On July 1, 2016, the Vietnam government enacted with immediate effect Decree No. 73/2016/ND-CP guiding the Law on Insurance Business 2000, as amended in 2010 (Decree 73). Decree 73 replaces Decree No. 45/2007/ND-CP (and its amendments) and Decree No. 46/2007/ND-CP.
Decree 73 introduces the following key changes to the reinsurance business in Vietnam:
As a result, foreign insurers operating in Vietnam are now more restricted in transferring the premium collected in a country to associated/parent insurers through overseas reinsurance placements. It is also anticipated that the cap of 90 percent could then force domestic capacity to be utilized more. This should also make insurers more liable to insureds.
Although this could be a positive step forward to the local industry, some local insurers have criticized the changes for limiting their liquidity. The Ministry of Finance, however, is allowed to issue guiding circulars on reinsurance business, and so further changes may be introduced in the future.
If you have any questions about Decree 73 or reinsurance business in Vietnam, please contact Tilleke & Gibbins at [email protected] or +84 8 3936 2068.