Regulations on bankruptcy of insurers and reinsurance companies in Vietnam

Regulations on bankruptcy of insurers and reinsurance companies in Vietnam (Image from the Internet)

1. Regulations on bankruptcy of insurers and reinsurance companies in Vietnam

Regulations on the bankruptcy of insurers and reinsurance companies in Vietnamaccording to Article 116 Law on Insurance Business 2022 are as follows:

- After the Ministry of Finance issues a document to terminate the application of control measures stipulated at point c, clause 11, Article 113 Law on Insurance Business 2022, the insurer or reinsurance business is obliged to submit a request to the court to initiate bankruptcy proceedings according to the provisions of the Bankruptcy Law 2014. In the event that the insurer or reinsurance business does not submit a request to initiate bankruptcy proceedings, the Ministry of Finance will submit the request.

- Upon receiving the request to initiate bankruptcy proceedings for the insurer or reinsurance business as prescribed in clause 1, Article 116 Law on Insurance Business 2022, the court shall initiate proceedings to resolve the bankruptcy declaration, declare the insurer or reinsurance business bankrupt, and immediately apply asset liquidation procedures without convening a creditors' meeting and skipping the business recovery procedures.

- The distribution of assets of the insurer or reinsurance business in the event of bankruptcy shall follow this priority order:

+ Bankruptcy costs;

+ Wage liabilities, severance pay, social insurance, and health insurance for employees;

+ Compensation payments, insurance payments for claims that have been accepted for payment by the insurer or reinsurance business, refund values, account contract values, or insurance premium refunds;

+ Financial obligations to the state; unsecured debts to creditors on the creditor list; secured debts not fully paid due to insufficient collateral value;

+ Owners, capital contributors, and shareholders of the insurer or reinsurance business.

- If the asset value is insufficient to pay according to clause 3, Article 116 Law on Insurance Business 2022, parties within the same priority order will be paid on a proportional basis corresponding to the amount of debt.

- Any content regarding the bankruptcy of insurers and reinsurance companies not specified in Article 116 Law on Insurance Business 2022 shall follow the provisions of the Bankruptcy Law 2014.

2. Rights and obligations of insurers and foreign non-life insurers’ branches in Vietnam

Rights and obligations of insurers and foreign non-life insurers’ branches in Vietnam according to Article 20 Law on Insurance Business 2022 are as follows:

* Insurance enterprises and foreign non-life insurer's branches have the following rights:

- Collect insurance premiums as agreed in the insurance contract;

- Request that policyholders provide complete and honest information related to the conclusion and performance of the insurance contract;

- Cancel the insurance contract as specified in clause 2, Article 22, or unilaterally terminate the performance of the insurance contract as specified in Article 26 Law on Insurance Business 2022;

- Refuse to compensate, pay insurance money in cases not under the insurance liability or excluded from insurance liability as agreed in the insurance contract;

- Request that policyholders take preventive measures and limit losses as prescribed by the Law on Insurance Business 2022 and other relevant legal provisions;

- Demand reimbursement from third parties for amounts that the insurer or foreign non-life insurer's branch has compensated to the insured for property damage, economic benefits, contractual obligations, legal obligations, or civil liability caused by third parties;

- Other rights as stipulated by law.

* Insurance enterprises and foreign non-life insurer's branches have the following obligations:

- Provide the policyholder with an insurance application, questionnaires related to insured risks, insurance subjects, rules, conditions, and insurance clauses;

- Clearly and fully explain the insurance benefits, insurance liability exclusion clauses, rights, and obligations of the policyholder upon concluding the insurance contract;

- Provide proof of the insurance contract conclusion as specified in Article 18 Law on Insurance Business 2022;

- Issue insurance premium receipts to the policyholder as agreed in the insurance contract and legal provisions;

- Compensate and pay insurance money when the insured event occurs;

- Provide written explanations for refusing to compensate or pay insurance money;

- Coordinate with the policyholder to resolve third-party compensation claims for damages within the insurance liability when the insured event occurs;

- Archive insurance contract records according to legal provisions;

- Keep confidential the information provided by the policyholder and the insured, except in cases requested by competent state agencies or with the consent of the policyholder and the insured;

- Other obligations as stipulated by law.

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