Conditions for establishing a health insurance company in Vietnam

Insurance is one of the conditional businesses. Therefore, to establish a company dealing in all types of insurance in general and health insurance companies in particular, customers need to meet certain conditions. So what are the conditions for establishing a health insurance company?

Legal bases

• Schedule of commitments Vietnam in WTO.
• Insurance Business Law 2022.

• Decree No. 46/2023/ND-CP details the implementation of a number of articles of the Law on Insurance Business.

• Decree No. 151/2018/ND-CP amending and supplementing a number of decrees regulating investment and business conditions under state management of the Ministry of Finance

What is health insurance?

Pursuant to Clause 15 Article 4 of the Law on Insurance Business in 2022 stipulates the concept of health insurance as follows: “Health insurance is a type of insurance for cases where the insured suffers injury, accident, illness, illness or health care.”

Thus, health insurance is a non-life insurance product provided by insurance companies to protect customers’ finances against risks related to health and life. In addition, health insurance can also be considered a form of savings with a stable interest rate

Basic types of health insurance in Vietnam

According to the Law on Insurance Business 2022, health insurance is divided into 3 main categories:

Personal Accident Insurance

• A type of insurance in case of accident risk resulting in death, injury or other problems giving rise to medical expenses for the insured.
• Insurance benefits will be compensated according to the actual cost or proportion of the sum insured depending on each product of each company.

Health insurance

• It is a type of insurance in the field of public health care. Accordingly, the purchaser of health insurance will be partially or fully covered for health examination, treatment and rehabilitation costs,… if unfortunately an accident occurs, illness.

Health Care Insurance

• This is a type of insurance that helps customers get the best medical care with many benefits, paid according to the fact and limited to each benefit for inpatient, outpatient, dental, maternity, organ transplant insurance benefits …

Market access conditions for insurance business in Vietnam

Vietnam’s commitment to join the WTO

Based on Section 7 of Vietnam’s Schedule of commitments in the WTO regulating financial services, it can be seen that when Vietnam joined the WTO, it committed to open the market for foreign investors to access the market for insurance and insurance-related services in Vietnam for sub-sectors:  Principal insurance (Life insurance, excluding health insurance, general insurance), Reinsurance and reinsurance assignment, Insurance intermediaries (such as insurance brokers and insurance agents).

Vietnam’s commitments in CPTPP

Vietnam’s commitments to open insurance ancillary services in the CPTPP are similar to commitments in the WTO. Accordingly, in Chapter 11 of the Schedule of commitments on financial services, Vietnam commits without limitation to financial services including: all insurance services and insurance-related services. In particular, the types of insurance include: direct insurance (life; non-life); reinsurance and reinsurance assignments; insurance intermediaries; ancillary services for insurance (consulting, statistics, risk assessment and claims settlement services).

Conditions for establishing a health insurance company in Vietnam

Conditions on legal capital

The first thing to establish an insurance business company is to meet the conditions for legal capital as prescribed. Pursuant to the provisions of Article 133 of the Law on Insurance Business in 2022 on legal capital when establishing a health insurance company as follows:

• Charter capital shall be contributed in Vietnamese Dong and not lower than the minimum level prescribed by the Government;
• Shareholders and capital-contributing members are not allowed to use loans or investment trust capital of other organizations or individuals to participate in capital contribution.

Pursuant to Clause 3 Article 35 of Decree No. 46/2023/ND-CP stipulating the minimum charter capital of health insurance enterprises: VND 400 billion.

Note:

Insurance enterprises established, organized and operating before July 1, 2023 with charter capital lower than the above-mentioned level must complete the addition of charter capital and deposit as prescribed by January 1, 2028.

Conditions on shareholders and members contributing capital to establish

Pursuant to Point a, Clause 1, Article 64 of the Law on Insurance Business in 2022 stipulates conditions for shareholders and capital-contributing members to establish:

• Organizations and individuals have the right to establish and manage enterprises
• The organization has legal status, is operating legally;
• In case of contributing 10% or more of charter capital, it must do business profitably for the last 03 consecutive fiscal years up to the time of submitting the application for a license and satisfy the financial conditions prescribed by the Government;
• Insurers and reinsurance enterprises that have been granted establishment licenses and operate in Vietnam contribute capital to establish insurance enterprises or new reinsurance enterprises must do business profitably in the last 03 consecutive financial years up to the time of submitting the application for a license and meet the capital adequacy ratio as prescribed by the Law this.

For Vietnamese organizations

• Having total assets not less than VND 2,000 billion in the year preceding the year of submitting the application for a license.

For foreign organizations

A member contributing capital to establish a health insurance limited liability company must be an organization and meet the following conditions:

• Being a foreign insurer permitted by a competent authority of a foreign country to conduct business in the field planned to be conducted in Vietnam or a subsidiary specializing in performing outward investment functions of a foreign insurance enterprise authorized by a foreign insurance enterprise to contribute capital to establish an insurance enterprise in Vietnam;
• At least 7 years of experience in the field expected to be conducted in Vietnam
• Have total assets equivalent to at least US$2 billion in the year preceding the year in which the license application is submitted
• Not seriously violating the legal provisions on insurance business activities of the country where the enterprise is headquartered within 03 years preceding the year of submitting the application for a license

Personnel conditions

General conditions

• Have the right to manage the enterprise under the Enterprise Law;
• Not be sanctioned for administrative violations in the field of insurance business, not be disciplined in the form of dismissal for violating internal processes for 03 consecutive years before the time of appointment
• Not be prosecuted by competent agencies in accordance with law at the time of being elected or appointed.

Conditions for the titles of Chairman of the Board of Directors, Chairman of the Members’ Council, members of the Board of Directors, members of the Members’ Council

• Meet the above general conditions and standards;
• Have a university degree or higher;
• The Chairman of the Board of Directors, the Chairman of the Members’ Council has at least 05 years directly working in the field of insurance, finance and banking/has at least 03 years holding the position of manager, executive and controller at enterprises operating in the field of insurance, finance, banking; members of the Board of Directors, members of the Members’ Council who have at least 03 years of direct working in the field of insurance, finance and banking/have at least 03 years of holding positions as managers, operators and controllers at enterprises operating in the field of insurance,  finance, banking.

Conditions for the title of Director or General Director, legal representative

• Meet the above general conditions and standards;
• Have a university degree or higher in insurance. In case of not having a university degree or higher in insurance, they must have a university degree or higher in another major and have insurance certificates issued by insurance training institutions legally established and operating at home or abroad;
• Having at least 05 years of working experience in the fields of insurance, finance and banking, including at least 03 years as a manager and controller of insurance enterprises, reinsurance enterprises, foreign branches;
• Residing in Vietnam during the term of office.

Having a dossier of application for an establishment and operation license according to regulations

According to Article 134 of the Law on Insurance Business 2022 stipulates the dossier of application for a license to establish and operate an insurance brokerage enterprise as follows:

• A dossier of application for an establishment and operation license includes:
• A written request for an establishment and operation license;
• Draft company charter;
• The operation plan for the first 5 years, clearly stating the contents of activities expected to be implemented;
• Curriculum vitae, criminal record cards, copies of diplomas and certificates proving the capacity, professional and professional qualifications of the person who is expected to be appointed as the Chairman of the Board of Directors or the Chairman of the Members’ Council, the Director or General Director, the legal representative;
• The level of capital contribution and method of capital contribution, the list of founding organizations and individuals or members, shareholders expected to contribute 10% or more of charter capital and documents proving the satisfaction of the conditions for shareholders and members to contribute established capital; capital conditions; personnel conditions.

If you want to establish a health insurance company, please contact Viet An Law Firm for the best support!