New regulations on insurance auxiliary service
On June 14th, 2019, the National Assembly passed Law on Amendments to some Articles of Law on Insurance Business and Law on Intellectual Property (in other words, Law no 42/2019/QH14), to promptly codify the to-be-enforced obligations within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that came into effect in Vietnam from January 14, 2019.
The most remarkable feature of Law No. 42/2019/QH14 is the introduction of a new and complete definition of insurance auxiliary activities. Accordingly, Insurance auxiliary service (“IAS”) refers to an integral part of insurance business activities, which is implemented by insurers, insurance brokers, and other organizations and individuals for-profit purposes and includes insurance consulting, insurance risk assessment, actuarial analysis, insurance loss assessment, and insurance claim assistance.
More particularly, the five (05) groups of insurance auxiliary services are further interpreted as follows:
- Insurance consulting refers to the activity which provides consulting services on insurance programs, insurance products, insurance risk management and prevention, and reduction of losses.
- Insurance risk assessment refers to the identification, classification, and assessment of the nature and extent of risks, as well as the risk management on people, property, and civil liability used as a basis for insurance participation.
- The actuarial analysis includes collection and analysis of statistical data; calculation of insurance premiums, professional reserves, capital, and solvency margin; evaluation of business performance results and determination of enterprise value to ensure the financial safety of insurers.
- Insurance loss assessment refers to the determination of actual state, cause and loss level; calculation, and allocation liability for compensation used as a basis to resolve insurance claim.
- Insurance claim assistance refers to the activity that assists policyholders, the insured, beneficiaries, or insurers in carrying out procedures-related activities.
Individuals and organizations wishing to provide IAS shall meet some distinctive conditions, most important of which is to obtain relevant IAS certificates following the type of the to-be-provided auxiliary service. Further instructions shall be promulgated in a guideline Decree by the Government.
IAS providers must also comply with insurance-related principles, such as those on the usage of clients’ information and keep such information confidential, participate in mandatory professional liability insurance, and sign written service contracts.
Law No. 42/2019/QH14 entered into force on the 1st of November 2019, however, to minimize the impact on current IAS providers, these entities will have one year (meaning until 31st of October, 2020) to fulfill the new requirements stated in the Law. In case they’re still unqualified at such date, their IAS business shall be suspended until the regulatory conditions are met.