1. Cases in need of transfer of portfolios of insurance contracts in Vietnam
According to Article 91 of the Law on Insurance Business 2022, transfer of the entire portfolio of insurance contracts pertaining to one or several respective lines of insurance, property and liabilities between insurance companies or foreign non-life insurance companies shall occur in the following cases:
– Upon request for division, separation, merger, or consolidation of insurance enterprises or reinsurance enterprises, request the transfer of the list of insurance contracts to the Ministry of Finance.
– Service or business shrinking;
– Split-up, split-off, merger, amalgamation, dissolution, closing or termination of business;
– Application for the business license or permit contains fraudulent information provided with the aim of satisfying licensing conditions;
– Their business activities are not the same as those specified in the business license or permit that they are holding;
– The foreign non-life insurance company or the foreign reinsurance company that has their branches established in Vietnam goes bankrupt or has their business license or permit withdrawn or revoked.
2. Preconditions for transfer of portfolios of insurance contracts in Vietnam
Pursuant to the provisions of Article 92 of the Law on Insurance Business 2022, an insurance company or foreign non-life insurance company’s branch may receive the transferred portfolio of insurance contracts when meeting the following conditions:
– They are rendering the insurance service to be transferred;
– They meet the minimum capital requirements and the capital adequacy or prudential ratios prescribed in this Law;
– They ensure conformance to conditions for eligibility to render insurance services after transfer.
The transfer of the portfolio of insurance contracts must entail the transfer of relevant property put up as technical provisions for all of portfolios of insurance contracts to be transferred.
Rights and obligations agreed upon in an insurance contract that are subject to the process of portfolio transfer shall remain unchanged until that insurance contract expires.
In the case of transfer of the portfolio of insurance contracts prescribed in clause 1 of Article 91 of the Law on Insurance Business 2022, if the value of property is less than the value of technical provisions for the portfolio of insurance contracts to be transferred, the insurance company or foreign non-life insurance company’s branch as the transferee shall agree with the policyholder or the insured on reduction in the sum insured or insurance benefit and other obligations under the insurance contract.
In case of disagreeing over the transfer, the policyholder may unilaterally terminate the insurance contract.
3. Procedures for transfer of insurance contracts in Vietnam
Pursuant to the provisions of Article 93 of the Law on Insurance Business 2022, when transferring the portfolio of insurance contracts, an insurance company or branch of a foreign non-life insurance company shall submit the written request for transfer of the portfolio of insurance contracts to the Ministry of Finance, clearly stating the reasons for such transfer, enclosing the transfer plan and contract. Transfer of the portfolio of insurance contracts shall proceed only after receipt of the written consent to such transfer from the Ministry of Finance.
Within 30 days of receipt of the Ministry of Finance’s consent to such transfer, the insurance company or the foreign non-life insurance company’s branch that transfer the portfolio of insurance contracts shall post the news of such transfer on their websites and notify the transfer in writing to the policyholder.
