Law on Insurance Business

Multiple Choice

Q1. Do insurance brokerage businesses have to buy professional liability insurance suitable for insurance brokerage activities?

• Yes

• No

✔ According to point dd clause 2 Article 137 of Law on Insurance Business 2022: "2. Insurance brokerage enterprises have the following obligations:
dd, Buy professional liability insurance suitable for insurance brokerage activities;"

Multiple Choice

Q2. Is the following statement true or false: “Individuals are the subjects allowed to carry out insurance brokerage activities”?

• True

• False

✔Individuals are not allowed to practice insurance brokerage. Only insurance brokerage businesses licensed by the Ministry of Finance can act as insurance brokers.
According to clause 21 Article 4 Law on Insurance Business 2022: “Insurance brokerage enterprises are those which are established, organized and operate under the provisions of this Law and relevant laws for insurance brokerage activities.”

Multiple Choice

Q3. Fill in the blank: “Reinsurance brokerage commission shall be agreed by parties in accordance with ______”

• Vietnamese law

• international practice

• international treaty

• international trade law

✔ According to clause 4 Article 8 Circular No. 50/2017/TT-BTC: "Reinsurance brokerage commission shall be agreed by parties in accordance with international practice."

Multiple Choice

Q4. Is the following statement true or false: “Insurance enterprises and foreign branches are not authorized to authorize insurance broker enterprises to collect insurance premiums”?

• True

• False

✔ According to point b, clause 2, Article 7, Circular No. 50/2017/TT-BTC:
"the authorization shall be made in accordance with the principles below: If the insurance broker is authorized to collect insurance premiums:

- The policyholder’s liability for insurance premiums shall be considered fulfilled if insurance premiums have paid in full to the insurance broker as specified in the insurance policy;

- Upon the policyholder’s payment of insurance premiums, the insurance broker shall transfer the said amount of insurance premium to the insurer/foreign branch within the term as agreed between the insurer/foreign branch and the insurance broker, which does not exceed 30 days from the date on which the amount of insurance premiums is received."

Multiple Choice

Q5. Is the following statement true or false: “Insurance brokers in Vietnam must not deduct 5% of their annual profit after tax to establish a cash reserve fund”?

• True

• False

✔According to Article 54, Decree 46/2023:
"Insurers, reinsurers, insurance brokers and foreign branches in Vietnam must deduct 5% of their annual profit after tax to establish a cash reserve fund. The maximum level of the required cash reserve fund is 10% of the charter capital of the insurer/reinsurer, the allocated capital of the branch."

Multiple Choice

Q6. Is the following statement true or false: “Foreigners are not allowed to operate insurance agents in Vietnam.”?

• True

• False

✔ According to clause 1 Article 125 of the Law on Insurance Business 2022:
"Individuals who conduct insurance agency activities must meet the following conditions:

a) Being Vietnamese citizens permanently residing in Vietnam;

b) Having full civil act capacity;

c) Having suitable insurance agency certificates as specified in Article 130 of this Law."

Multiple Choice

Q7. Types of insurance brokerage enterprises’ activities are:

• Primary insurance brokerage activity, reinsurance brokerage activity.

• Primary insurance brokerage activity, retrocession brokerage activity.

• Reinsurance brokerage activity, retrocession brokerage activity.

✔ According to clause 1 Article 131 Law on Insurance Business 2022: There are two types of insurance brokerage enterprises’ activities: Primary insurance brokerage and reinsurance brokerage.