Effective from 1 July 2016, the New Penal Code1 criminalizes insurance fraud and holds both violating individuals and commercial legal entities liable. It has been reported that situations giving rise to fraud in the insurance industry have become increasingly common and complex in Vietnam. Moreover, the old regulations are incomplete and insufficiently stringent to effectively prohibit, sanction and prevent fraud in the insurance industry. Thus, this development will hopefully form an effective legal basis to contribute to the protection of insurers’ interests, as well as the development of the insurance market in Vietnam in general.
Specific Regulations Provided by the New Penal Code
1. Those who commit one of the following acts appropriating insurance proceeds valued from VND20,000,000 (approx. US$920)2 and less than VND100,000,000 (approx. US$4,600) or causing damage valued from VND50,000,000 (approx. US$2,300) and less than VND200,000,000 (approx. US$9,200), shall be subject to a fine from VND30,000,000 to VND100,000,000 (approx. US$1,380 – US$4,600) or non-custodial reform for up to three (3) years:(a) Being in collusion with the beneficiary of insurance proceeds to illegally settle indemnification or make payments of insurance proceeds;
(a) Being in collusion with the beneficiary of insurance proceeds to illegally settle indemnification or make payments of insurance proceeds;
(b) Forging documents, intentionally falsifying the information to refuse to indemnify and pay insurance proceeds when an insured event occurs;
(c) Forging documents, intentionally falsifying the information in the documentation and dossier requesting indemnification and payment of insurance proceeds; and
(d) Intentionally causing damages to one’s own health and properties in order to benefit from an insurance policy, unless otherwise provided by law
2. In the event of a crime committed in one of the following circumstances, the offenders shall be subject to a fine from VND100,000,000 to VND300,000,000 (approx. US$4,600 – US$13,800) or between one (1) and three (3) years of imprisonment:
(a) In an organized manner;
(b) Employing treacherous and dangerous tricks; and
(c) Appropriating an amount of insurance proceeds which are between VND100,000,000 and under VND500,000,000 (approx. US$4,600 – US$23,000);
(d) Causing damage of between VND200,000,000 and under VND1,000,000,000 (approx. US$9,200 – US$46,000); and
(e) Dangerous recidivism.
3. In the event that a crime is committed in one of the following circumstances, the offenders shall be subject to between three (3) and seven (7) years of imprisonment:
(a) Appropriating an amount of insurance proceeds valued at VND500,000,000 (approx. US$23,000) or more; and
(b) Causing damage valued at VND1,000,000,000 (approx. US$46,000) or more.
4. The offenders shall also incur a fine of between VND10,000,000 and VND100,000,000 (approx. US$460 – US$4,600), and/or a ban from holding certain posts, practicing certain occupations or doing certain jobs from one (1) to five (5) years. 5. If an offender is a commercial legal entity (e.g., a company), the offender shall be subject to the following:
(a) Committing one of the acts provided in Item 1 above and appropriating an amount of money valued between VND200,000,000 and under VND1,000,000,000 (approx. US$9,200 – US$46,000) or causing damage valued of between VND400,000,000 and under VND2,000,000,000 (approx. US$18,400 – US$92,000), shall incur a fine of between VND200,000,000 and VND1,000,000,000 (approx. US$9,200 – US$46,000);
(b) Committing one of the acts provided in Items 2(a), (b), (c) or (d) above and appropriating an amount of money valued between VND1,000,000,000 and VND3,000,000,000 (approx. US$46,000 – US$138,000) or causing damage valued between VND2,000,000,000 and VND 5,000,000,000 (approx. US$92,000 – US$230,000), shall incur a fine of between VND1,000,000,000 and VND3,000,000,000 (approx. US$46,000 – US$138,000);
(c) Committing a crime and appropriating an amount of money valued at VND3,000,000,000 (approx. US$138,000) or more, or causing damage valued at VND5,000,000,000 (approx. US$230,000) or more, shall incur a fine of between VND3,000,000,000 and VND7,000,000,000 (approx. US$138,000 – US$322,000); and
(d) A violating commercial legal entity shall also be banned from conducting its business, or from operating in certain sectors or areas, or from mobilizing capital for a period of between one (1) to three (3) years.
1 Penal Code No. 100/2015/QH13 passed by the National Assembly of Vietnam on 27 November 2015 (the “New Penal Code”). 2 Interbank exchange rate dated 30 December 2015: 1US$ = VND21,890.
