New regulations on the method and basis for calculating motor vehicle insurance premiums.

The Ministry of Finance has issued Circular 67/2023/TT-BTC guiding some provisions of the 2022 Law on Insurance Business and Government Decree 46/2023/ND-CP dated July 1, 2023, detailing the implementation of some provisions of the Law on Insurance Business. This includes new regulations on the method and basis for calculating insurance premiums for motor vehicle insurance.

Methods and basis for calculating insurance premiums for motor vehicle insurance.

Article 25 of Circular 67/2023/TT-BTC provides guidance on the method and basis for calculating insurance premiums for motor vehicle insurance.

Specifically, non-life insurance companies and branches of foreign non-life insurance companies shall proactively apply appropriate methods for calculating motor vehicle insurance premiums, ensuring that they meet at least the following requirements:

Insurance premiums are structured to ensure compliance with the provisions of point d, clause 2, Article 87 of the Law on Insurance Business.

The insurance premium includes the net premium, product deployment costs, and projected profit. The net premium, insurance product deployment costs, and projected profit are calculated according to the provisions of Clauses 2, 3, and 4 of Article 25 of Circular 67/2023/TT-BTC.

The following risk-related factors are applied as the basis for calculating insurance premiums, including: Type of motor vehicle as defined by road traffic laws; Business purpose (commercial vehicle, non-commercial vehicle); Purpose of use of the motor vehicle (passenger vehicle, cargo vehicle, specialized vehicle); Year of manufacture of the motor vehicle.

In cases where additional risk-related factors are applied besides those mentioned above, non-life insurance companies and branches of foreign non-life insurance companies must ensure that they have data as prescribed in point a, clause 2, Article 25 of Circular 67/2023/TT-BTC.

Specify the circumstances and grounds for increasing or decreasing insurance premiums.

Increases in insurance premiums must be based on factors that increase the insured risk.

Premium reductions must ensure that in all cases the premium after the reduction is not lower than the net premium and is based on one or more factors that reduce, disperse, or share the risk or reduce the cost of deploying motor vehicle insurance products, including the number of insured vehicles, the choice of deductible, the amount of excess, claims history, product distribution method, and other factors (if any). In the case of premium reduction due to direct sales, the reduced premium amount shall not exceed the insurance agent commission rate as stipulated in Article 51 of Circular 67/2023/TT-BTC;

The premium for supplementary insurance clauses corresponds to the conditions and responsibilities covered; if the supplementary clause expands the scope of coverage, the premium must increase, and if the clause narrows the scope of coverage, the premium must decrease, but in no case can the reduction be greater than the net premium.

The net premium is the amount of insurance premium paid to ensure the fulfillment of the obligations agreed upon with the policyholder, corresponding to the insurance conditions and responsibilities.

Non-life insurance companies and branches of foreign non-life insurance companies shall determine the net premium for a one-year insurance term of motor vehicle insurance products, ensuring that the following requirements are met:

Net premiums are determined based on actual operational statistics of insurance companies and branches of foreign non-life insurance companies, ensuring scale and continuity over a minimum of 5 consecutive years.

In cases where statistical data does not guarantee scale and continuity, insurance companies and branches of foreign non-life insurance companies may use the following sources: Net premiums published by competent authorities; Official, publicly available statistics published by competent domestic organizations to determine net premiums; Net premiums provided by the parent company or reinsurance company, or foreign insurance organization receiving reinsurance; in this case, the reinsurance company or organization must have a minimum rating of “BBB” according to Standard & Poor's or Fitch, “B++” according to AMBest, “Baal” according to Moody's, or equivalent ratings from other organizations with the function and experience in rating in the most recent fiscal year prior to the date of application for registration of the method and basis for calculating insurance premiums, and must have experience in underwriting this type of risk in the Vietnamese or Asian market.

In the event of adjustments to the net premium of a foreign reinsurer (increase or decrease), the insurance company or branch of a foreign non-life insurance company must provide an explanation for the reasons.

The use of net insurance premiums provided by reinsurance companies and organizations must ensure consistency with the insurance benefits that the insurance company or branch of a foreign non-life insurance company intends to provide as stipulated in the rules and terms of the insurance product.

The net insurance premium is determined specifically for each or a number of the following risks: collision (including impact with other objects); overturning, falling, sinking; being struck by falling objects; fire, explosion; natural disasters; theft; and other risks (if any).

Short-term (less than 1 year) or long-term (more than 1 year) net premiums are determined based on the net premium for a 1-year insurance term and must include an explanation of the risk allocation assumptions corresponding to the insurance term.

Non-life insurance companies and branches of foreign non-life insurance companies must ensure that the cost and profit assumptions included in the insurance premium do not exceed 50% of the insurance premium.

The document explaining the methodology and basis for calculating insurance premiums must follow the form prescribed in Appendix IV issued with Circular 67/2023/TT-BTC.

The form of providing insurance services and products online.

According to Article 5 of Circular 67/2023/TT-BTC, the forms of providing insurance services and products online include:

A portal/website with a domain name registered in accordance with current legal regulations, an e-commerce website selling goods, or applications installed on networked electronic devices that allow service users or insurance buyers to access the portal/website or e-commerce website selling goods;

Or applications installed on portals/websites, e-commerce websites selling goods, or e-commerce applications established by insurance companies, branches of foreign non-life insurance companies, or mutual organizations providing microinsurance to facilitate the provision of insurance services and products online.

A portal/website with a domain name registered in accordance with current legal regulations, an e-commerce website selling goods, a website providing e-commerce services, or applications installed on networked electronic devices that allow service users or insurance buyers to access the portal/website, e-commerce website selling goods, or website providing e-commerce services established by insurance brokerage firms or insurance agents to serve the provision of insurance services and products in the online environment.

Websites providing e-commerce services include the following types: E-commerce trading platforms; and other types of websites as prescribed by the Ministry of Industry and Trade .

Tue Minh

Source: https://www.nguoiduatin.vn/quy-dinh-moi-ve-phuong-phap-co-so-tinh-phi-bao-hiem-xe-co-gioi-a635354.html