Abstract: The current Law on Insurance Business, despite its numerous advantages, still exhibits certain limitations. One of the most notable issues pertains to the regulations governing the transfer of insurance contracts between insurance enterprises, which remain overly general and lack the necessary specificity. This regulatory ambiguity poses significant challenges for insurance companies, regulatory authorities, and policyholders in the implementation process. As a result, the efficiency of insurance contract transfers has not been fully optimized, thereby impacting the legitimate rights and interests of both insurers and insured parties. In light of these shortcomings, this article aims to examine the following key aspects: elucidating the concept and significance of insurance contract transfers; analyzing the deficiencies in the current legal provisions under the Law on Insurance Business concerning this matter; and proposing legal reforms to enhance the regulatory framework governing the transfer of insurance contracts.

Keywords: Law on Insurance Business, transfer, property insurance contract.

1. Introduction

The insurance business in Vietnam is governed by a specialized legal framework, the most significant of which is the Law on Insurance Business No. 08/2022/QH15. Enacted by the National Assembly on June 16, 2022, and effective as of January 1, 2023, this law marked a major milestone in the development of the legal framework for the insurance sector. Alongside its implementing instruments such as Decrees and Circulars, the 2022 Law on Insurance Business (hereinafter referred to as “LIB”) provides a comprehensive and robust legal foundation, thereby facilitating transparent, stable, and sustainable growth of the insurance market. The new provisions not only enhance state management efficiency over the insurance market but also safeguard the lawful rights and interests of stakeholders, including insurance enterprises, investors, and policyholders. The perfection of the legal system for insurance is crucial for modernizing the industry, meeting the increasing demands of the economy and society. The innovations in the legal framework not only enable insurance enterprises to operate more efficiently but also reinforce public confidence, thereore expanding the scope of insurance and enhancing its role as a tool for asset protection, healthcare coverage, and economic security.

2. Overview of Property Insurance Contract Transfers and Their Significance

By nature, an insurance contract is a type of civil contract and therefore falls under the scope of governance of the Civil Code. Unlike the 2005 Civil Code, however, the 2015 Civil Code no longer provides a specific definition of an insurance contract, thereby introducing changes in the legal treatment of this contractual form [1]. Instead, the concept is defined under Clause 16, Article 4 of the LIB. According to such regulation, an insurance contract is understood as an agreement between the policyholder and the insurance enterprise, the branch of a foreign non-life insurance enterprise, or a mutual micro-insurance organization. Under this agreement, the policyholder is obliged to pay premiums, while the insurance enterprise, the branch of a foreign non-life insurance enterprise, or the mutual micro-insurance organization is responsible for indemnifying or paying insurance benefits in accordance with the conditions stipulated in the contract.

Distinctive features of property insurance contracts compared to other type of contracts:

First, with respect to the parties, a property insurance contract is concluded between the insurance enterprise and the policyholder [2]. The insurance enterprise is an organization established and operating in accordance with the provisions of the Law on Insurance Business (LIB) and relevant legal instruments, with the function of providing insurance and reinsurance services to protect the financial interests of policyholders against risks that may arise in relation to the insured property. Since the essence of the insurance relationship is the transfer of risk from one party to another, risk constitutes the foundation and core element of the insurance business. The very existence of risk gives rise to the demand for insurance and serves as the basis for establishing contractual terms aimed at protecting the policyholder’s property and interests from potential losses [3]. Risk in insurance refers to events that may occur in the future and cannot be precisely quantified at the time of contract conclusion. In entering into and performing contracts, insurance enterprises in effect mobilize idle capital from the public through the collection of premiums. These funds are not only used to ensure the ability to pay when insured risks materialize but are also invested by the enterprises to generate profit. Because of this feature, the insurance business entails a higher level of risk than ordinary goods or services sectors. For this reason, the LIB requires insurance enterprises to meet stringent conditions, including statutory capital requirements, feasible business plans, an appropriate governance system, and a management team with sufficient expertise and professional capacity in the field of insurance, so as to ensure the safety and sustainability of the market [4]. According to the law on insurance business, an enterprise operating in the field of property insurance must satisfy minimum charter-capital requirements to ensure financial capacity and solvency when risks occur [5]. These provisions are intended to guarantee that insurance enterprises possess adequate financial capacity to operate in a stable and safe manner, thereby minimizing the risk of insolvency or collapse. In a property insurance contract, the policyholder may be an organization or an individual with full legal capacity to conclude a contract with the insurance enterprise. The policyholder is responsible for paying insurance premiums as agreed in the contract. A property insurance premium is the sum payable by the policyholder to the insurance enterprise according to the agreed schedule and method, in order to secure protection against risks to the insured property [6]. Property insurance premiums are regarded as mandatory payments under the contract. They constitute an important financial source enabling the insurance enterprise to establish insurance funds, thereby ensuring its ability to indemnify or pay compensation in the event of loss or damage to the insured property. Premium levels are calculated on the basis of multiple factors, including the value of the property, the degree of risk, and the specific contractual conditions, so as to balance the interests of the policyholder with the financial sustainability of the insurance enterprise.

Second, the content of a property insurance contract comprises provisions stipulating the rights and obligations of the insurance enterprise as well as of the parties participating in the insurance. Typically, a property insurance contract will set out complete information regarding the insurance enterprise, the policyholder, the insured, or the beneficiary. The contract shall also specifies the insured subject matter, the sum insured, the scope of insurance coverage, and the applicable conditions for insurance. In addition, to ensure transparency, the property insurance contract enumerates exclusions from liability in order to avoid disputes later on. Furthermore, the contract clearly regulates the amount of premium, the method of payment, the term of the contract, as well as the method of indemnity or insurance payment. In the event of a dispute between the parties, the contract will contain a clause on dispute resolution mechanisms, thereby safeguarding the lawful rights and interests of the relevant parties. These provisions not only enable the property insurance contract to operate effectively but also establish a solid legal foundation that contributes to the protection of the rights and interests of both the policyholder and the insurance enterprise [7].

Third, a property insurance contract must be made in writing to ensure clarity, transparency, and to serve as a legal basis during its performance. Evidence of the conclusion of an insurance contract may take the form of an insurance contract, an insurance certificate, an insurance policy, or other instruments as prescribed by law [8]. A property insurance contract typically consists of several important documents such as the insurance application form, the insurance rules and terms, additional clauses, contractual appendices, and the insurance certificate. Given the complexity of insurance operations, the written form is essential not only to clearly determine the rights and obligations of the parties but also to play an important role in contract performance and dispute resolution when issues arise. This protects the interests of the policyholder while also enabling the insurance enterprise to manage risks effectively, ensuring legality and stability in the conduct of property insurance business.

A property insurance contract is established between the insurance enterprise and the policyholder to concretize the latter’s need for protection against risks to their property. When a risk occurs, the insurance enterprise is obliged to indemnify or pay benefits in accordance with the contractual agreement. Conversely, as a commercial organization, the insurance enterprise pursues profit, primarily by investing the funds collected through premiums. However, the property insurance business is influenced by multiple factors such as domestic and international market fluctuations, the financial and human resource situation of the enterprise, and state regulatory policies. In certain cases, insurance enterprises may encounter difficulties that prevent them from continuing to perform property insurance contracts already concluded, or continued performance of such contracts may fail to provide expected commercial efficiency. In these circumstances, the transfer of property insurance contracts is considered a solution that assists the insurance enterprise in overcoming difficulties, maintaining financial stability, and ensuring the rights of policyholders. The question therefore arises: what is meant by the transfer of a property insurance contract?

As noted, property insurance contracts are governed by the 2015 Civil Code, the LIB, and its implementing regulations. However, current legislation does not provide a specific definition of “transfer of property insurance contracts.” Since such contracts are essentially civil contracts, it is first necessary to examine the concept of transfer of civil contracts. Analyzing the nature of civil contract transfers helps clarify the fundamental principles applicable to transfers of property insurance contracts, thereby providing the basis for determining their implementation and the legal consequences on the rights and obligations of the contracting parties. Under Article 28 of the LIB, an insurance contract transfer permits the policyholder to assign its rights and obligations to another party, provided that the transferee has an insurable interest in the insured property. This ensures that only persons with a legitimate interest in the property may continue to benefit from coverage, thereby preventing insurance fraud. At the same time, the transferee must assume all rights and obligations of the transferor, including the obligation to pay premiums and the right to claim indemnity in the event of loss. The transfer is only effective if notified in writing and accepted in writing by the insurance enterprise, unless otherwise stipulated in the contract or by international custom. According to Article 12:201 of the Principles of European Contract Law, a transfer of contract is understood as a situation where one party to a contract reaches an agreement with a third party for that third party to replace it in the contract, while it withdraws. Similarly, the 2004 UNIDROIT Principles of International Commercial Contracts define a contract transfer as the process whereby a person or entity (“the transferring party”) transfers its rights and obligations under a contract with another party (“the remaining party”) to a new subject (“the transferee”) through agreement [9]. According to the definition in Law Insider, a transfer of insurance contracts is a transaction in which an insurance enterprise transfers one or more insurance contracts, including all associated technical reserves and obligations, to another insurance enterprise that accepts them. This process directly affects policyholders’ rights, as the change in the party responsible for performance may entail adjustments in contractual rights and obligations [10]. Considering these general and specific concepts of contract transfer, a definition of transfer of property insurance contracts may be proposed as follows: “Transfer of a property insurance contract is the process whereby one insurance enterprise (the transferor) transfers all of its rights and obligations under a property insurance contract concluded with the policyholder to another insurance enterprise (the transferee), and formally withdraws from the contract.” Such transfer aims to secure the rights of the policyholder, while enabling the insurance enterprise to address financial difficulties or restructure its business operations where necessary. In the United Kingdom, the transfer of insurance contracts between insurance enterprises is conducted pursuant to Part VII of the Financial Services and Markets Act 2000. This process requires approval of the court and the insurance regulator to ensure the rights of all stakeholders, including the insured, are protected [11]. In the United States, transfers of insurance contracts between companies are subject to the specific regulations of each state and generally require the approval of the relevant state insurance regulator. Although there is no uniform federal law governing this matter, each state maintains its own supervisory authority responsible for overseeing insurance activities within its jurisdiction. For example, in California, the California Department of Insurance regulates and supervises insurance activities, including contract transfers. To effect a transfer of insurance contracts, insurance companies are typically required to apply for approval from the state insurance regulator, submit relevant documentation, and comply with prescribed procedures [12].

More specifically, the transfer of a property insurance contract has two fundamental characteristics:

First, with respect to the parties, the transfer of a property insurance contract entails a change of the insurance enterprise in the contract. Ordinarily, a property insurance contract is concluded once its in line with the insurer’s business strategy and profit objectives. However, during the performance of the contract, the enterprise may face difficulties such as lacking the necessary conditions, resources, or financial capacity to continue performing the obligations it has undertaken toward the policyholder. In such circumstances, transferring the contract to another insurance enterprise allows the original insurer to withdraw from the contract and be fully released from the associated rights and obligations. The transferee insurance enterprise then assumes responsibility for performing the commitments previously established with the policyholder, ensuring that the contract continues in force under its original terms. Accordingly, the legal consequence of a transfer is solely the substitution of the insurer, while the rights and obligations previously agreed upon must be preserved intact. Second, with respect to the subject matter of the transfer, the transferring insurance enterprise must transfer all rights and obligations specified in the property insurance contract to the transferee. Specifically, the right to collect premiums in accordance with the agreed schedule and method, as well as the duty to indemnify or pay insurance benefits when the insured event occurs, are transferred to the new insurer. This ensures continuity in the performance of the contract, safeguards the policyholder’s rights, and maintains stability in the property insurance market.

With the characteristics outlined above, the transfer of property insurance contracts plays an important role for both insurance enterprises and policyholders. In the context of a continuously developing market economy with increasing competitive pressure, insurance enterprises may need to restructure their operations, face mergers or acquisitions, or even withdraw from the market. These changes directly affect the performance of existing property insurance contracts, impacting the rights of policyholders as well as the stability of insurance enterprises’ operations. The unique nature of the insurance industry makes its business model different from many other sectors, since revenue from premiums is collected in advance while the obligation to indemnify only arises when the insured event occurs. In many cases, the continued performance of property insurance contracts may not only fail to generate the expected profits but may also increase financial pressure on insurers, particularly when they face liquidity difficulties or declining financial capacity. For this reason, many insurers choose to withdraw from contractual relationships either by unilaterally terminating the contract or by transferring property insurance contracts to another insurer, thereby reducing financial risks and ensuring policyholder rights. However, if an insurance enterprise unilaterally terminates a property insurance contract, this may lead to adverse legal consequences. Specifically, the party that unilaterally terminates may be liable to compensate the other party for damages caused by the termination [13]. This principle arises from the fundamental rule of respecting contractual commitments, ensuring that policyholders who have paid premiums are not deprived of their contractual benefits. Therefore, instead of unilaterally terminating contracts, many insurers prefer to transfer property insurance contracts as a solution to maintain contractual validity, minimize legal risks, and protect policyholders’ interests. Compared with unilateral termination, this option is less costly and more widely used [14]. The transfer of property insurance contracts not only helps insurers reduce financial burdens when exiting contracts but also enables them to avoid liability for damages arising from premature termination. At the same time, it is a flexible business strategy, allowing insurers to optimize their insurance portfolios, allocate risks more effectively, and adjust their business models to suit market trends. For transferee insurance enterprises, receiving property insurance contracts from transferor insurers brings significant benefits. On the one hand, the transferee can expand its customer base rapidly without expending resources on searching for, approaching, negotiating, and concluding new contracts. On the other hand, this process substantially reduces the time and costs associated with underwriting activities. In addition, the transferee also receives all technical reserves related to the transferred property insurance contracts. This constitutes a substantial source of capital that not only enables the insurer to maintain solvency and fulfill obligations when risks occur, but also provides favorable conditions for using such funds in investment activities, optimizing profits, and enhancing business performance [15].

For policyholders, the transfer of property insurance contracts is an important mechanism to ensure their rights in cases where the insurance enterprise encounters difficulties and can no longer perform the contracts it has concluded. When a property insurance contract is transferred, the transferee insurance enterprise is obliged to assume all the rights and obligations of the transferor insurance enterprise in accordance with the original terms agreed with the policyholder. This ensures that, notwithstanding the change of insurer, the policyholder continues to enjoy all contractual rights, particularly the right to indemnity or insurance benefits when an insured event occurs. As a result, the purpose of participating in insurance is preserved, and risks arising from disruption in the performance of the contract are avoided. In summary, the transfer of property insurance contracts is an effective solution that both enables insurers to resolve financial difficulties and guarantees the rights of policyholders when risks occur. This mechanism not only preserves the continuity of the insurance contract but also limits adverse legal consequences arising from unilateral termination [16]. Moreover, the transfer of property insurance contracts contributes to reducing disputes between parties, since instead of contracts being abruptly terminated, the original rights and obligations are maintained but are transferred from the transferor insurer to the transferee insurer. Consequently, policyholders remain protected under the agreed benefits, while insurance enterprises are able to restructure their operations with greater flexibility and efficiency.

3. Limitations in the Provisions of the Law on Insurance Business Regarding the Transfer of Property Insurance Contracts and Proposals for Improvement

3.1. Circumstances in Which the Transfer of Property Insurance Contracts Applies

Article 92 of the Law on Insurance Business stipulates: “The transfer of the entire portfolio of insurance contracts of one or several lines of insurance business, together with the corresponding assets and liabilities, between insurance enterprises and branches of foreign non-life insurance enterprises shall be carried out in the following cases:

1. At the request of the Ministry of Finance as provided at Points c and d, Clause 8, Article 113 of this Law;

2. Where the content or scope of operations is narrowed;

3. Division, separation, merger, consolidation, dissolution, or termination of operations;

4. The cases prescribed at Points a, d, and e, Clause 1, Article 75 of this Law.”

Based on research and practical application, the author observes that this provision still reveals a number of limitations as follows:

First, in cases where an insurance enterprise undergoes division, separation, consolidation, merger, or dissolution, the transfer of property insurance contracts becomes a mandatory requirement. According to the provisions of enterprise law [17], when an insurance enterprise carries out a merger or consolidation, the newly established enterprise or the surviving enterprise in the merger shall inherit all rights, obligations, and legal liabilities of the merged or consolidated insurance enterprise. This includes outstanding debts, property obligations, labor contracts, and, in particular, obligations related to property insurance contracts. Premiums already paid by policyholders are also regarded as financial obligations that the new insurance enterprise must assume and perform. Accordingly, in the event of a merger or consolidation, the transfer of property insurance contracts is an inevitable consequence designed to ensure contractual continuity and to prevent disruption or negative impacts on the rights of policyholders. Furthermore, the statutory requirement for transferring property insurance contracts in the course of merger or consolidation serves to protect the legitimate rights of customers, guaranteeing that they continue to receive indemnity and insurance payments when insured events occur. However, from an economic perspective, mergers and consolidations of insurance enterprises are primarily aimed at increasing capital scale, enhancing financial capacity, and strengthening competitiveness in the market. With stronger financial resources following a merger or consolidation, the new insurance enterprise is typically capable of fully performing its contractual commitments without the need to transfer property insurance contracts to another insurer. This raises the question of whether the mandatory nature of such transfers in cases of merger or consolidation should be reconsidered, in order to ensure flexibility in enterprise operations while still protecting the lawful rights of policyholders.

Based on the foregoing analysis of the transfer of property insurance contracts in cases of division, separation, consolidation, merger, or dissolution of insurance enterprises, several recommendations may be made to improve the legal provisions, ensuring both flexibility for enterprises and protection of policyholders’ rights, as follows:

First of all, reconsider the mandatory nature of transferring property insurance contracts in cases of merger or consolidation. At present, the law provides that the transfer of property insurance contracts is an inevitable consequence of the merger or consolidation of insurance enterprises. In practice, however, post-merger or post-consolidation enterprises generally possess stronger financial capacity and are able to fully perform their insurance obligations to customers. Therefore, a more flexible mechanism is needed, allowing the merged or consolidated insurance enterprise to continue performing property insurance contracts without being compelled to transfer them, except in cases where the enterprise lacks sufficient financial capacity or faces a risk of insolvency.

Second, clearly stipulate the criteria for assessing the financial capacity of an insurance enterprise after a merger or consolidation. To determine whether the post-merger or post-consolidation insurance enterprise must transfer property insurance contracts, the law should supplement specific financial capacity criteria. These may include: (i) whether the minimum charter capital after the merger or consolidation satisfies statutory requirements; (ii) whether technical reserves are sufficient to cover all arising insurance obligations; and (iii) whether the credit rating or financial condition of the enterprise demonstrates adequate ability to perform insurance obligations. Only in cases where the post-merger or post-consolidation insurance enterprise fails to meet these criteria should the transfer of property insurance contracts be made mandatory, in order to protect the rights of policyholders.

The substitution of the insurance enterprise in a property insurance contract is a significant legal event that may directly affect the rights of policyholders and the performance of the contract. This is because the insurance enterprise is the party responsible for indemnifying when an insured event occurs, thereby ensuring the financial interests of the insured. For this reason, the insurance laws of many countries stipulate that the transfer of property insurance contracts may only be effected with the approval of the insurance supervisory authority, in order to guarantee transparency and to protect the interests of policyholders. For instance, under French insurance law, the Autorité de Contrôle Prudentiel et de Résolution (ACPR) is the competent authority to review and approve the transfer of insurance contracts, ensuring that the process is lawful and does not harm customers [18]. Similarly, in Switzerland, the Swiss Financial Market Supervisory Authority (FINMA) is the body responsible for supervising and deciding upon the transfer of insurance contracts by insurance enterprises. FINMA is tasked with ensuring that such transfers comply with legal requirements, protect the rights of policyholders, and maintain the stability of the insurance market [19]. In Vietnam, the Ministry of Finance is the state authority competent to supervise and regulate all insurance business activities, including the transfer of property insurance contracts. This body is responsible for promulgating regulations, issuing guidance, and overseeing the transfer process in order to ensure compliance with the law, protect the rights of policyholders, and preserve the stability of the insurance market [20].

According to Clause 4, Article 92 of the Law on Insurance Business, when an insurance enterprise has its establishment and operation license revoked, it may no longer continue its insurance business activities, including the performance of property insurance contracts already concluded. However, this provision may give rise to certain limitations in the process of transferring property insurance contracts, specifically as follows:

First, the lack of a timely mechanism for handling transfers when an insurance enterprise has its license revoked: Revocation of the license means that the insurance enterprise loses its legal status to continue exercising rights and obligations under insurance contracts. However, the law does not yet provide specific provisions on mandatory deadlines and procedures for transferring property insurance contracts in this situation. If the transfer is not carried out immediately upon the decision to revoke the license, policyholders may be adversely affected because the contracts are suspended, leaving no insurer responsible for indemnifying when an insured event occurs.

Second, the risk of insolvency of the insurance enterprise prior to the transfer. Insurers subject to license revocation are often in poor financial condition or have committed serious violations of the law. If such enterprises lack sufficient technical reserves and secured assets to carry out the transfer or to meet remaining insurance obligations, policyholders may face the risk of losing their rights. Without strict supervisory measures from the regulatory authority, the transferee insurer may also be exposed to risks when assuming obligations from an insolvent insurance enterprise.

Third, the absence of specific provisions on the mechanism for selecting the transferee insurer. The LIB does not clearly stipulate criteria for choosing the receiving insurance enterprise in cases where an insurer has its license revoked. This may result in no insurer being willing to accept the transferred contracts due to concerns about financial risks or the risk profile of the transferred portfolio. The selection process may lack transparency, creating disadvantages for policyholders. As of 2024, the Vietnamese insurance market comprised a total of 85 enterprises, including 32 non-life insurance enterprises [21].

The author argues that the above-mentioned shortcomings may be remedied if the Ministry of Finance applies a tender mechanism in the process of selecting the insurance enterprise to receive the transfer of property insurance contracts. The application of such a mechanism would bring about several significant benefits:

First, organizing a tender to select the transferee insurance enterprise would ensure fair and transparent competition among insurers, while limiting direct administrative intervention by the Ministry of Finance in the operation of the insurance market. This would help maintain a healthy business environment and encourage insurance enterprises to strengthen their financial capacity and risk management in order to qualify for receiving transferred contracts.

Second, through a tendering process, the Ministry of Finance can select an insurance enterprise with the strongest financial capacity, experience, and risk management ability to continue performing existing property insurance contracts. This not only guarantees the continuity of insurance contracts but also reinforces policyholders’ confidence in the insurance system and safeguards their lawful rights when the original insurer is unable to perform the contracts.

3.2. Conditions for the Transfer of Property Insurance Contracts

According to Article 92 of the Law on Insurance Business: “1. An insurance enterprise or a branch of a foreign non-life insurance enterprise may receive a portfolio of insurance contracts when meeting the following conditions: a) currently conducting the line of insurance to be transferred; b) ensuring capital adequacy and solvency in accordance with this Law; c) ensuring the conditions for carrying out the line of insurance after the transfer. 2. The transfer of an insurance contract portfolio must be accompanied by the transfer of assets corresponding to the technical reserves of the entire portfolio being transferred. 3. The rights and obligations under transferred insurance contracts shall remain unchanged until the expiration of the contract. In the case of transfers prescribed in Clause 1, Article 91 of this Law, if the value of assets is lower than the technical reserves of the transferred portfolio, the transferee insurance enterprise or branch of a foreign non-life insurance enterprise must reach agreement with the policyholder or the insured regarding the reduction of the sum insured or insurance benefits and other obligations under the contract. 4. If the policyholder does not agree with the transfer, he/she shall have the right to unilaterally terminate the performance of the insurance contract.” As analyzed, the transfer of property insurance contracts means a change of insurer in the contract, which has significant impact on the rights of policyholders. While the law sets out conditions and principles for implementing such transfers, several aspects still require further consideration, specifically as follows:

First, regarding the conditions imposed on transferee insurance enterprises under Clause 1, the law requires the transferee insurer to meet three conditions: currently conducting the line of insurance to be transferred; ensuring capital adequacy and solvency in accordance with the law; and having sufficient conditions to carry out the relevant line of insurance after the transfer. These conditions are designed to ensure that the transferee insurer possesses adequate financial capacity and professional competence to continue performing the contracts effectively. However, the law does not set forth specific criteria for assessing financial capacity or the degree of solvency of the transferee insurer. This may create risks if an insurer that is not truly capable is nevertheless permitted to accept the transfer, thereby jeopardizing the rights of policyholders.

Second, risks associated with the transfer of technical reserves. Clause 2 provides that the transfer of insurance contracts must be accompanied by the transfer of assets corresponding to the technical reserves. However, the law does not provide a clear mechanism for valuing technical reserve assets, creating the risk that the transferor insurer may undervalue them, thereby diminishing the payment capacity of the transferee insurer. Moreover, there are no explicit provisions on the liability of the transferor insurer if the assets transferred are insufficient to cover contractual reserves, nor is there a supervisory mechanism to ensure that the transferor insurer fully transfers the corresponding assets before the transfer is completed.

Third, the policyholder’s right to unilaterally terminate the contract under Clause 4. The law allows policyholders to unilaterally terminate the contract if they disagree with the transfer. This is a protective provision, giving policyholders the option to withdraw if they do not wish to continue with the new insurer. However, the law does not clarify whether the policyholder is entitled to a refund of premiums already paid in the event of unilateral termination. This ambiguity may lead to disputes and could adversely affect the financial interests of policyholders.

On this basis, the author proposes amending Article 92 of the Law on Insurance Business as follows: “Article 92. Conditions and Procedures for the Transfer of Insurance Contracts: 1. An insurance enterprise or a branch of a foreign non-life insurance enterprise may receive a portfolio of insurance contracts when fully meeting the following conditions:

a) Currently conducting the line of insurance corresponding to the insurance contracts being transferred;

b) Ensuring capital adequacy and solvency in accordance with this Law: The transferee insurance enterprise must have equity at least equal to the statutory capital prescribed by the insurance supervisory authority; must provide audited financial statements evidencing its capacity to fully meet the insurance obligations under the contracts being transferred; and must be assessed by the insurance regulatory authority as being qualified to receive the transferred contracts;

c) Ensuring the conditions for conducting the line of insurance after the transfer, including governance capacity, information technology systems, and the ability to continue providing insurance services to policyholders.

The transfer of an insurance contract portfolio must be accompanied by the full transfer of assets corresponding to the technical reserves of the entire portfolio being transferred.

a) Prior to the transfer, the technical reserve assets must be valued by an independent auditing or valuation organization;

b) The transferor insurance enterprise shall be responsible for ensuring that the assets transferred correspond to the value of the technical reserves under the insurance contracts. Where the assets are insufficient, the transferor must make up the shortfall before the transfer process is completed;

c) The insurance regulatory authority shall be responsible for supervising the transfer of assets to ensure the protection of policyholders.

The rights and obligations under transferred insurance contracts shall remain unchanged until the expiration of the contracts. Where the value of the assets transferred is lower than the technical reserves of the portfolio being transferred, the transferee insurance enterprise may not unilaterally reduce the sum insured or the insurance benefits unless with the written consent of the policyholder and the insured.

a) If adjustment of insurance benefits is deemed necessary, the transferee insurance enterprise must provide a reasonable alternative plan that ensures the rights of the policyholder;

b) If the policyholder does not agree with the proposed adjustment, he/she shall have the right to request a refund of the unearned portion of the insurance premium or to request continuation of the contract with support from the Policyholder Protection Fund.

Policyholders shall have the right to unilaterally terminate the insurance contract if they do not agree with the transfer.

a) In the event of unilateral termination, the policyholder shall be entitled to a refund of the unearned portion of the premium corresponding to the remaining term of the contract;

b) The transferor insurance enterprise shall be responsible for notifying policyholders of the transfer at least 60 days prior to implementation, so that policyholders have sufficient time to review and make a decision.”

4. Conclusion

Over the past period, the Law on Insurance Business (LIB) together with its implementing instruments has established an important legal framework, contributing to the formation and development of the property insurance market. However, practical application has revealed that certain provisions relating to property insurance contracts still present shortcomings and have not kept pace with the rapid changes of the socio-economic environment as well as the expansion of the insurance market. On this basis, the article has put forward several proposals to address the limitations of the Law on Insurance Business with respect to the transfer of property insurance contracts. These proposals not only help improve the legal framework, but also maximize the role of the transfer of property insurance contracts as a tool to assist insurers in resolving financial difficulties, optimizing their insurance portfolios, and enhancing risk management efficiency. At the same time, improving the provisions on the transfer of property insurance contracts will contribute to protecting the legitimate rights of policyholders, ensuring transparency and stability of the market, thereby strengthening the confidence of enterprises and individuals in the insurance system and promoting the sustainable development of the property insurance sector in Vietnam.

References

1. Civil Code 2015.

2. Law on Insurance Business 2022.

3. Government of Vietnam, Decree No. 46/2023/ND-CP dated 1 July 2023 detailing the implementation of certain provisions of the Law on Insurance Business.

4. Bùi Thị Hằng Nga, Insurance Business Law. Ho Chi Minh City: Vietnam National University Publishing House, 2015.

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7. Bank of England – Prudential Regulation Authority (PRA), Guidance on Part VII Transfers for Insurers. 2022. Available at: https://www.bankofengland.co.uk/prudential-regulation/part-vii-insurance-business-transfers (accessed 14 March 2025).

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*Master of Laws, Phạm Thị Việt, Doctoral Candidate, Hue University of Law, Hue University. Approved for publication on 29 July 2025. Email: ptviet.dhl23@hueuni.edu.vn, Tel: +84 913 200 399.

[1] Article 385, Civil Code 2015.[2] Point (a), Clause 1, Article 17, Law on Insurance Business 2022.

[3] Bùi Thị Hằng Nga, Insurance Business Law. Ho Chi Minh City: Vietnam National University Publishing House, p. 29 (2015).

[4] Article 64, Law on Insurance Business 2022.

[5] Article 35, Decree No. 46/2023/ND-CP of the Government dated 01 July 2023 detailing the implementation of certain provisions of the Law on Insurance Business.

[6] Clause 28, Article 3, Law on Insurance Business 2022.

[7] Article 17, Law on Insurance Business 2022.

[8] Article 18, Law on Insurance Business 2022.

[9] Đào Thị Thu Hiền, Nguyễn Minh Hằng, and Đỗ Văn Đại (2010), UNIDROIT Principles of International Commercial Contracts 2004. Hanoi: Justice Publishing House, p. 579.

[10] Law Insider. (n.d.). A Transfer of Insurance Contracts. Retrieved from https://www.lawinsider.com/dictionary/a-transfer-of-insurance-contracts (accessed 14 March 2025).

[11] Bank of England – Prudential Regulation Authority (PRA). (2022). Guidance on Part VII Transfers for Insurers. Retrieved from https://www.bankofengland.co.uk/prudential-regulation/part-vii-insurance-business-transfers (accessed 14 March 2025).

[12] National Association of Insurance Commissioners (NAIC). State Insurance Regulation: An Overview. Retrieved from https://content.naic.org (2023) (accessed 14 March 2025).

[13] Article 428, Civil Code 2015.

[14] Ngô Quốc Chiến, “The Civil Code needs to supplement provisions on contract transfers,” Legislative Studies Journal, Office of the National Assembly, Nos. 2–3 (234–235), pp. 69–77 (2013).

[15] Articles 92 and 93, Law on Insurance Business 2022.

[16] Galvao, T., “La cession de contrat.” Revue internationale de droit comparé, 3(2), 217–237 (1951). https://doi.org/10.3406/ridc.1951.6356 (accessed 14 March 2025).

[17] Articles 200 and 201, Law on Enterprises 2020.

[18] Autorité de Contrôle Prudentiel et de Résolution (ACPR). (n.d.). Qu’est-ce que l’ACPR?. Retrieved from https://acpr.banque-france.fr/lacpr/presentation/quest-ce-que-lacpr (accessed 14 March 2025).

[19] Swiss Financial Market Supervisory Authority (FINMA). (n.d.). About FINMA. Retrieved from https://www.finma.ch/en/finma/ (accessed 14 March 2025).

[20] Articles 151 and 152, Law on Insurance Business 2022.

[21] Vietnam Financial Times (Thời báo Tài chính Việt Nam), “Positive growth expectations from the non-life insurance sector.” Vietnam Financial Times (2024). Retrieved from https://thoibaotaichinhvietnam.vn/ky-vong-suc-bat-kha-quan-tu-khoi-doanh-nghiep-bao-hiem-phi-nhan-tho-170925-170925.html (accessed 14 March 2025).