Regulations on maximum premiums of microinsurance products in Vietnam

Regulations on maximum premiums of microinsurance products in Vietnam (Image from the Internet)

1. Regulations on maximum premiums of microinsurance products in Vietnam

Maximum sums insured and premiums of microinsurance products as per Article 3 of Decree 21/2023/ND-CP are as follows:

- The insurance amount for each microinsurance product protecting against life and health risks shall not exceed 5 times the annual average per capita income of the near-poor threshold in urban areas as regulated by the Government of Vietnam at the time of product implementation.

- The insurance amount for each microinsurance product protecting against asset risks shall not exceed the market value of the insured asset at the time of insurance purchase and shall not exceed 5 times the annual average per capita income of the near-poor threshold in urban areas as regulated by the Government of Vietnam at the time of product implementation.

- The annual insurance premium for each microinsurance contract must not exceed 5% of the annual average per capita income of the near-poor threshold in urban areas as regulated by the Government of Vietnam at the time of product implementation. The insurance premium must correspond to the insurance benefits.

2. Application and procedures for registration of premium calculation methods and bases of microinsurance products in Vietnam

According to Article 6 of Decree 21/2023/ND-CP, the application and procedures for registration of premium calculation methods and bases of microinsurance products are as follows:

- Microinsurance providers must register the basis and methods for calculating insurance premiums for microinsurance products before implementation.

- Microinsurance providers must submit to the Ministry of Finance one set of documents registering the basis and methods for calculating insurance premiums which includes the following documents:

+ A written request to register the basis and methods for calculating insurance premiums as per Form No. 06 specified in the Appendix issued together with Decree 21/2023/ND-CP;

+ A summary of the insurance benefits and exclusion clauses of the microinsurance product expected to be launched;

+ The formulas, methods, bases for calculating net insurance premiums, gross insurance premiums, and explanatory materials on the basis used for calculating insurance premiums for the microinsurance product expected to be launched; principles for increasing and decreasing insurance premiums (if any). These documents must be certified by a microinsurance actuary.

- Within 14 days from the date of receipt of complete valid documents, the Ministry of Finance shall issue a written approval of the basis and methods for calculating insurance premiums of the microinsurance provider. In case of refusal, the Ministry of Finance shall provide a written explanation of the reasons.

- In the case of changes to the basis and methods for calculating insurance premiums for microinsurance products, the microinsurance provider must submit to the Ministry of Finance one set of documents requesting approval for amendments and supplements to the basis and methods for calculating insurance premiums which includes the following documents:

+ A written request to amend and supplement the basis and methods for calculating insurance premiums as per Form No. 06 specified in the Appendix issued together with Decree 21/2023/ND-CP;

+ Explanatory materials on the amended and supplemented contents, certified by a microinsurance actuary.

- Within 14 days from the date of receipt of complete valid documents, the Ministry of Finance shall issue a written approval for the amendments and supplements to the basis and methods for calculating insurance premiums of the microinsurance provider. In case of refusal, the Ministry of Finance shall provide a written explanation of the reasons.

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