Headlines 30/01/2019 16:27 CH

New regulations on creating technical reserves for life insurance operations are about to take effect

Ngọc Duy

This is one of the contents of the Circular No. 01/2019/TT-BTC amending the Circular No. 50/2017/TT-BTC providing instructions on implementation of the Decree No. 73/2016/ND-CP elaborating on the Law on Insurance Business.

According to the Circular, bases for creating technical reserves for life insurance products will be regulated as follows:

- 100% of Commissioners Standard Ordinary (CSO) mortality table 1980 and other technical basis in conformity with insurance benefits that the insurer has committed to provide for clients with insurance products endorsed by the Ministry of Finance;

(Existing regulations do not specify the rate (%) of setting-aside bases in this table).

- Maximum technical interest rate will not be allowed to exceed 80% of the average interest rate of Government bonds with a term of more than 10 years which have been issued in the latest 24 months before the reserve has been set aside;

(Maximum interest rate increases by 10% and the maturity period is increased from 6 months to 24 months)

- The technical interest rate to be used for setting aside the reserve will not be allowed to exceed the average investment rate in the immediately preceding 04 consecutive quarters of the insurer and the interest rate on the premium of each insurance product.

For more details, please see the Circular No. 01/2019/TT-BTC entering into force on February 16, 2019.

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