LAW

Legal framework for micro-insurance products to be enacted

All low-income earners will be able to access affordable insurance products, according to Decree 21 issued by the Government on May 5.

Legal framework for micro-insurance products to be enacted
All low-income earners will be able to access affordable insurance products, according to Decree 21 issued by the Government on May 5.

All low-income earners will be able to access affordable insurance products, according to Decree 21 issued by the Government on May 5.

Under the new regulation, micro-insurance products are those designed for the poor, low-income earners and social vulnerability groups, with low insurance premiums, small insurance sums, and simple and easy-to-understand insurance products, and expected to provide these groups of people with financial solutions when suffering risks or damage in their lives.

Permitted to provide micro-insurance products are non-life insurance providers, life insurance providers, health insurance providers, foreign non-life insurance branches, and mutual micro-insurance organizations established and operating in Vietnam.

Under the new rule, the annual insurance premium payable by each micro-insurance contract policyholder must not exceed 5 percent of his annual income while the maximum micro-insurance sum must be equal to five times his annual income according the law-provided standards applicable to urban households living just above the poverty line.

Every mutual micro-insurance firm wishing to provide micro-insurance products in Vietnam must have a charter capital of at least VND 10 billion and may provide micro-insurance products for basic risk protection including death, total and permanent disability, health, accident and asset damage insurance.

Notably, they may only provide micro-insurance products with a term of up to one year.- (VLLF)

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