CIRCULAR

STIPULATING ACTIVITIES OF INSURANCE AGENTS AND COLLABORATORS

In furtherance of Decree No. 100-CP of December 18, 1993 of the Government on insurance business, Decree No. 74-CP of June 14, 1997 of the Government amending and supplementing a number of articles of Decree No. 100-CP of December 18, 1993 of the Government on insurance business; in order to protect the legitimate rights and interests of the insured, create favorable conditions for business activities of insurance enterprises and ensure a healthy competition, the Ministry of Finance hereby provides for the activities of insurance agents and collaborators as follows:

I. GENERAL PROVISIONS

1. Interpretation of terms.

The following terms in this Circular are construed as follows:

Insurance agents (hereafter referred to as agents for short) are individuals who are authorized by insurance enterprises to sell insurance products to the people on the latter's behalf and fully meet the conditions stated in Clause 9, Article 1 of Decree No.74-CP of June 14, 1997 of the Government.

Insurance collaborators (hereafter referred to as collaborators for short) are economic organizations that have legal person status, are authorized by insurance enterprises to sell insurance products to the people on behalf of the insurance enterprises on the basis of collaborator's contracts and are affiliates of the insurance enterprises.

Agents' and collaborators' activities are a mode of insurance sale thereby agents and collaborators are responsible for arranging the signing of insurance contracts between the insurance enterprises and insurance purchasers under the authorization of insurance enterprises on the basis of agent's or collaborator's contracts so as to enjoy insurance commissions.

2. Insurance enterprises are not allowed to use and pay commissions to organizations and individuals that are not qualified for undertaking collaborators' or agents' activities.

3. Insurance enterprises shall be accountable before law and to the insured for activities carried out by their agents and collaborators under the signed agent's or collaborator's contracts and in accordance with current provisions of law.

4. The insurance commission regime applicable to agents and collaborators shall comply with the provisions of Circular No.76-TC/TCNH of October 25, 1995 of the Ministry of Finance prescribing the insurance commission regime, Circular No.02-TC/TCNH of January 4, 1996 guiding the amendment and supplement to the application of the insurance commission regime, and with current provisions of law.

II. CONDITIONS FOR AGENTS' AND COLLABORATORS' ACTIVITIES

1. Insurance agents.

To work as agents, individuals must fully satisfy the conditions stated in Clause 9, Article 1 of Decree No. 74-CP of June 14, 1997 of the Government amending and supplementing a number of Articles of Decree No. 100-CP of December 18, 1993 of the Government on insurance business.

2. Insurance collaborators.

Collaborators are economic organizations that have legal person status, are legally established and operate in Vietnam in accordance with current provisions of law.

The undertaking of collaborators' activities shall not contradict the functions and tasks of the organizations acting as collaborators and run counter to the interests of the insurance enterprises.

III. RIGHTS AND OBLIGATIONS OF INSURANCE ENTERPRISES AND INSURANCE AGENTS AND COLLABORATORS

1. Insurance enterprises shall have the following rights:

- To select agents, collaborators, the structure and forms of agency and collaboration, to sign agent's or collaborator's contract.

- To determine the levels of commissions in the agent's or collaborator's contracts according to current provisions of law.

- To receive and manage escrow deposits or property mortgaged by agents and collaborators (if so agreed upon in the agent's or collaborator's contracts).

- To request agents and collaborators to pay collected insurance premiums according to the mutually agreed mode.

- To authorize agents and collaborators to perform part of the work under the insurance enterprise's charge as determined in the agent's or collaborator's contracts.

- To supervise and monitor the performance of agent's or collaborator's contracts.

- To enjoy other legitimate interests brought about by agents' or collaborators' activities.

2. Insurance enterprises shall have to fulfill the following obligations:

- To sign agent's or collaborator's contracts according to current provisions of law.

- To organize training courses for agents and grant certificates to agents that have completed such courses.

- To provide guidance and necessary information relating to agents' and collaborators' activities and take responsibility for the accuracy of such information.

- To discharge responsibilities arising from the signed agent's or collaborator's contracts.

- To pay commissions as pledged in the agent's or collaborator's contracts and in accordance with the provisions of law.

- To return to agents and collaborators escrow deposits or mortgaged property (if so mutually agreed upon) in case of termination of agent's or collaborator's contracts.

- To take responsibility for damage or losses caused by their agents' or collaborators' activities according to the agent's or collaborator's contracts and relevant provisions of law.

- To separately follow insurance contracts directly signed by themselves and those arranged by their agents and collaborators in order to ensure that commissions are paid according to current provisions of law.

- To submit to the supervision by competent State agencies over the activities undertaken by their agents and collaborators.

3. Agents and collaborators shall have the following rights:

- To select and sign agent's or collaborator's contracts with suitable insurance enterprises in accordance with current provisions of law.

- To participate in training courses to foster and improve agents' or collaborators' skills, which are organized by the concerned insurance enterprises.

- To be provided with information necessary for their activities and other conditions for the performance of agent's or collaborator's contracts.

- To receive commissions and other legitimate interests brought about by their activities. Insurance commissions earned according to the provisions of collaborator's contracts shall be regarded as such collaborators' incomes and used according to current financial regulations.

- To request insurance enterprises to return their escrow deposits or mortgaged property (if so agreed in the agent's or collaborator's contracts) upon the termination of the contracts.

4. Agents and collaborators shall have the following obligations:

- To introduce and offer by themselves the sale of insurance and other related activities at the request of the insurance enterprises; to supply sufficient and accurate information to the insured in the process of arranging the signing and performance of insurance contracts and settling complaints...within the scope of responsibility authorized in the agent's or collaborator's contracts.

- To properly fulfill their commitments made in the agent's or collaborator's contracts signed with the insurance enterprises.

- Not to simultaneously act as agent for another insurance enterprise it it is not so consented in writing by the insurance enterprise for which they are acting as agents.

- Not to simultaneously undertake other activities for the interests contrary to those of the insurance enterprise for which they are acting as its agents.

- To deposit into an escrow account or to mortgage property to the insurance enterprise (if so agreed in the agent's or collaborator's contracts).

- To submit to the control and supervision by the insurance enterprises, observe the regime of periodically reporting their activities at the request of the insurance enterprises.

- To keep records to monitor their revenues and expenditures according to current regulations on accounting and statistics.

- To submit to the control and supervision by competent State agencies and fulfill all financial obligations towards the State according to current provisions of law.

IV. AGENT'S AND COLABORATOR'S CONTRACTS

1. Agent's or collaborator's contracts must be made in writing.

2. Agent's or collaborator's contracts must include the following principal contents:

- Full names and addresses of the parties to the agent's or collaborator's contract;

- Kinds of insurance products and services that the agent or collaborator is allowed to provide;

- The agent's or collaborator's scope and geographical areas of operation;

- The involved parties' rights and obligations as agreed upon according to the provisions in Section III of this Circular and relevant legal documents;

- The levels of commissions and other expenses;

- The mode, time and location of payment of:

+ Collected insurance premiums;

+ Commissions and other expenses;

+ Escrow deposits or return of the mortgaged property.

- The provisions on rewards, fines and damage compensation;

- The provisions on the information supply and reporting to the insurance enterprises;

- The effective term of the agent's or collaborator's contract;

- Settlement of disputes.

Besides, the two parties may add other matters such as advertisement, marketing, training, material and financial assistance...in accordance with current provisions of law.

3. Any amendments or supplements to the agent's or collaborator's contract shall become legally binding only when they are approved in writing by the two parties.

4. The involved parties are obliged to correctly fulfill the commitments made in the contract. The violating party shall take material responsibility to the other party. Fines on the contract breaches and compensation for damage shall comply with current provisions of law unless otherwise provided for in the contract.

5. An agent's or collaborator's contract shall terminate in the following cases:

- Upon the expiry of the effective term of the contract and the involved parties have no agreement to extend it;

- The two parties agree to terminate the contract before its expiry;

- It is invalidated according to current provisions of law on the invalidation of economic contracts;

- One of the involved parties unilaterally terminates the contract. In this case, the party that unilaterally terminates the contract shall have to compensate for damage (if any) incurred by the other party as a result of the termination of the contract.

V. IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its signing and applies to insurance agents' or collaborators' activities in Vietnam. Insurance enterprises, agents and collaborators shall have to carry out agents' and collaborators' activities in conformity with this Circular.

2. All violations of this Circular shall, depending on their seriousness, be handled according to laws currently in force.

Any difficulty or problem arising in the course of implementation should be promptly reported to the Ministry of Finance for consideration and settlement.