Set up a branch of a foreign insurance company in Vietnam

Foreign insurance company has become more and more popular and preferred by investors. Because many investors are interested in investing in service industries in Vietnam, especially the insurance business. The frequently asked question is that what requirements do investors need to meet to set up a branch of a foreign insurance company in Vietnam? In the article below, Viet An Law Firm will provide the clients with information about the requirements to set up a branch of a foreign insurance company in Vietnam according to current regulations of the Law on Insurance Business 2022.

Market access conditions for foreign insurance company

Vietnam’s WTO Schedule of Commitments in Services stipulates conditions for the insurance sector and insurance-related services as follows:

• None for insurance services provided to enterprises with foreign-invested capital, foreigners working in Viet Nam;
• In case of commercial presence: 100% foreign-invested insurance enterprises shall not be allowed to engage in the statutory insurance business, including motor vehicle third-party liability, insurance in construction and installation, insurance for oil and gas projects, and insurance for projects and construction works of high danger to public security and the environment.
• From 2012, non-life branches of foreign insurance enterprises shall be permitted, subject to strict regulations.

Thus, Vietnam does not restrict foreign-invested enterprises from participating in insurance business, only limited conditions is after 5 years from the date of joining, non-life branches of foreign insurance enterprises shall be permitted.

Conditions to set up a branch of a foreign insurance company in Vietnam

Foreign insurance company branches are one of the forms of insurance business presence according to insurance business law in Vietnam. A branch of a foreign insurance company refers to the subsidiary of a parent foreign insurance company that has no legal entity and is offered a guarantee from the parent foreign insurance company for their obligations and commitments arising during their existence period in Vietnam.

General conditions

According to Article 67 of the Law on Insurance Business, general conditions for the issuance of the Establishment and Operation License of a foreign branch in Vietnam include:

• Their head office is located in the country with which Vietnam has signed the international treaty, including agreements on the establishment of such branch in Vietnam;
• The foreign state insurance authority of the place where the parent company’s head office is located has signed the international agreement with the Ministry of Finance of Vietnam on management and supervision of operations of the branch;
• The foreign state insurance authority of the parent company’s head office approved to establish a branch in Vietnam that can render authorized insurance services;
• It must acquire at least 07 years of experience in the proposed business activities that it is applying for the license or permit to perform in Vietnam;
• Their minimum required total of assets must conform to the conditions specified in Article 65 of the Law on Insurance Business;
• It must provide a guarantee and bear responsibility for all obligations and commitments of its branch in Vietnam.

Financial conditions

According to Article 11 of Decree 46/2023/ND-CP stipulates the financial conditions for the issuance of the Establishment and Operation License of a foreign branch in Vietnam as follows:

• Capital contributors engaging in businesses that require legal capital, minimum charter capital, or minimum capital must ensure that the difference between owner’s equity and the required capital is greater than or equal to their planned contribution;
• The financial statements for the 03 consecutive years preceding the year of application must receive an unqualified opinion.

Conditions for legal capital

Article 36 of Decree 46/2023/ND-CP stipulates the minimum allocated capital of branches of foreign insurance enterprises as follows:

Minimum allocated capital of branches of foreign non-life insurers:

• Non-life insurance (except for cases specified in points b and c, Clause 1, Article 36 of Decree 46/2023/ND-CP) and health insurance: 250 billion VND;
• Non-life, health insurance, and aviation insurance or satellite insurance: 300 billion VND;
• Non-life, health insurance, aviation insurance and satellite insurance: 400 billion VND.

Minimum allocated capital of branches of foreign reinsurers:

• Reinsurance business, non-life reinsurance, or both non-life and health reinsurance: 400 billion VND;
• Reinsurance business, life reinsurance, or both life reinsurance and health reinsurance: 450 billion VND;
• Reinsurance business, life, non-life reinsurance, and health reinsurance: 700 billion VND.

Note:

Funding for the establishment of the branch must be legitimate and not include borrowed funds or investment funds held in trust in any form.

Personnel conditions

The branch’s nominated Director and actuaries must meet managerial competency and professional qualification conditions and standards specified in Article 81 of the Law on Insurance Business.

A branch of a foreign insurance company in Vietnam having an Establishment and Operation License is allowed to operate as an insurance company and reinsurance company established and operating in Vietnam according to regulations.

Application for the issuance of the Establishment and Operation License of a foreign insurance company branch in Vietnam

According to Article 14 of Decree 46/2023/ND-CP, the application for the issuance of the Establishment and Operation License of a foreign insurance company branch in Vietnam includes:

• An application form for a License, is provided in Appendix I to Decree 46/2023/ND-CP.
• The draft regulation on the organization and operation of foreign branches in Vietnam has been approved by the foreign non-life insurer or foreign reinsurer.
• Operation plan for the first 05 years suitable to the business line of a foreign insurance company branch in Vietnam.
• Copies of ID cards or passports; police clearance or equivalent of foreigners as prescribed by foreign law.
• Curricula vitae, copies of degrees, certificates and other documents proving the eligibility of the person expected to be appointed as President of the Board of Directors, Director or General Director, Legal Representative, Appointed Actuary of a foreign insurance company branch in Vietnam.
• Documents on the non-life insurer or foreign reinsurer.
• Confirmation by the bank licensed to operate in Vietnam that the charter capital deposited in the escrow account opened at the bank is not lower than the minimum charter capital level.
• A certification issued by the competent authority of the home country of the foreign non-life insurer, or foreign reinsurer.
• The written commitment of the foreign non-life insurer or foreign reinsurer that they meet the eligibility requirements as prescribed in Decree 46/2023/ND-CP and Law on Insurance Business.
• A document proving that the capital contributors ensure that the difference between owner’s equity and the required capital is greater than or equal to their planned contribution.
• Power of attorney for Viet An Law Firm to carry out the procedure.

Procedures for applying for the Establishment License

Article 16 of Decree 46/2023/ND-CP stipulates the procedures for applying for the Establishment and Operation License of foreign insurance company branches in Vietnam as follows:

Step 1: Organizations and individuals apply for a license. A dossier can be applied in the following methods:

• Apply directly to the Ministry of Finance;
• Apply via the post office;
• Apply to the online public service system (if eligible).

Step 2: The Ministry of Finance (The Insurance Supervisory Authority) accepts, verifies, and notifies the applicant in writing to supplement or revise the application within 30 days of receiving an incomplete or invalid application.

Step 3: The time limit for the applicant to supplement or revise their application is 12 months from the date of the first notification by the Ministry of Finance. If the applicant fails to complete the application within the specified time limit, the Ministry of Finance has the discretion to deny the application.

Step 4: Within 60 days of receiving a complete or valid application, the Ministry of Finance shall issue an Establishment and Operation License to the foreign branch in Vietnam. If the application is rejected, the Ministry of Finance shall explain in writing.

Service to set up a branch of a foreign insurance company in Vietnam

• Consulting and guidance on conditions and procedures to set up a branch of foreign insurance company in Vietnam;
• Drafting registration documents to set up a foreign insurance company branch in Vietnam;
• Representing clients to carry out procedures for Establishment and Operation License;
• Performing corporate tax accounting services, finalization, declaration, and payment of taxes according to regulations;
• Representing intellectual property registers trademarks and copyrights with competent authorities;
• Providing regular legal advice to clients during operations in Vietnam.

Clients who have related questions or need legal support to set up a branch of a foreign insurance company in Vietnam, or set up a company in Vietnam, please contact Viet An Law Firm for the best support!