Can insurance businesses do reinsurance business?

According to Clause 3 Article 4 Law on Insurance Business 2022 reinsurance business is the activity of an insurance enterprise, reinsurance enterprise, foreign branch in Vietnam receiving a reinsurance fee from another insurance enterprise, reinsurance enterprise, foreign branch in Vietnam, foreign insurance enterprise, foreign reinsurance enterprise, foreign insurance organization to commit to compensate for the insured liabilities.

At the same time follow Clause 1 Article 63 Law on Insurance Business 2022 as follows:

Activities of insurance enterprises, reinsurance enterprises, foreign branches in Vietnam

1. Activities of insurance enterprises and branches of foreign non-life insurance enterprises include:

a) Insurance business, reinsurance business, reinsurance transfer;

b) Management of funds and capital investment from insurance business activities insurance;

c) Providing insurance auxiliary services;

d) Other activities directly related to insurance business activities.

2. Activities of reinsurance enterprises and branches of foreign reinsurance enterprises include:

a) Reinsurance business; ceding reinsurance;

b) Managing funds and investing capital from reinsurance business activities;

c) Other activities directly related to reinsurance business activities.

3. Insurance enterprises and branches of foreign non-life insurance enterprises are only allowed to conduct one type of insurance business as prescribed in Clause 1, Article 7 of this Law, except for the following cases:

a) Life insurance enterprises conducting health insurance business;

b) Non-life insurance enterprises, branches of foreign non-life insurance enterprises that sell health insurance products with a term of 01 year or less and insurance products for the risk of death with a term of 01 year or less;

c) Health insurance enterprises that sell insurance products for the risk of death with a term of 01 year or less.

According to the above regulations, insurance enterprises can do reinsurance business.

What are the main contents of an insurance company’s reinsurance program?

Pursuant to point b clause 1 Article 34 Circular 67/2023/TT-BTC, the reinsurance program of insurance enterprises includes the following main contents:

– Determine the risk-taking ability of insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam.

– Determine the retention level appropriate to the accepted insurance risk, the limits on the retention level per unit of risk and the maximum level of protection from foreign insurance enterprises and organizations receiving reinsurance.

– Identify the types and methods of reinsurance most suitable for managing accepted risks.

– Methods, standards, and procedures for selecting foreign insurance enterprises and organizations to receive reinsurance, including methods of assessing the level of risk and financial safety of foreign enterprises and insurance organizations receiving reinsurance.

– List of foreign insurance enterprises and organizations that are expected to receive reinsurance, paying attention to the diversification and ranking of reinsurers.

– Method of using the deposit of the foreign insurance enterprise or organization receiving reinsurance (if any).

– Manage cumulative risks for specific fields, geographic regions and product types.

– How to control reinsurance and reinsurance programs, including reporting and internal control systems.

Who is responsible for approving the insurer’s reinsurance program?

The person responsible for approving the reinsurance program of the insurance enterprise is specified in point a clause 1 Article 34 Circular 67/2023/TT-BTC as follows:

Managing reinsurance and reinsurance programs

1. Approval of reinsurance and reinsurance ceding programs:

a) To ensure safety and efficiency in reinsurance business activities, the Board of Directors (Board of Members) or General Director (Director) of insurance enterprises, reinsurance enterprises, Directors of foreign branches in Vietnam are responsible for approving reinsurance and reinsurance cession programs in accordance with the financial capacity, business scale of the enterprise, branch and current legal regulations; Review, evaluate, and adjust reinsurance and reinsurance programs on an annual basis or when market conditions change;

Thus, the Board of Directors (Board of Members) or General Director (Director) of the insurance enterprise is responsible for approving the reinsurance program in accordance with the financial capacity, business scale of the enterprise and current legal regulations.