Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
|National Assembly||No: 06/NA|
|Vientiane Capital, date: 21 December 2011|
This Law determines principles, regulations and measures regarding the organization, operation, management, monitoring and inspection of insurance activities to ensure that an insurance business operates properly, fairly and effectively with the aim of protecting legitimate benefits of the insurers and policyholders, protecting the state and common interests, ensuring public security and order, and contributing to social-economic development.
Insurance is the management of risks on various hazards that may occur to the insured who has paid an insurance premium to the insurer for compensation by insurance annuity as agreed in an insurance contract.
Terms used in this Law have the following meanings:
The State promotes domestic and foreign individuals, legal entities and organizations to invest or participate in insurance business operations such as the establishment of an insurance company, agent, broker and representative office with customs and tax incentives according to the laws and regulations.
The State protects the legitimate rights and benefits of policyholders and parties involved in insurance business operations equally under the laws of Lao PDR.
The State encourages the development of the insurance market to provide insurance to cover the health, life and property of people to contribute to the national social-economic development.
The State promotes all Lao citizens to use different types of insurance services in accordance with the laws and regulations.
The operation of insurance activities shall be implemented in accordance with the following main principles:
This Law applies to both domestic and foreign individuals, legal entities and organizations operating an insurance business, policyholders, beneficiaries and other individuals and legal entities that are involved in insurance activities and applies to property and those required by laws and regulations to buy compulsory insurance.
The State has an open relationship and cooperation with foreign countries, regions and the world with respect to insurance through the exchange of techniques, information and professionalism, the seeking of assistance, human resource development and other areas, and complies with and implements requirements in international agreements or treaties to which the Lao PDR is a party.
There are two types of insurance:
- Life insurance;
- General insurance.
Life insurance is insurance that is related to insuring the risk for the entire life of the policyholder or insured upon death.
Life insurance includes the following categories:
- whole life insurance;
- endowment insurance;
- mixed life insurance;
- annuity insurance; and,
- term life insurance.
Additional categories of life insurance can be determined on the basis of the approval of the Ministry of Finance, if necessary.
General insurance is an insurance of property and civil responsibility for a third party and other insurance that is not life insurance.
There are two types of general insurance:
- compulsory insurance;
- voluntary insurance.
[Compulsory general insurance applies to the following] Individuals, legal entities and business units in all sectors conducting temporary or permanent business activities with permanent residency in Lao PDR, including land transport that run with engines, hotels, guesthouses, entertainment venues, restaurants, owners of markets, construction sites, warehouses, chemical warehouses, fuel [flammable liquid] warehouses, explosive substance warehouses, factories, land, water and air transportation of goods and passengers, fire and places for producing and storing explosive substance.
Detailed regulations on compulsory general insurance are defined separately.
Voluntary general insurance is an insurance where the policyholder is eligible to select the category, scope or sum insured by the insurer.
General insurance consists of the following:
- accident insurance [and treatment of injured people from an accident];
- health insurance;
- property insurance;
- goods and transit goods by land, water and rail, and air transport insurance;
- aviation insurance;
- transport running with engines insurance;
- fire and explosive object manufacturing site insurance;
- state asset insurance;
- financial and credit risk insurance;
- business risk insurance; - agriculture and forestry insurance; and,
- accident and disaster insurance.
Additional categories of general insurance can be determined on the basis of the approval of the Ministry of Finance, if necessary.
Re-insurance is insurance that involves the allocation of risks for general insurance that the insurance company (insurer) re-insures with another domestic or foreign insurance company (called re-insurer) in accordance with insurance principles as provided in related laws and regulations for which the insurer shall be responsible for the payment of indemnity or compensation for damages of the portion that is re-insured to the insured or beneficiary in case that the reinsurer is insolvant.
Re-insurance shall be suitable to business operation situations of the insurer who shall fulfill all requirements, is reliable to the domestic, regional and international insurance market, [is] financially stable and has full experience in the re-insurance business.
Re-insurance includes the following methods:
1. reinsurance can be made with one or more insurance companies by distributing the insured risk to the re-insurer;
2. part or whole of insured risks can be re-insured.
INSURANCE BUSINESS OPERATIONS
Establishment and Operation of Insurance Business
Anyone wishing to establish and operate an insurance business in Lao PDR shall file an application form through the one-stop service of the Planning and Investment sector as provided in the Law on Investment Promotion .
The type, form and kind of the establishment of insurance business in Lao PDR shall comply with the Law on Investment Promotion and Law on Enterprise.
Insurance business operation has the following scope:
1. insurance business, re-insurance business;
2. risk management, loss protection and elimination;
3. loss assessment;
4. loss assessment agent, loss compensation settlement agent and agent responsible for loss compensation claim from a third party;
5. fund and investment management; and,
6. other activities as defined under the laws of Lao PDR.
An individual or legal entity wishing to establish an insurance business shall fulfill all requirements as follows:
1. has good background on business operation;
2. has registered capital and security deposit as determined in Articles 21 and 24 of this Law;
3. has competent managers who have passed insurance studies;
4. has competent personnel with a certificate or degree in insurance;
5. has never been imprisoned as a result of intentional economic offenses; and,
6. has an office or building that is suitable for operating an insurance business.
The registered capital of an insurance company shall be not less than sixteen billion kip.
During the operation of business, the insurance company shall maintain the level of [total] registered capital not less than the level of capital as defined in the above paragraph [even if the levels of individual shareholders may change].
The government can change the minimum registered and working capital in each period but shall not be less than the amount defined in the above paragraph.
Both a domestic and foreign individual and legal entity fulfilling all requirements is eligible to file an application to operate an insurance business to the Planning and Investment Sector in accordance with the laws and regulations of Lao PDR.
The [time] period for processing the application for the operation of an insurance business, including notification of the approval, shall be within forty- five working days from the date that the application is received.
The insurance business operator shall pay a fee for the issuance of a license for the establishment and operation of an insurance business in accordance with the laws and regulations of Lao PDR.
The insurance business operator shall deposit a security of one third of registered capital for each type of insurance at any commercial bank that has financial stability established in the territory of Lao PDR and this shall be reported to the Ministry of Finance.
The Ministry of Planning and Investment is eligible to issue a license for the establishment and operation of an insurance business in accordance with the agreement and proposal of the Ministry of Finance.
The Ministry of Finance shall define specific regulations and procedures for issuing an insurance business license.
An insurance business license will be withdrawn according to each case when the insurer does not comply with the requirements or violates the prohibitions as follows:
1. cannot fulfill the requirements as provided in this Law;
2. cannot timely implement measures as provided in the effectiveness improvement plan of the company;
3. seriously violates regulations related to the implementation of obligations that are still valid;
4. does not operate insurance business activities after receiving a license as defined in Article 25 of the Law on Investment Promotion.
Once the license of an insurance company is withdrawn, a license of its branch established in Lao PDR shall also be withdrawn.
The withdrawal of a license or suspension of operation of an insurance company shall be made through a written explanation to such company.
The insurer is eligible to request to the Ministry of Finance to reconsider the decision on the withdrawal of a license within fifteen working days from the date of receipt of such decision by providing strong reasons. If the Ministry of Finance does not make a decision within thirty working days from the date of receipt of the request for reconsideration, the insurer is eligible to request to the Government for consideration. The Government shall make a decision not later than sixty working days from the date of receipt of the request. If the insurer is not satisfied with the decision of the Government, it is eligible to take this case to the People’s Court according to the laws and regulations.
Joint-Venture Insurance Company and Insurance Broker
An insurance company and insurance broker wishing to operate as a joint-venture insurance company with a foreign investor is eligible to operate under the kind or type of investment determined in the Law on Investment Promotion and Law on Enterprise.
Any foreign insurance company and insurance broker wishing to establish and operate an insurance business in Lao PDR shall file application documents through the one-stop service for approval as defined in the Law on Investment Promotion.
The establishment of a representative office of a foreign insurance company shall fulfill the following requirements:
1. has experience in operating insurance business for at least five years;
2. has contacted the concerned authority of the Government of Lao PDR for
In addition, the establishment of a representative office shall comply with Article 47 of the Law on Investment Promotion.
The Ministry of Planning and Investment shall issue a license for the establishment of the representative office of a foreign insurance business based on the technical agreement from the Ministry of Finance in accordance with the laws and regulations of Lao PDR.
In addition to provisions defined in Articles 20, 21, 22, 23 and 24 of this Law, the application for establishment and operation of a joint-venture insurance company or insurance broker shall include the following documents:
1. charter and license for the establishment and operation of an insurance business by the partner;
2. Agreement to establish a joint-venture company (if a joint-venture);
3. Balance sheet and annual financial report for the last three years of the partner certified by an independent auditor;
4. Letter of appointment of the managing director in Lao PDR;
5. Full name and CV of the founder, partners and directors of the enterprise requesting for establishment;
6. The first five-year plan of insurance business operations.
The application for establishment of a representative office of a foreign insurance company in Lao PDR shall include the following documents:
1. application for establishment of a representative office;
2. a copy of the license of the foreign insurance company issued in the country where the head office is located;
3. balance sheet and annual financial report for the last three years of the foreign insurance company or insurance broker certified by an independent auditor;
4. a letter of appointment for a representative office manager in Lao PDR;
5. full name and CV of the representative office manager in Lao PDR;
6. Certification letter of a foreign insurer or insurance broker and activities related to associations and other organizations of Lao PDR.
The period and fee for issuing a license and notification of the scope of business operation relating to the insurer and insurance broker that run a joint- venture with a foreign insurance company and the representative office of a foreign insurance company shall be implemented as determined in Articles 22 and 23 of this Law.
The scope for operating an insurance business and insurance broker that has a partnership with foreigners shall comply with the provisions of Article 19 of this law.
The representative office of a foreign insurance company shall comply with Article 47 of the Law on Investment Promotion.
A license of a foreign insurer or foreign insurance broker established in Lao PDR shall be withdrawn if the license of its head office in the foreign country is withdrawn.
A license of a representative office of a foreign insurance company shall be withdrawn if the license of its head office in the foreign country is withdrawn.
In addition, such license will also be withdrawn if the foreign insurer or insurance broker or representative office violates the laws and regulations of Lao PDR.
Principles of Insurance Contract
Insurance contract is an agreement made between the policyholder and insurer under conditions that the policyholder shall pay insurance premium and the insurer shall pay indemnity or compensate for damages to a policy holder or the insured in case damages occur. Each type of insurance contract made by the insured in Lao PDR shall be made only with an insurer registered and operating in Lao PDR.
Types of insurance contract are:
1. Personal insurance contract;
2. Property insurance contract;
3. Civil liability insurance contract.
An insurance contract has the following main content:
1. names and surnames, addresses of the contracting parties;
2. persons or property insured;
3. types of risks insured against;
4. commencement date of insurance against risks;
5. sum insured;
6. insurance premium and payment methods;
7. methods and requirements for notifying damages occurred;
8. period of validity of the insurance contract and guarantee;
9. wording that indicates the invalidity of insurance contracts, the loss
of rights and termination of a contract prior to its expiration;
10. methods of dispute settlement.
An insurance contract shall be effective only if the insurer received a request letter from the insured that includes a request letter for [to buy] insurance, heath certificate, and additional notice that the insured has signed and has paid the first installment of premium which enables the insurer to agree to make and issue a contract. A request letter for insurance is not binding between the insured and insurer. Only the insurance certificate or protection record shall make a binding relationship between insured and insurer.
An insurance certificate is a contracting document that determines general conditions. An insurance contract shall be enforceable only when general conditions are agreed upon by both parties which is evidenced by an insurance certificate issued by the insurance company after the policyholder paid the insurance premium.
An insurance certificate shall be made in writing that is easy to read and in the Lao language, if necessary it can be made additionally in a foreign language. When it is needed to add or change the content in an insurance certificate, the parties shall make an additional contract.
Any type of an insurance contract shall determine the period [covered by the insurance contract] and it can be extended upon an agreement of contracting parties.
An insurance contract can be amended only when an agreement is made between contracting parties.
The amendment shall be effective only when the insurer has recorded the amendment in the contract or issued an attached document.
An insurance contract is terminated in any of the following cases:
1. insurance contract expires without extension;
2. any contracting party violates the insurance contract or does not fulfill the requirements agreed upon; 3. the insured properties disappear or are destroyed;
4. contracting parties agree to cancel the insurance contract voluntarily;
5. the policyholder has intentionally lied or hidden the person/property to be insured;
6. the court makes a decision that the insurance contract is void or the insurance company is bankrupt.
The insurer shall be responsible for providing full information related to an insurance contract, and to explain the conditions and contents of an insurance contract to the policyholder. The policyholder shall also be responsible for providing full information related to the insurance, [including] clarifications and details of the information [to the insurer]. The insurer shall keep the information provided by the policyholder confidential.
Insurer is eligible to suspend or cancel the implementation of an insurance contract and collection of insurance premium if the policyholder does the following actions:
1. intentionally provides false information aiming to reach an insurance contract and collect insurance money or insurance annuity;
2. does not provide information to the insurer as determined in Articles 38 and 39 of this Law.
If the insurer intentionally provides false information, the policyholder is eligible to suspend or cancel the implementation of the insurance contract received, and the insurer shall compensate for damages occurred from such false information provided.
If there are any changes to risk factors that decrease the basis for the calculation of an insurance premium, the policyholder is eligible to request the insurer to reduce the insurance premium for the remaining period of the insurance contract. In case the insurer disagrees to decrease such insurance premium, the policyholder is eligible to cancel the insurance contract but shall inform the insurer in writing immediately and send a copy of the notice to the Ministry of Finance.
If there are any changes to risk factors that increase the basis for the calculation of an insurance premium, the insurer is eligible to recalculate the insurance premium for the remaining period of the insurance contract. In case the policyholder rejects payment of the additional insurance premium, the insurer is eligible to cancel the insurance contract unilaterally, but shall make a notification in writing to the policyholder immediately and send a copy of the notice to the Ministry of Finance.
Claiming for insurance annuity or indemnity shall be as follows:
1. be processed within a one year period from the date the incident occurred[;] for a force majeure or sudden incident, shall not be included in the period of payment of the insurance annuity or compensation of damages;
2. in case the policyholder does not know when the incidence occurred as provided in paragraph 1 of this Article, the time period shall be calculated from the date the incident is known to the policyholder;
3. in case a third party requests the policyholder to compensate for damages that are insured according to the insurance contract, the time period as defined in paragraph 1 of this Article shall be calculated from the date the third party made a request.
The Ministry of Finance shall issue a regulation on the management of an insurance reserve fund for advance payment to the policyholder in case an accident occurrs.
If an incident occurrs, the insurer shall pay insurance annuity or indemnity according to the time period agreed in the insurance contract. In case the time period is not specified, the insurer shall pay insurance annuity or indemnity within thirty days from the date of receipt of all required documents in accordance with the claim for insurance annuity or indemnity.
Litigation regarding an insurance contract shall be carried out within three years from the date the dispute occurred. The prescription may be suspendion according to Article 30 of the Law on Contracts if there are acceptable reasons and there is an appointment of an expert to prove the facts after damages occurred.
An insurance contract that has one or more kinds of insurance can be transferred between insurers based on an agreement among those insurers.
The Ministry of Finance shall be notified about the transfer of an insurance contract.
The transfer of an insurance contract shall be conducted as follows:
1. the transferred insurance contract shall be the same kind of insurance;
2. rights and obligations as determined in the insurance contract shall not be changed throughout the period of the insurance contract;
3. the insurer who received the transferred insurance contract shall have financial stability and a reserve fund as defined in the laws and regulations.
The transfer of an insurance contract shall be conducted as follows:
1. the reasons and transfer plan with the copied insurance contract shall be proposed to the Ministry of Finance;
2. the transfer of an insurance contract can be processed only when the Ministry of Finance issues a written notice; 3. the insurer shall disclose the transfer and notify the policyholder in writing within thirty days from the date of receipt of that notice.
Personal Insurance Contract
A personal insurance contract is an insurance contract against risk to life, heath, and personal body accident.
The policyholder can buy insurance for individual persons as follows:
2. husband, wife, child/children, parents and siblings of the policyholder;
3. other persons if the policyholder shares the benefits with that person.
A life insurance contract is a contract that aims to receive insurance annuity in case the insured dies and the insurer shall pay to the beneficiary as defined in the contract.
Health insurance contract is a contract that provides compensation of the costs for treatment as defined in the contract in case of sickness.
Body accident insurance contract is a contract that compensates for expenses as defined in the contract in case of injury, disability or death because of the accident.
The policyholder is obliged to specify the age of the insured correctly at the time the insurance contract is made. Such information is background for the calculation of the insurance premium.
In case the policyholder specifies the wrong age of the insured such that the age of that person is not in the scope to be insured, the insurer is eligible to cancel the insurance contract by deducting all expenses before returning the insurance premium to the policyholder.
In case the life insurance contract has been in force for more than two years, the insurer shall pay money for the withdrawal of the contract to the policyholder as provided in the insurance contract.
In case the policyholder specifies the wrong age of the insured such that the real age of the insured is in the scope for getting the insurance but the result is that the insurance premium is not high enough, the insurer is eligible to request the policyholder to pay a higher insurance premium to match the insurance premium as agreed in the insurance contract or may reduce the level of protection to match the insurance premium actually paid.
In case the policyholder specified the wrong age of the insured but the real age of the insured is in the scope of getting the insurance but results in the collection of an insurance premium that exceeds the amount agreed, the insurer shall return such excess insurance premium to the policyholder or may increase the level of protection to match the insurance premium that was actually paid.
The policyholder shall pay the insurance premium in one payment or in installments as determined in the insurance contract. In case the insurer allows the payment of the insurance premium every three months, six months or more than that, the outstanding amount of insurance premium shall be regarded as a debt that the insurer is eligible to deduct from the amount of insurance annuity to be paid in accordance with the contract.
In case the policyholder pays the insurance premium in installments and the policyholder has paid no more than two years but cannot pay for two consecutive months, the insurer is eligible to suspend the implementation of insurance contract and the policyholder is ineligible to claim back the insurance premium that was paid earlier unless the policyholder continues to pay the due premium. If the policyholder could not pay the due amount within two years, [the policyholder] is ineligible to claim back the insurance premium paid earlier unless the provisions of the contract defines otherwise.
In case the policyholder had paid the insurance premium for two or more years and the insurer has stopped the implementation of the insurance contract as provided in paragraph 2 of this Article, the insurer shall pay back the premium to the policyholder unless the provisions of the insurance contract defines otherwise.
The contracting parties may continue the implementation of an insurance contract that has been suspended as provided under paragraph two of this Article within two years from the date of such suspension.
The policyholder who transfers benefits in life insurance to another person shall specify in writing the person to receive the benefits and insured amount, and shall notify the insurer.
The policyholder is eligible to transfer the benefits from life insurance to an insane person or a person who is lower than eighteen years old upon the agreement of the parents or guardian of that person.
The insurer will not pay an insurance annuity in the following cases:
1. An insurance contract related to a death shall not be enforceable if the insured committed suicide, but the insurer shall still pay money to the person who is eligible to receive the amount that exists in the reserve fund according to the calculation formula if the insurance certificate defined that the insurer will pay the insurance annuity to the insured in case he/she committed suicide[;] the insurance contract shall be enforceable only when the insurance certificate that has been signed by the parties has been in force for two years. The insurance contract shall not be enforceable if the beneficiary intended to cause the insured’s death.
2. The insured person dies or is permanently disabled by the intention of the policyholder or the beneficiary;
3. In case there are many beneficiaries and one of the beneficiaries intended to hurt the insured to cause death or to be permanently disabled, the insurance company shall pay insurance annuity to other beneficiaries as agreed in the insurance contract;
4. In the case of paragraph 1 of this Article, the insurance company shall pay the remaining insurance annuity or total insurance annuity to the policyholder after properly deducting related expenses. If the policyholder dies, the return money shall be resolved under provisions of the Law on Inheritance.
Personal insurance is exempted from taxes as follows:
1. Value-added tax on making a life insurance contract and health insurance contract;
2. Income tax on income from the death or permanent disability of an individual insurance contract;
3. Income tax on health insurance and body accident insurance annuities;
4. Income tax on benefits received from endowment insurance.
Property Insurance Contract
A property insurance contract is a contract against risks on property including targets as defined in Articles 11, 12 and 13 of this Law.
The insurer shall pay insurance indemnity to an insured person or beneficiary according to actual damages but shall not exceed the sum insured as defined in the insurance contract.
In case there are damages to the property, life or body of the insured person that has directly or indirectly been caused by careless action of a third party, the insurer shall pay the insurance annuity to the insured person according to actual damages but shall not exceed the sum insured as defined in the contract.
The insurer is eligible to claim compensation for payment to the insured person from the third party who caused the damage.
The third party who caused the damage shall also be responsible for compensating the amount that exceeds the sum insured.
The insurer shall not be responsible for paying indemnity in case the insured property is damaged due to depreciation or due to the decrease of its value unless it is defined otherwise in the insurance contract.
The compensation for damages shall be implemented as follows:
1. The insurer shall compensate for damages to the insured based on the actual estimation at the place the incident occurred of the level of damages, unless defined otherwise in the insurance contract. The costs for the estimation of damages shall be borne by the insurer;
2. The insurer shall compensate for damages to the insured not to exceed the sum insured.
The policyholder and the insurer can agree on the forms of compensation as follows:
1. repairing the damaged property;
2. replacing the damaged property by the same property that has equal value;
3. paying money for damages.
In case the insurer and the policyholder cannot agree on the forms of paying for compensation, it shall be processed according to paragraph 3 of this Article.
If the compensation for damages is processed in accordance with paragraphs 2 or 3 of this Article, the insurer is eligible to collect the damaged properties after they have been replaced or compensated for in accordance with the actual value of the properties.
When incidents such as fire and accident occur, the insurer shall immediately go to the site of the incident to estimate the cause and damages occurred.
In case the insurer and policyholder could not agree on the cause and damages, any contracting party can request for a third party to estimate the cause and damages. In case an agreement could not be reached to hire a third party, any contracting party can ask the People’s Court to appoint an independent evaluator for the cause and damages.
The contracting parties shall accept the results of the evaluation and damages conducted by that evaluator.
In case the insured person has caused damages to the third party, the insurer shall be responsible for the indemnity to the insured and/or third party as defined in the contract.
In case damages have been caused by a third party, the third party shall be responsible for damages that have occurred to the insured in accordance with the laws and regulations. In case of injury caused by a road accident of which the transport is insured, the insurer shall first pay for the costs of treatment of the injured person; in case there is no insurance funding available, the insurer can claim back [the payment] from the person who caused the accident.
If the ensured value of the property is lower than its actual value and if an incident occurs, the insurer shall compensate for damages in accordance with the percentage of the sum insured and actual value of the insured property during the period of the insurance contract.
If the value of the property insurance is higher than the actual value of the insured property, the insurer shall return the excess insurance premium to the policyholder. If an incident occurs, the insurer shall pay compensation according to actual damages and shall not exceed the sum insured.
Overlapping insurance contracts is where a policyholder makes an insurance contract with two or more insurance companies to insure the same property that has the same conditions and purposes of insurance.
In case the contracting parties make overlapping insurance contracts and if an incident occurs, each insurance company shall compensate for damages at the ratio of the sum insured agreed in accordance with actual value of damaged property.
The insurer can carry out reinsurance with domestic or foreign reinsurers in order to reduce risks and responsibilities for the compensation of damages to insured property in compliance with related Lao PDR and international laws and regulations. The insurer shall provide information regarding the re-insurance contract and other information to the Ministry of Finance for the purpose of monitoring, management and inspection.
Re-insurance shall be carried out according to the following requirements:
1. shall be suitable to the conditions of the business operation of the re-insurer;
2. shall be feasible and suitable technically to the field of business operation of the authorized re-insurer;
3. shall be trusted among insurance markets in [Lao PDR] and foreign countries in the region and internationally, financially sustainable and has expertise in the field of re-insurance.
If the Ministry of Finance detects that the re-insurance does not fulfill the requirements defined above, it is eligible to send a written notice to cancel or to adjust the re-insurance or reject the approval of re-insurance.
The insurer shall be responsible to the policyholder in accordance with an insurance contract, including re-insurance of property.
The re-insurer is not allowed to require the policyholder to pay insurance premium to him/her directly, except if the insurance contract defines otherwise.
The policyholder is not allowed to require the re-insurer to pay compensation to him/her, except if the insurance contract defines otherwise.
An Insurance Contract Regarding Civil Liability
The insurer shall have responsibility only when the insured has caused damages during the term of the insurance contract and the [damaged] third party has claimed for compensation for such damage from the insured.
The insurer is eligible to act on behalf of a policyholder in the negotiation with the third party regarding compensation for such damage caused by the insured, except if the insurance contract defines otherwise.
The insurer can directly pay compensation for damage to the insured or damaged third party when the damage occurred, based on a request of the insured.
INSURANCE AGENT AND INSURANCE BROKER
An insurance agent is an individual or legal entity authorized by the insurer under the provisions of a contract to be an insurance agent to operate insurance activities in compliance with this Law and other related laws and regulations.
The insurer shall submit a list of insurance agents under its responsibility to the Ministry of Finance.
An insurance agent shall fulfill the following requirements:
1. For an individual:
- being a Lao citizen with residency in Lao PDR;
- be 18 years old or older;
- has passed insurance course/s;
- has never been imprisoned as the consequence of intentional actions;
- is in good health.
2. For a legal entity:
- is established legally.
An insurance agent has the following rights and duties:
1. offer and sell insurance;
2. issue insurance contracts;
3. collect insurance premium and handover to the insurer;
4. provide coordination for purposes of inspection and problem solving when an insurance accident occurs;
5. deliver full indemnity to apolicyholder or beneficiary on timely manner;
6. implement other duties related to an insurance contract.
The covenant for an insurance agent shall include the following main content:
1. name and address of the insurance agent;
2. name and address of the insurer;
3. rights and obligations of the insurer and insurance agent;
4. commission (fees) to be paid to insurance agent;
5. term of the covenant;
6. dispute resolution;
7. depositing of security.
In case an insurance agent violates the covenant for being an insurance agent and causes damages to the rights and benefits of a policyholder, the insurer shall be directly responsible for damages caused by such insurance agent and [the insurer] is eligible to claim for compensation from the insurance agent.
Insurance broker is an individual or legal entity that is authorized to operate an insurance broker business.
An insurance broker that is legally established is eligible to be an insurance broker for the insurer and for policyholders.
An individual or legal entity wishing to operate an insurance broker business shall [follow the same rules for application] as for the establishment of an insurance company as defined in Article 17 of this Law.
Details for the registered capital of the insurance broker is defined in a separate regulation.
An insurance broker may operate an insurance business under the following scope:
An insurance broker has the following rights and duties:
An insurance broker shall deposit a security for its insurance broker activities by purchasing professional liability insurance with any insurer in Lao PDR.
Details on professional liability insurance of the insurance broker are defined in a separate regulation.
COMPETITION IN THE INSURANCE BUSINESS
Insurers, insurance agents and insurance brokers that are permitted to operate an insurance business in Lao PDR have equality in front of the law and can compete according to the laws and justice in order to stabilize the insurance market, and expand and develop insurance products to serve the society.
Competition in insurance business shall be conducted according to market economic mechanisms under the laws and regulations of Lao PDR, ensuring the principles of fairness and professional ethics.
The competition in insurance business:
FINANCE, ACCOUNTING AND REPORTING REGIME
An insurer and insurance broker shall accurately and completely comply with the financial regime, reserved fund and insurance reserved fund as defined in the laws and regulations of Lao PDR.
An insurer and insurance broker shall create a reserved fund as defined by the Law on Enterprise to guarantee the risks in business operations and business expansion.
An insurance reserved fund is the technical reserved fund that the insurer has deducted to pay for insurance debt and operating costs of insurance activities and other costs occurred from the contracts.
Insurance reserved fund must be allocated according to each category of insurance where the insurance reserved fund shall have adequate funds to fulfill obligations to the insured or beneficiaries from the insurance.
Details of the form and kind of insurance reserved fund and amount of reserved funds are determined in a specific regulation by the Ministry of Finance.
Accounting and Reporting [Regime]
An insurer and insurance broker shall comply with the accounting regime as stipulated in the Law on Accounting and other relevant laws and regulations of Lao PDR.
A foreign insurer and insurance broker invested and operating in Lao PDR can transfer profit and dividends from Lao PDR to other countries after fulfilling financial obligations and deducting the relevant reserved funds as provided under the laws of Lao PDR.
Transferring its assets out of Lao PDR is allowed after terminating operations and payment of all obligations including debts.
An insurance company shall have evidence to certify its sufficient ability to pay debts that include:
An insurer is eligible to use assets that are deposited in a bank to pay debts when it stops its operations:
2. As a result of violations against the laws and regulations;
3. As a result of a bankruptcy.
A claim for a security shall be implemented as follows:
In case of ceasing business operation according to section 1 above, it shall be claimed within thirty days after the date of receiving a notice for ceasing insurance business.
In case of ceasing business operation according to sections 2 and 3 above, the insurer cannot claim back its deposit money until it has developed a plan to pay the debts and [has] paid the debts to all insured or beneficiaries.
In case it receives interest from the security deposit in the bank, the insurer can use the interest from such security.
The insurer is eligible to use its capital based on the agreement of the shareholder meeting but shall warrant the safety, efficiency and ensure the ability to repay money on a regular basis in accordance with the insurance contract.
The insurer is eligible to use its capital to invest in Lao PDR in accordance with the order of the following prioritized areas:
The income and expenditure of the insurer and insurance broker shall be consistent with the Accounting Law and consistent with the standards of accounting principles of Lao PDR.
The Ministry of Finance shall issue specific regulations for inspecting the implementation of financial regulations by an insurance company and insurance broker.
The fiscal year of the insurer and insurance broker shall be implemented in accordance with the accounting year as defined in the Law on Accounting which starts from 1st January and ends 31st December of each year.
The first fiscal year of the insurer and insurance broker shall be started from the date of approval for the establishment and operation of a business and end on 31st December of that year.
The audit of the annual financial statements of the insurer and insurance broker shall be certified by an independent auditor or the relevant government authority.
The Ministry of Finance is eligible to require the insurer and insurance broker to have their insurance business operation rated by either a domestic or foreign rating company.
The insurer and insurance broker shall comply with financial report regulations as provided in the Accounting Law and shall provide reports on a periodic basis regarding its business operations.
In addition to a regular report, the insurer and insurance broker shall submit financial statements to the Ministry of Finance according to the following cases:
The insurer and insurance broker are eligible to publish its financial report that has already been audited by an independent auditor or relevant government authority after the end of the fiscal year.
RIGHTS AND OBLIGATIONS OF THE INSURER AND
The insurer has the following rights:
The insurer has the following obligations:
The policyholder has the following rights:
The policyholder has the following obligations:
Insurance officers are prohibited to act as follows:
Insurers and insurance brokers are prohibited to behave as follows:
An individual, legal entity and other organizations are prohibited to act as follows:
the insurance business operator to not pay obligations to the State.
Dispute resolution for insurance can be implemented by any of the following forms:
Once an insurance dispute occurs, the parties can select any form of dispute settlement as defined under Article 106 of this Law.
Parties can make a compromise on an insurance default.
The settlement made by a compromise shall comply with the principles of making a contract as defined in the Law on Contracts.
The parties can select to mediate a dispute at any time in compliance with laws and regulations.
The parties can appeal to the Insurance Management Authority to resolve an insurance dispute in accordance with laws and regulations.
The parties can appeal to the Economic Dispute Resolution Committee at any time to resolve insurance disputes in accordance with the Law on Economic Dispute Resolution and other related laws and regulations.
The parties can sue in the People’s Court to resolve an insurance dispute in accordance with laws and regulations.
The settlement of an insurance dispute that is related to an international case shall be implemented in accordance with the treaties and conventions to which Lao PDR is a party.
MANAGEMENT AND INSPECTION
Management Body [Authority]
The Government centrally and uniformly manages insurance activities throughout the country by assigning the Ministry of Finance as the lead authority to coordinate with relevant sectors, particularly the Planning and Investment Sector, Industry and Commerce Sector, Public Health Sector, Agriculture and Forestry Sector, Information Culture and Tourism Sector and concerned local administrations.
The Finance Sector is the Insurance Management Authority.
Other sectors have rights and duties to manage insurance activities in accordance with their roles.
For the purpose of managing insurance activities, the Ministry of Finance has the following rights and duties:
Inspection Authorities include:
Internal Inspection Authorities have the following rights and duties:
External Inspection Authorities have rights and duties to inspect the implementation of the laws and regulations that are related to insurance activities according to their roles, rights, duties and scope of responsibilities, to strictly inspect performance of insurance officers such as their behaviors, and complaints from the public and appeals from individuals, legal entities and other organizations to ensure effective, transparent and fair insurance.
Inspection includes the following forms:
- Regular inspection;
- Inspection with prior notice;
- Sudden inspection.
Regular inspection is an inspection that is carried out in accordance with a plan and on a regular and certain period of time.
Inspection with prior notice is an inspection that is not included in the plan [but is] carried out when it is needed by informing the audited person in advance.
Sudden inspection is an urgent inspection without informing the inspected person in advance.
INCENTIVES FOR GOOD PERFORMERS AND MEASURES
An individual, legal entity or organization with outstanding performance in implementing the Law on Insurance, particularly enabling insurance business to be highly effective and efficient, will be rewarded or will receive other benefits as defined in the regulations.
An individual, legal entity or organization violating the Law on Insurance shall be educated or warned, [subject to] disciplinary actions or face criminal actions depending on the seriousness of the offence and shall compensate for civil damages.
An individual, legal entity or organization committing an unintentional offense on insurance for the first time will be educated or warned.
Personnel and insurance officers violating laws and regulations on insurance and prohibitions to a light degree that is not a criminal offense will [have] disciplinary actions [applied to them] according to each case as follows:
Those who perform unfair competition on insurance that causes damages to others shall be imprisoned from three months to two years and fined from 500,000 kip to 10,000,000 kip.
Other actions that are criminal offenses shall be punished according to the Penal Law as well as paying compensation for damages occurred.
The Government of the Lao People’s Democratic Republic shall implement this Law.
This Law enters into force after ninety days from the date the President of the Lao People’s Democratic Republic issues the Presidential Decree on the Promulgation.
This Law replaces Insurance Law No. 11/90/SPA, dated 29 November 1990.
All provisions and regulations that contradict this Law shall be void.
President of National Assembly
[signed and stamped]
|Joint venture between insurance company and insurance broker and foreign investor allowed||Insurance company and insurance broker may |
operate as a joint-venture insurance company with
a foreign investor as permitted by Law on
Investment Promotion and Law on Enterprise
|Requirement for a registered capital to operate as an insurance broker||An individual or legal entity wishing to operate an|
insurance broker business must have registered capital
|Requirement for application to be submitted to establish and operate an insurance company between a foreign insurance company and insurance broker||A foreign insurance company and insurance broker|
wishing to establish and operate an insurance
business in Lao PDR must apply for a license
|Requirement for domestic and foreign individuals and legal entities to have a license to operate an insurance business||Domestic and foreign individuals and legal entities |
must apply for a license to operate an insurance
|Requirement for establishing an insurance business is the grant of a license based on technical requirements||An individual or legal entity wishing to establish|
an insurance business must meet several criteria,
including qualified staff
|Requirement for establishing an insurance business: a minimum capital||An individual or legal entity wishing to establish|
an insurance business must have registered capital and
|Requirement for insurers and insurance brokers to create a reserved fund||An insurer and insurance broker must create a|
reserved fund as defined by the Law on
Enterprise to guarantee risks
|Requirement for license fee to operate insurance business||A fee must be paid for the issuance of a license|
to operate an insurance business
|Requirement for professional liability insurance for insurance broker||An insurance broker must deposit a security for |
its insurance broker activities by purchasing
professional liability insurance with any insurer in
|Requirement for security deposit by insurance business operator||The insurance business operator must deposit a |
security of one third of registered capital for each
type of insurance
|Requirement of a license for the establishment of a representative office of a foreign insurance business||A license for the establishment of the representative office of a foreign insurance business is based on technical agreement||Active|
|Requirement to prohibit various practices by insurer and insurance broker||Insurer and insurance broker prohibitions include|
operating life and general insurance at the same
time without having separate business licenses
|Requirements for being insurance agent include nationality and residency||An insurance agent must meet various criteria, |
including being a Lao citizen with residency
in Lao PDR
|Requirements for registered capital and working capital||The registered capital of an insurance company|
must not be less than 16 billion kip. The working
capital shall be the same amount as the registered
|Requirements for the establishment of a representative office of a foreign insurance company||The establishment of a representative office of a |
foreign insurance company must fulfill conditions, including experience for at least 5 years
|Requrement to obtain a license to establish and operate insurance business||The establishment and operation of an insurance|
business in Lao PDR requires the filing of an
application for license
|Rrequirement to observe rules on competition in insurance business||Competition in insurance business must be|
conducted according to market economic
mechanisms. Penalty for unfair competition
that causes damages to others is
imprisonement and a fine