Conditions for establishing an insurance agency company in Vietnam

An insurance agent is considered a branch of an insurance enterprise, providing products and services to insurance enterprises. However, in order to establish as well as operate an insurance agency business, enterprises need to meet certain conditions as prescribed by law. Therefore, in the article below, Viet An Law Firm will provide full information related to the conditions for establishing an insurance agency company so that customers can better understand.

Legal basis

• WTO commitments;
• Insurance Business Law 2022;
• Decree 46/2023/ND-CP details the implementation of a number of articles of the Law on Insurance Business.

“Insurance agent” means

Pursuant to the provisions of Article 124 of the Law on Insurance Business in 2022, insurance agents are understood as organizations and individuals authorized by insurers or branches of foreign non-life insurance enterprises and mutual organizations providing microinsurance on the basis of insurance agency contracts to carry out insurance agency activities.

Market access conditions for foreign investors

According to the WTO commitments, Vietnam currently commits to open its doors to the sub-sector of Insurance Intermediaries (including insurance agents) in the Financial Services sector. Accordingly, foreign investors when establishing an insurance agency company need to meet the following conditions:

• Insurance enterprises with 100% foreign invested capital are not allowed to provide compulsory insurance services, including civil liability insurance of motor vehicle owners for third persons, construction and installation insurance, insurance for oil and gas works and works likely to endanger public security and the environment. This restriction will be lifted on January 1, 2008.
• After 5 years from the date of joining, allow foreign insurers to establish non-life insurance branches, based on prudent management regulations.

Accordingly, at present, the regulations on the establishment of insurance agency companies are applied similarly between domestic and foreign investors.

Conditions for establishing an insurance agency company in Vietnam

In Article 125 of the Law on Insurance Business 2022, there are specific regulations on conditions for insurance agency operation, in which Clause 2 clearly states the conditions for establishing an insurance agency company, including:

• Being a legal entity legally established and operating in Vietnam.
• Have registered lines of business as insurance agents. For organizations operating in conditional business lines, licenses, certificates, certificates or other written confirmations and approvals of competent agencies will have to contain insurance agency activities.
• Having employees directly performing insurance agency activities who meet the conditions specified in Clause 1, Article 125 of the Law on Insurance Business 2022, specifically:
• Be a Vietnamese citizen permanently residing in Vietnam.
• Have full civil act capacity.
• Have an insurance agent certificate.

Personnel and other conditions as prescribed in Article 62 of Decree 46/2023/ND-CP, specifically:

• Conditions for insurance agency operating organizations being credit institutions and branches of foreign banks:
• A specialized department must be established to carry out insurance agency activities.
• Experience requirements for heads of specialized departments: have at least 03 years of working experience in the field of finance, banking, insurance, have a diploma from university or higher majoring in insurance, otherwise, must have a university degree or higher in another major and an insurance certificate as prescribed.
• Number of employees per branch: at least 03 employees are trained and have insurance agent certificates suitable to the type of insurance that the credit institution acts as an agent.
• Number of employees per transaction office: at least 01 employee is trained and has an insurance agent certificate suitable to the type of insurance that the credit institution acts as an agent.
• Appropriate information technology systems must ensure complete, accurate and timely provision of information related to insurance contracts exploited through agency organizations.
• There is a process of supervision as well as quality control in the performance of insurance agency activities by employees in the agency organization. The supervision and control process will ensure that employees in the agency organization directly performing agency activities comply with the principles of agency activities, the contents authorized in the agency contract and relevant laws. Insurers and foreign branches in Vietnam will be allowed to participate in the inspection and supervision process for the quality of agency activities of employees in agency organizations; the handling of violations against employees in the agency operation organization when directly performing agency activities.
• Each branch or transaction office of a credit institution and a branch of a foreign bank shall have to set up a separate transaction counter to carry out insurance agency activities, which shall be separated from the transaction area and other professional activities of the credit institution, Foreign Bank Branches.

Procedures for establishing an insurance agency company in Vietnam

Step 1: Prepare documents for establishment of an insurance agency business company

The composition of the company establishment dossier includes:

• An application for registration of an insurance agency company;
• The company’s charter;
• List of capital-contributing members for limited liability companies with 2 or more members or list of founding shareholders for joint-stock companies;
• Notarized or certified copy of CCCD/ID card or passport of the legal representative of the company, shareholders, capital contributing members;
• Power of attorney for Viet An Law to submit enterprise registration dossiers at the Business Registration Office of the Department of Planning and Investment.

Step 2: Enterprises register insurance agency activities

Pursuant to Decision No. 27/2018/QD-TTg, registration of business line code: 6622 – 66220: Activities of insurance agents and brokers. This will include activities such as Activities of agents and brokers or so-called insurance intermediaries in selling, negotiating or advising on insurance-related policies.

Step 3: Apply

The enterprise shall submit an application for registration of establishment of an insurance agency company at the Department of Planning and Investment where the enterprise is headquartered. Within 03 working days, in case the application is complete and valid, the Department of Planning and Investment will issue an enterprise registration certificate.

Step 4: Disclosure of business registration information

After being granted an enterprise registration certificate, an insurance agency company will have to make a public announcement on the National Business Registration Portal according to the order and procedures within 30 days from the date of publication.

Pursuant to the provisions of Clause 1, Article 45 of Decree 122/2021/ND-CP, in case an enterprise deliberately fails to publish or publishes information not in accordance with the time limit prescribed on the National Business Registration Portal, it may be administratively sanctioned from VND 10 to 15 million.

Step 5: Engrave the company seal

The company shall have the right to decide for itself on the form, quantity and content of seals. The company may also authorize another entity or perform the marking on its own.

Step 6: Sign agency contracts with insurance businesses

The insurance agency company will have to prepare all the certificates prescribed on insurance agents for agency employees and then sign insurance agency contracts with insurance business units.

If you need advice on conditions for establishing an insurance agency company in particular and establishing a business in general, please contact Viet An Law Firm for the most effective support!