The Ministry of Finance (MOF) has proposed changes to Decree 103 of 2008 regarding compulsory civil liability insurance of motor vehicle owners, aiming to facilitate motor vehicle owners’ participation in civil liability insurance and increase responsibility of insurance firms.
Specially, the draft decree revises current provisions on validity period of insurance certificates, indemnity procedures, and insurers’ responsibility for compensation and insurance limits.
Flexible regulations on validity period of insurance certificates
For the sake of convenience of both the insured and insurance companies, the draft proposes that civil liability insurance certificates of motorbike owners would be valid for one year to three years. For automobiles, the minimum validity period of insurance certificates would be one year while the maximum period would correspond to the validity period of vehicles’ technical safety and environmental protection inspection certificates. When joining traffic, vehicle owners must carry their valid insurance certificates and show them to traffic police and other competent functional agencies when requested.
Nguyen Quang Huyen, Deputy Director of the MoF’s Insurance Supervisory Authority, said such proposals would help save vehicle owners’ costs and time for purchasing insurance. As for insurance companies, when the insurance period is raised to three years, they would find it easier to conduct management, accounting and account finalization work.
Simplification of indemnity procedures
In order to facilitate payment of insurance compensation, the draft specifies that in case of non-fatal injuries, insurance companies may themselves compile indemnity dossiers without having to collect relevant documents from state authorities. Such a dossier comprises documents related to the motor vehicle and driver concerned, documents proving damage to life, health and/or property of the insured and a record of inspection of the cause of the accident and degree of damage, made by the insurance company after reaching agreement with the insurance buyer and the insured. However, in case of fatal accidents, insurers would have to collect copies of accident-related documents from related state agencies, mostly public security agencies.
When an accident occurs, a motor vehicle owner would immediately report the accident to not only his insurer but also the nearest police office or local administration for joint handling while seeking measures to rescue the injured, mitigate damage and protect the accident scene.
The draft further provides that the Ministry of Public Security would direct the traffic police and investigation police forces to provide copies of documents relating to traffic accidents to insurers after investigation results are available. The time limit for provision of documents is five working days after receipt of a request from insurance companies.
Insurers’ compensation responsibility and insurance limits
The draft emphasizes that insurance enterprises would have to closely coordinate with vehicle owners or drivers and the third party to identify causes of the accidents and determine the degree of damage. Insurers would have to cover all expenses for damage assessment.
Within three working days after receiving a notice of accident from its client, an insurance company would make advance payment of compensation to help the victim(s) (the third party) pay medical examination and treatment expenses. The advance payment would equal 70 percent of the compensation per person, in case of casualty, or 50 percent of the compensation per person, in case of injury. Particularly, if it remains unclear whether the accident falls under the liability coverage, these rates would be 30 percent for dead victims and 10 percent for those undergoing emergency treatment.
Particularly, in case vehicles causing accidents are unidentifiable or uninsured, dead victims, if any, would be entitled to a support amount equaling 30 percent of the compensation from the Motor Vehicle Insurance Fund, a foundation set up with compulsory contributions of insurance enterprises.
The draft suggests raising the insurance limits for loss of human life to VND 150 million (USD 6,500) from the current level of VND 100 million (USD 4,330). For property damage, the insurance limit would be kept unchanged at VND 50 million (USD 2,100) for motorbikes and VND 100 million for automobiles. Annual premiums of compulsory civil liability insurance of motor vehicle owners would remain unchanged.- (VLLF)