What is insurance company? Rights and obligations of insurance companies in Vietnam

What is insurance company? Rights and obligations of insurance companies in Vietnam (Internet image)

1. What is insurance company?

According to Clause 17, Article 4 of the Law on Insurance Business 2022, insurer (also insurance company) refers to an enterprise that is established, managed and run as per the Law on Insurance Business 2022 and other relevant laws to do business in the insurance, reinsurance and reinsurance cession sector.

Insurance companies are classified into life insurance, non-life insurance and health insurance companies.

In there:

- Insurance service (also insurance business sector) refers to an activity of an insurer, non-life insurer’s foreign branch, mutual providing microinsurance product that insures the risk of the insured. That activity is performed by the policyholder’s paying insurance premiums in order for the aforesaid entity to pay indemnity or insurance coverage in case of any policy event that occurs under terms and conditions of an insurance contract.

- Reinsurance service refers to the practice whereby an insurer, a reinsurer or an insurer’s foreign branch in Vietnam is paid a sum of reinsurance premium by another insurer, reinsurer or insurer’s foreign branch in Vietnam; by a foreign insurer, reinsurer or foreign insurance organization to undertake to cover the insured liability.

- Cession refers to the practice whereby an insurer, a reinsurer or an insurer’s foreign branch in Vietnam transfers a portion of their insured liability and pay reinsurance premium to another insurer, reinsurer or insurer’s foreign branch in Vietnam; to a foreign insurer, reinsurer or foreign insurance organization.

2. Rights and obligations of insurers in Vietnam

2.1. Rights of insurers in Vietnam

An insurer and foreign non-life insurer’s branch shall have the following rights:

- Collect insurance premiums under contractual terms and conditions;

- Request the policyholder to provide full and accurate information related to conclusion and execution of the insurance contract;

- Revoke the insurance contract as per clause 2 of Article 22 or unilaterally terminate the insurance contract under Article 26 of the Law on Insurance Business 2022;

- Reject payment of insurance claims or insurance if insurance claims fall outside of the limit of insured liability or fall within the scope of application of the disclaimer clause as provided in the insurance contract;

- Request the policyholder to apply loss prevention and control measures under the Law on Insurance Business 2022 and other regulatory provisions of relevant law;

- Request the third party to repay the amount that the insurer or the foreign non-life insurer’s branch pay as indemnity or coverage to the insured in case of loss or damage to property; economic interests or contractual or lawful obligations; civil liability that the third party causes;

- Other rights prescribed by law.

(Clause 1, Article 20 of the Law on Insurance Business 2022)

2.2. Obligations of insurers in Vietnam

An insurer and a foreign non-life insurer’s branch shall take on the following obligations:

- Provide the policyholder with proposal and questionnaire related to insurable risks, subject matters insured, rules, terms and conditions of insurance;

- Give the policyholder with clear and full explanations about insurance benefits, clauses on disclaimer of insured liability, rights and obligations of the policyholder when concluding the insurance contract;

- Provide the policyholder with the proof of conclusion of the insurance contract prescribed in Article 18 herein;

- Issue premium invoices to the policyholder as agreed upon in the insurance contract and stipulated in regulatory provisions of relevant law;

- Pay indemnity and insurance in case of policy event that occurs;

- Give written explanations as to why payment of any insurance claim or coverage is rejected;

- Cooperate with the policyholder on settling third-party claims for compensation for any losses falling within the limit of insured liability in case of any policy event that occurs;

- Store and retain insurance contract-related documents and records under law;

- Ensure confidentiality and security for information provided by the policyholder or the insured, except as requested by competent regulatory authorities or agreed by the policyholder or the insured;

- Other obligations prescribed by law.

(Clause 2, Article 20 of the Law on Insurance Business 2022)

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE