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THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
144/1999/TT-BTC
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Hanoi, December 13, 1999
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CIRCULAR
PRESCRIBING THE
REGIME OF LIFE INSURANCE COMMISSIONS
Pursuant to the Governments Decree No. 100/CP
of December 18, 1993 on insurance business and Decree No. 74/CP of June 14,
1997 amending and supplementing a number of articles of Decree No. 100/CP of
December 18, 1993 on insurance business;
Pursuant to the Finance Ministrys Circular No. 76-TC/TCNH of October 25, 1995
providing for the regime of insurance commissions and Circular No. 02-TC/TCNH
of January 4, 1996 guiding the amendment of and supplement to the
implementation of the regime of insurance commissions;
The Ministry of Finance hereby provides for the life insurance commission
regime as follows:
I.
GENERAL PROVISIONS
1. Subject to this Circular are insurance
enterprises, insurance brokerage organizations legally established and
conducting life insurance activities in Vietnam, insurance agents and
collaborators that have signed insurance agency or collaboration contracts with
insurance enterprises.
2. Life insurance business activities consist of
the following basic types of insurance:
2.1. Term insurance means a type of life
insurance characterized by the insurance being paid in a lump sum on the death
of the insured within a certain period as prescribed in the insurance policy.
2.2. Pure endowment insurance is a type of life
insurance characterized by the insurance being paid in a lump sum to the
insured who is still alive after the expiry of the insurance period as
prescribed in the insurance policy.
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2.4. Whole-life insurance is a type of life
insurance characterized by the insurance being paid on the death of the insured
at any point of time as prescribed in the insurance policy.
2.5. Annuity insurance is a type of life
insurance characterized by the insurance being paid on a periodic basis as
prescribed in the insurance policy.
2.6. Group life insurance is the provision of
life insurance services to a group of people sharing a certain relation.
3. Other human insurance is a type of insurance
for risks related to human beings (insurance for personal accidents, insurance
for surgery costs, insurance for medical allowances...).
II.
SPECIFIC PROVISIONS
1. The following subjects shall be entitled to
life insurance commission:
1.1. Insurance agents and collaborators,
according to the Finance Ministry’s current regulations on
operations of insurance agents and collaborators.
1.2. Insurance brokerage organizations,
according to the Government’s current stipulations on
insurance business.
2. The following subject shall not be entitled
to life insurance commission:
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- Organizations and individuals that directly
buy insurance.
- Officials and employees of insurance
enterprises.
- Agents and collaborators that have not yet
signed life insurance exploitation contracts with insurance enterprises.
3. Insurance commission rates:
3.1. For types of individual life insurance and
group life insurance:
Insurance enterprises must base themselves on
the index of maximum commission rates applicable to various types of life
insurance prescribed in the Appendix attached to this Circular to set the
commission rate for each of their life insurance products.
3.2. For other human insurance types with a
period of one year or less: The maximum commission rate is equal to 10% of the
all-in insurance.
3.3. For those types of life insurance not
prescribed at Point 2, Section I of this Circular and other human insurance
types with a period of more than one year, the insurance enterprises must
submit to the Ministry of Finance for approval their commission rates before
application.
4. Regarding the commission-spending level and
accounting:
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The level of commissions payable to those
entitled to and the level of insurance commissions used for agency management
can only be spent within the limit of the maximum rate prescribed in the index
of commission rates in the Appendix of this Circular.
4.2. Regarding the accounting of commission
spending: The expense for life insurance commissions shall be accounted in the
direct expenses for insurance business of insurance enterprises.
At the end of a fiscal year, the insurance
enterprises may carry forward the remaining (unspent) commission to the
following year.
5. Use of commissions:
Insurance enterprises may use life insurance
commissions to make payments directly to their agents, collaborators and
insurance brokerage organizations, that have brought about services for
insurance enterprises, to cover such expenses as initial exploitation expense
(exploration, persuasion and recommendation of clients); expense for collection
of insurance premiums, expense for follow-up of insurance policies and
persuasion of clients to maintain insurance policies.
In addition, insurance enterprises may also use
life insurance commissions for agency management such as: Expense for the
agency manager; incentives for agents to overfulfill the norms on revenues and
number of insurance policies, to ensure a high rate of maintenance of insurance
policies; and expense for implementation of some welfare policies and for
creation of conditions for stabilizing agents’ incomes.
6. Inspection work:
The Ministry of Finance shall have to inspect
and supervise the observance of the regime of life insurance commissions as
well as business activities of insurance enterprises and insurance brokerage
organizations according to current provisions of law.
III.
ORGANIZATION OF IMPLEMENTATION
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2. Basing themselves on the contents of the
Circular, the insurance enterprises shall formulate appropriate commission
regimes applicable to their life insurance activities and send them to the
Ministry of Finance for management and supervision.
3. All violations of the life insurance
commission regime prescribed in this Circular shall be handled according to the
current provisions of law.
If, in the course of implementation, any
problems arise, insurance enterprises should promptly report them to the
Ministry of Finance for consideration and settlement.
FOR THE MINISTER OF FINANCE
VICE MINISTER
Tran Van Ta
TABLE OF MAXIMUM
COMMISSION RATES APPLICABLE TO VARIOUS TYPES OF LIFE INSURANCE
(Issued
together with Circular No. 144/1999/TT-BTC of December 13, 1999 of the Ministry
of Finance)
I. FOR
TYPES OF INDIVIDUAL LIFE INSURANCE:
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Calculation
unit: %
Maximum
commission rate calculated on the basis of all-in insurance premium
Types of
life insurance
Mode of
periodic payment of premiums
The first
year of the policy
The second
year of the policy
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Mode of
lump-sum payment of premiums
1. Term insurance
40
20
15
3
2. Pure endowment insurance
15
10
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1.5
3. Combined insurance
- With insurance period of 10 years or less
- With insurance period of over 10 years
25
40
7
10
5
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1.5
2
4. Whole-life insurance
30
20
15
3
5. Annuity
15
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7
1.5
B. Combination of separate types of insurance:
Life insurance commissions shall be calculated on the basis of the total
commissions of the above-mentioned separate types of life insurance.
II. For group life insurance types: The
maximum commission rate shall be equal to 50% of the corresponding rate
applicable to the individual life insurance of the same type.-
THE MINISTRY OF FINANCE
Tran Van Ta