil liability insurance of motor vehicle users, preventing and remediating damage, traffic accidents and ensuring road traffic safety.

- Finishing and maintaining operation of database on compulsory civil liability insurance of motor vehicle users.

- Financing operation of ASEAN Program for compulsory motor insurance and operation of Vietnamese agency implementing Protocol No. 5 on ASEAN Program for compulsory motor insurance.

- Managing motor vehicle insurance fund: Salary, allowances and salary-based payments (social insurance, health insurance, unemployment insurance, union fees) and commendation for employees of offices of motor vehicle insurance fund;

Responsibility allowances for individuals holding managerial positions in motor vehicle insurance fund and part-time employees of offices of motor vehicle insurance fund; renting offices, purchasing equipment, spending on banking and post services; hiring auditors; spending on operational costs and organizing meetings of motor vehicle insurance fund.  

(Clause 1, Article 27 of Decree 03/2021/ND-CP)

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE