Conditions for establishing a company providing insurance ancillary services in Vietnam

In Vietnam, along with the development of the insurance market is an increase in demand for ancillary services, this is an inevitable trend. The demand for ancillary insurance services of Vietnamese enterprises is increasing. In particular, insurance enterprises in Vietnam are using a lot of insurance ancillary services including: Consulting, risk assessment, charging, loss assessment, compensation settlement support. An insurance ancillary service provider is a type of company that must fully meet the conditions when establishing a company as prescribed. So what are the conditions for establishing an insurance ancillary service 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
• Circular No. 65/2019/TT-BTC stipulates the contents of training, examination, issuance and recognition of certificates of insurance ancillary.

What are insurance ancillary services?

Pursuant to Clause 7 Article 4 of the Law on Insurance Business 2022 stipulates insurance ancillary services as follows: “Including consulting, insurance risk assessment, insurance calculation, insurance loss assessment, insurance claim settlement support. Insurance ancillary services do not include the self-implementation of insurance enterprises, reinsurance enterprises, foreign branches in Vietnam, mutual organizations providing microinsurance to carry out their own insurance and reinsurance business activities.“

Thus, insurance ancillary services are a part of insurance business activities, carried out by insurance enterprises, insurance brokerage enterprises and other organizations and individuals for the purpose of profit. Insurance ancillary services include the following 5 activities: insurance consulting; insurance risk assessment; insurance calculation; insurance loss assessment; assistance in settling insurance claims.”

Subjects to be provided with insurance ancillary services in Vietnam

Pursuant to Article 140 of the Law on Insurance Business in 2022, organizations and individuals providing insurance ancillary services must belong to the following groups of subjects:

• Insurance enterprises, branches of foreign non-life insurance enterprises may provide insurance ancillary services to insurance enterprises, reinsurance enterprises, foreign branches in Vietnam, insurance brokerage enterprises, mutual organizations providing microinsurance.
• Insurance brokerage enterprises may provide insurance ancillary services to insurance enterprises, reinsurance enterprises, foreign branches in Vietnam, insurance brokerage enterprises, mutual organizations providing microinsurance and other organizations and individuals.
• Other organizations with legal status may provide insurance ancillary services to insurance enterprises, reinsurance enterprises, foreign branches in Vietnam, insurance brokerage enterprises, mutual organizations providing microinsurance.
• Individuals are entitled to provide consulting services to insurance enterprises, reinsurance enterprises, foreign branches in Vietnam, insurance brokerage enterprises, mutual organizations providing microinsurance.

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 ancillary services in Vietnam for sub-sectors: insurance support services (such as consulting,  calculation, risk assessment and compensation settlement services).

Conditions 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 CPTPP Commitment, Vietnam does not restrict market access for ancillary services for insurance such as consulting, statistics, risk assessment and claims settlement services. Since then, Vietnam has developed principles for providing and using insurance services in accordance with current laws, international practices and international commitments Vietnam has acceded to (CPTPP); expanding the target of foreign investors, allowing financial groups to conduct insurance business; simplify conditions for licensed insurers in Vietnam who want to establish new insurance enterprises…

Conditions for establishing a company providing insurance ancillary services in accordance with Vietnamese law in Vietnam

Conditions on shareholders and members contributing capital to establish

Because an enterprise providing insurance ancillary services is in the group of insurance enterprises, it is necessary to meet the conditions for shareholders and capital contributing members. 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 an establishment and operation 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 submission of the application for an establishment and operation

For foreign organizations

A member contributing capital to establish an insurance limited liability company must be an organization and satisfy 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

Standard conditions in the field of insurance ancillaries

Decree No. 80/2019/ND-CP stipulates standards in the field of insurance ancillary. Specifically, insurance ancillary service providers must develop, implement and supervise the implementation of standards for provision of insurance ancillary services. Where:

Insurance enterprises, foreign branches and insurance brokerage enterprises using insurance ancillary services shall formulate, implement and supervise the implementation of standards for selection and use of insurance ancillary services.

Insurance enterprises, foreign branches and insurance brokerage enterprises employing foreign organizations to provide cross-border insurance ancillary services in Vietnam, the foreign organization must meet the following criteria:

• To be permitted to provide cross-border insurance ancillary services in accordance with the laws of the countries and territories where the organization’s head office is located
• Being legally operating for at least 10 years from the time of providing cross-border insurance ancillary services in Vietnam;
• Not violating the legal provisions on provision of insurance ancillary services where the organization’s head office is located within 3 years preceding the year of provision of cross-border insurance ancillary services in Vietnam
• Profitable business activities in the 3 fiscal years preceding the year of provision of cross-border insurance ancillary services in Vietnam.

Conditions for provision of insurance ancillary services

Pursuant to Clauses 1 and 2, Article 143 of the Law on Insurance Business in 2022 stipulating conditions for providing insurance ancillary services:

For individuals

Individuals providing counseling services must meet the following conditions:

• Must have full civil act capacity
• Must have a university degree or higher in insurance major.
• 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 auxiliary certificates in consulting issued by training institutions legally established and operating at home and abroad.

For organizations

An organization providing insurance ancillary services must satisfy the following conditions:

• Must have legal status, be legally established and operate
• Individuals directly performing insurance ancillary activities in insurance ancillary service-providing organizations must have full civil act capacity; have diplomas; Certificates of insurance ancillary suitable to the type of insurance ancillary services issued by training institutions legally established and operating at home or abroad.
• Individuals directly conducting insurance loss assessment activities in insurance ancillary service providers must satisfy the conditions specified at Point b of this Clause and the standards of assessors as prescribed by commercial law;
• Individuals who directly perform insurance actuarial activities in insurance ancillary service providers must meet the conditions and standards for Actuaries.

Conditions on the license for establishment and operation of an insurance enterprise

Pursuant to Article 16 of Decree No. 46/2023/ND-CP stipulating the order and procedures for application for an establishment and operation license as follows:

• Organizations and individuals applying for establishment and operation licenses prepare dossiers and submit them directly to the Ministry of Finance or send them by post or through the online public service system if eligible
• Within 30 days from the date of receipt of the dossier of application for a license, if the dossier is incomplete and valid, the Ministry of Finance shall notify in writing the request to supplement or amend the dossier. The time limit for supplementing and amending the investor’s dossier is up to 06 months from the date of issuance of the notice. In case the investor fails to supplement or amend the dossier within the prescribed time limit, the Ministry of Finance will refuse to consider granting a license.
• The total time for organizations and individuals to supplement and amend dossiers is up to 12 months from the date of first notification by the Ministry of Finance. After the above time limit, organizations and individuals fail to complete dossiers and documents, and the Ministry of Finance has the right to refuse to consider granting licenses.
• Within 60 days from the date of receipt of a complete and valid dossier, the Ministry of Finance shall grant establishment and operation licenses to insurance enterprises, reinsurance enterprises and foreign branches in Vietnam.
• In case of refusal to grant a license, the Ministry of Finance shall issue a written explanation clearly explaining the reason. The Ministry of Finance may only refuse to grant a license when the organization or individual participating in capital contribution or the insurance enterprise, reinsurance enterprise or foreign branch in Vietnam expected to establish does not meet the conditions, dossiers of license issuance as prescribed in this Decree or organizations or individuals that cheat or forge prescribed papers and documents.

If you want to establish an insurance ancillary service company, please contact Viet An Law Firm for the best support!