Conditions for establishing a non-life insurance company in Vietnam

Non-life insurance is a practical and useful measure to protect personal and human assets. Currently, many customers are unclear about the information related to this type of insurance, especially related to the conditions for establishing a non-life insurance company. To answer your questions, Viet An Law Firm offers the article on conditions for establishing a non-life insurance company below.

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.

What is non-life insurance?

Pursuant to Clause 14 Article 4 of the Law on Insurance Business 2022 , non-life insurance is a type of insurance for property damage and other losses or civil liability for third persons.

In addition, non-life insurance, also known as property and casualty insurance. This is a very popular type of insurance for businesses and individuals alike. Non-life insurance will protect the owner from possible uncertainties as well as minimize the risk of your own economy being adversely affected.

Basic forms of non-life insurance in Vietnam

Non-life insurance includes:

Health insurance and personal accident insurance

• It is a type of insurance for cases where the insured suffers injury, accident, illness, illness or death, the insurer shall pay the insurance premium as agreed upon in the insurance contract.

Business Damage Insurance

• It is an insurance product for asset risks in the production and business process of enterprises.

Property insurance and damage insurance

• An insurance product for property including real objects, money, valuable papers and property rights

Aviation Insurance

• It is insurance for aircraft operation and risks during air transport (including cargo and people).

Motor Vehicle Insurance

• Motor vehicle insurance that compensates vehicle owners when unfortunately there is a risk to people, vehicles or goods on the vehicle.

Fire and explosion insurance

• It is a product of compensation for damage that occurs to the property of the insured when unfortunately a fire or explosion occurs.

Road, sea, river, rail, air freight insurance

• It is an insurance product that compensates for the risk of goods in the process of being transported.

Hull insurance and shipowners’ civil liability

• It is an insurance that compensates for damage to the hull and risks that the shipowner has to pay with third-person damage caused by the operation of the ship or boat.

Credit insurance and financial risk

• It is insurance that guarantees loans at banks when unfortunately encountering unexpected risks without repaying debts.

Market access conditions for non-life insurance business

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 non-life insurance services in Vietnam.

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, including non-life insurance. Accordingly, non-life insurance is not restricted in accessing the market.

Conditions for establishing a non-life insurance company in Vietnam

Conditions on legal capital

Pursuant to the provisions of Article 64 of the 2022 Law on Insurance Business on legal capital when establishing a non-life 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 2, Article 35 of Decree No. 46/2023/ND-CP stipulating the minimum charter capital of non-life insurance enterprises, including:

• Non-life insurance business (except aviation insurance, satellite insurance) and health insurance: VND 400 billion;
• Insurance business as prescribed at Point a of this Clause and aviation or satellite insurance: VND 450 billion;
• Insurance business as prescribed at Point a of this Clause, aviation and satellite insurance: VND 500 billion.

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;
• An insurance enterprise that has been granted a license to establish and operate in Vietnam, contributed capital to establish a new non-life insurance enterprise, must do business profitably for the last 03 consecutive fiscal years up to the time of submitting the application for a license and meet the capital adequacy ratio as prescribed by this Law.

Personnel conditions

Non-life 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 non-life 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 Non-life Director, legal representative

• Meet the above non-life 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 field of insurance, finance and banking, including at least 03 years as a manager and controller of insurance enterprises and foreign branches;
• Residing in Vietnam during the term of office.

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

Pursuant to Article 69 of the Law on Insurance Business 2022 stipulates the dossier of application for a license to establish and operate a non-life insurance company as follows:

• A written request for an establishment and operation license;
• Draft charter for non-life insurance enterprises;
• Draft organizational and operational regulations for foreign branches in Vietnam;
• The operation plan for the first 5 years, clearly stating the expected insurance operations, risk management model, method of setting up business provisions, non-life insurance programs, capital investment, solvency of non-life insurance enterprises, foreign branches in Vietnam;
• Curriculum vitae, criminal record cards, copies of diplomas and certificates proving the capacity, professional qualifications and profession of the person who is expected to be appointed as the Chairman of the Board of Directors or Chairman of the Members’ Council, Director or Non-life Director, legal representative, Actuarial;
• The level of capital contribution and method of capital contribution, the list of organizations, founding individuals or members, shareholders expected to contribute 10% or more of the charter capital and documents proving the satisfaction of conditions corresponding to the type of insurance enterprises and foreign branches in Vietnam specified in Article 65 of this Law of organizations, that individual;

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