Issue 030323-Rights and obligations of insurers, foreign non-life insurers’s branches and the policyholder

Dear Valued Clients,

Conclusion insurance contracts is one of the important steps to determine the rights and obligations between the insurers, foreign non-life insurers’ branches with the policyholder. Having a clear understanding of the rights and obligations between the insurers, foreign non-life insurers’ branches with the policyholder will help the parties to raise their awareness in fulfilling their obligations as well as ensure insurance benefits when participating.

Therefore, in this Legal Article, we would like to summarize the information about rights and obligations of insurers, foreign non-life insurers’ branches as the policyholder in accordance with the provisions of the Law on Insurance Business No. 08/2022/QH15 of the National Assembly dated June 16, 2022 (“Law on Insurance Business 2022”).

1. Rights and obligations of insurers and foreign non-life insurers’ branches

 1.1. Rights of insurers and foreign non-life insurers’ branches

According to the provisions of Article 20.1 of Law on Insurance Business 2022, insurers[1] and foreign non-life insurers’ branches[2] have the following rights:

(i) Collect insurance premiums under contractual terms and conditions;

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

(iii) Revoke the insurance contract specified in Article 22.2 of the Law on Insurance Business 2022 or unilaterally terminate the insurance contract under Article 26 of the Law on Insurance Business 2022;

(iv) 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;

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

(vi) 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;

(vii) Other rights prescribed by law.

1.2. Obligations of insurers and foreign non-life insurers’ branches

Insurers and foreign non-life insurers’ branches have the following obligations[3]:

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

(ii) 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;

(iii) Provide the policyholder with the proof of conclusion of the insurance contract prescribed in Article 18 of the Law on Insurance Business 2022;

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

(v) Pay indemnity and insurance in case of policy event that occurs;

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

(vii) 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;

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

(ix) 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;

(x) Other obligations prescribed by law.

2. Rights and obligations of the policyholder

Similar to insurers  and foreign non-life insurers’ branches, the policyholder[4] will have the following rights and obligations:

2.1. Rights of the policyholder

According to the provisions of Article 21.1 of Law on Insurance Business 2022, the policyholder will have the following rights and obligations:

(i) Decide on the insurer or the foreign non-life insurer’s branch with which the policyholder may conclude the insurance contract;

(ii) Request the insurer or the foreign non-life insurer’s branch to provide proposal and questionnaire related to risks covered against, subject matters insured, rules, terms and conditions of insurance, and interpret contractual terms and conditions;

(iii) Request the insurer or the foreign non-life insurer’s branch to provide proof of conclusion of the insurance contract referred to in Article 18 of Law on Insurance Business 2022;

(iv) Request the insurer or the foreign non-life insurer’s branch to issue premium invoices as agreed upon in the insurance contract and stipulated in regulatory provisions of relevant law;

(v) Revoke the insurance contract under Article 22.3 and Article 35 of Law on Insurance Business 2022 or unilaterally terminate the insurance contract under Article 26 of Law on Insurance Business 2022;

(vi) Request the insurer or the foreign non-life insurer’s branch to pay insurance claims or coverage or indemnity in case of any policy event that occurs;

(vii) Transfer the insurance contract under contractual terms and conditions or as provided by law;

(viii) Other rights stipulated by law.

2.2. Obligations of the policyholder

Regarding obligations, the policyholder has the following obligations[5]:

(i) Provide all full and accurate information related to the insurance contract upon the request of the insurer or the foreign non-life insurer’s branch;

(ii) Carefully read and understand policy terms and conditions, rights and obligations of the policyholder when entering into the insurance contract, and other contents of the insurance contract;

(iii) Pay insurance premiums in full and on time under contractual terms and conditions;

(iv) Inform the insurer or the foreign non-life insurer’s branch of cases in which it is likely to assume aggregated or alleviated risks or additional liability during the contract term as agreed upon in the insurance contract;

(v) Inform the insurer or the foreign non-life insurer’s branch of occurrence of any policy event as agreed upon in the insurance contract; cooperate with the insurer or the foreign non-life insurer’s branch on insurance loss assessment;

(vi) Apply loss prevention and control measures in accordance with Law on Insurance Business 2022 and other regulatory provisions of relevant law;

(vii) Other obligations prescribed by law.

As always, we hope you find this Legal Article useful and look forward to working with you in the future.

Kind regards,

ENT LAW LLC

The full version of this Legal Article can be found here.

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[1] Article 4.17 of Law on Insurance Business 2022.

“Insurer (also insurance company) refers to an enterprise that is established, managed and run as per this Law 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.”

[2] Article 4.20 of Law on Insurance Business 2022.

“Foreign reinsurer’s branch refers to the subsidiary of a parent foreign insurer that has no legal personality and is offered guarantee from the parent reinsurer for their obligations and commitments arising during their existence period in Vietnam.”

[3] Article 20.2 of Law on Insurance Business 2022.

[4] Article 4.24 of Law on Insurance Business 2022.

“Policyholder (also the assured) refers to an entity or person entering into an insurance contract with an insurer, foreign non-life insurer’s branch or mutual providing microinsurance product and paying insurance premiums.”

[5] Article 21.2 of Law on Insurance Business 2022.