Insurance laws Laos
Laos' insurance sector is governed by the Amended Law on Insurance (No. 78/NA), which came into effect on April 14, 2020. This law, promulgated by the President of the Lao PDR on January 10, 2020, and published in the Official Gazette on March 30, 2020, replaced the previous Insurance Law of 2012
🏛️ Regulatory Authority
The Ministry of Finance (MOF) is the primary regulatory body overseeing the insurance industry in Laos It is responsible for licensing insurance and reinsurance companies, monitoring their operations, and ensuring compliance with the law
📋 Key Provisions of the Amended Insurance Law
1. Life Insurance Product Categories
The law categorizes life insurance products into three type:
Non-participating policiesPolicyholders do not receive dividends from the insurer's profit.
Participating policies Policyholders are entitled to share in the insurer's profit.
Investment-linked policies Combines life insurance with investment components, similar to unit-linked insurance These policies can take various forms, including whole life, term life, endowment, and annuity insuranc.
2. Insurance Business Structure and Capital Requirements
Business Structure Insurance companies must operate as either a limited company or a public compan.
Capital Requirements The minimum registered capital is set at LAK 30 billion (approximately USD 3.35 million) for life or general insurance businesse. If reinsurance services are provided, the capital requirement increases to LAK 60 billion (approximately USD 6.7 million)f their registered capital with a commercial bank in Lao. Alternatively, they can obtain a guarantee from a financially stable bank to cover indemnity payment liabilities
3. Licensing and Operational Restrictions
Single Business Focus Insurance companies are permitted to operate only one type of insurance business at a time (either life or general insurance, with or without reinsurance services)
Share Transfer Approval Any transfer of 50% or more of shares in an insurance or reinsurance company requires prior approval from the MOF
Merger Approval Mergers must receive prior approval from the MOF, which will assess the potential impact on market competition
4. Financial Reporting and Disclosure
Annual Reporting Insurance companies must submit annual financial statements to the MOF by March 30 of the following year and obtain an annual accounting compliance certificate uditor opinions on their official website or other mass media platforms
Use of Actuaries All insurance companies must employ actuaries to compute insurance premiums, assess reserves, and prepare risk assessment reports
5. Distressed Insurance Companies
In cases of financial distress, the MOF has the authority t:
Require the transfer of rights and obligations under insurance contracts to another compan.Force the company to enter into a reinsurance contrac.
Take control of the company and its asset. If the company remains unable to meet its obligations, the MOF may initiate legal proceedings for further action
6. Dissolution and Liquidation
The law provides specific provisions for the dissolution and liquidation of insurance companies, including the appointment of a liquidation committee by the MOF to oversee the process
🌍 Foreign Investment and Market Acces
The Lao government does not impose any restrictions on foreign investment in the insurance industy Foreign investors are permitted to establish insurance companies in Laos, subject to compliance with the regulatory requirements outlined in the Amended Insurance Law
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