How to Set Up an FDI Insurance Company in Vietnam

The Vietnamese insurance market is experiencing robust growth, becoming a magnet for foreign capital. While establishing an FDI insurance enterprise is a strategic move for many, it remains a strictly regulated “conditional” business line under local law. Foreign investors must meet stringent criteria regarding financial capacity, organizational structure, and operational history while ensuring full compliance with Vietnamese regulations. Navigating the complex licensing process, minimum charter capital requirements, and ongoing supervision demands meticulous preparation and deep legal expertise. In this guide, Viet An Law provides comprehensive insights into the requirements, procedures, and essential notes on how to set up an FDI insurance company in Vietnam.

Vietnam’s market access commitments

According to Commitment No. 318/WTO/CK of 2006 of the Government of the Socialist Republic of Vietnam on services, the regulations on insurance business activities are as follows:

“Regarding commercial presence: Insurance companies with 100% foreign investment are not permitted to conduct business in mandatory insurance services, including third-party liability insurance for motor vehicle owners, construction and installation insurance, insurance for oil and gas facilities, and other facilities that pose a potential threat to public security and the environment. This restriction will be lifted on January 1, 2008.”

Therefore, at present, there are no restrictions on FDI enterprises participating in the insurance business in Vietnam.

General conditions for insurance business operations

General conditions for insurance business operations

According to Article 64 of the Law on Insurance Business 2022, in order for an enterprise to conduct insurance business activities, it must be granted a license to establish and operate an insurance or reinsurance enterprise. The enterprise must meet the following basic conditions:

Conditions regarding shareholders and founding members:

• Organizations and individuals have the right to establish and manage businesses in Vietnam in accordance with the provisions of the Law on Enterprise;
• Organizations must have legal personality and operate legally; if contributing 10% or more of the charter capital, they must have made a profit in the three most recent financial years and meet the financial requirements of the Government.
• Insurance and reinsurance companies in Vietnam contributing capital to establish new insurance and reinsurance companies must have made a profit in the three most recent financial years and meet the capital adequacy ratio according to the Law on Insurance Business 2022.

Conditions regarding capital:

• The charter capital must be contributed in Vietnamese Dong and not less than the minimum amount stipulated by the Government;
• Shareholders and members contributing capital to establish the company are not allowed to use borrowed capital or entrusted investment funds from other organizations or individuals to contribute capital.

Conditions regarding human resources:

The Chairman of the Board of Directors or Chairman of the Board of Members, Director or General Director, legal representative, and Actuarial Expert are expected to meet the conditions and standards regarding management capacity, experience, and professional expertise as stipulated in Article 81 of the Law on Insurance Business 2022.

Legal forms of organization

Businesses must ensure that their organizational structure complies with the provisions of this Law and that their draft charter conforms to the provisions of the Law on Enterprise.

According to Article 62 of the Law on Insurance Business 2022, the organizational forms of insurance and reinsurance companies include:

• Joint-stock companies.
• Limited liability companies.

Specific requirements for insurance business operations

As analyzed above, foreign investors can choose to establish a limited liability company or a joint-stock company to conduct insurance business. For each type of organization, in addition to the general conditions mentioned above, Vietnamese law will have regulations on the conditions for contributing members or shareholders of the company. Specifically as follows:

Conditions for contributing members to establish insurance and reinsurance companies in the form of limited liability companies

Article 65 of the Law on Insurance Business 2022 stipulates that members contributing capital to establish insurance and reinsurance companies in the form of limited liability companies must be organizations that meet the following conditions:

• Conditions for organizations established under foreign law:
  • Must be a foreign insurance, reinsurance, or financial and insurance corporation.
  • Must be certified by a foreign authority as not having committed serious violations of insurance business laws in the last 3 years.
  • The business sector in Vietnam must be one that the enterprise or its subsidiary has operated in for at least 7 consecutive years.
  • Total assets must not be less than 2 billion USD in the year immediately preceding the year of application.
  • Commitment to provide financial, technological, and managerial support to the insurance and reinsurance enterprise in Vietnam, ensuring compliance with regulations on financial safety and risk management.
  • Enterprises meeting the above conditions may authorize a subsidiary specializing in overseas investment to establish an insurance and reinsurance enterprise in Vietnam. This subsidiary must meet the total asset requirements.
• Conditions for economic organizations established under Vietnamese law: having total assets of not less than 2,000 billion VND in the year immediately preceding the year of application for a license.

Conditions regarding the shareholder structure for establishing insurance and reinsurance companies in the form of joint-stock companies

According to Article 66 of the Law on Insurance Business 2022, the establishment of insurance and reinsurance companies in the form of joint-stock companies must meet the following conditions:

• There must be at least two institutional shareholders, and each of those shareholders must meet the following conditions:
  • Must contribute 10% or more of the charter capital of the insurance company or reinsurance company;
  • Conditions stipulated in Article 65 of the Law on Insurance Business 2022;
• An individual shareholder may not contribute more than 10% of the charter capital of an insurance or reinsurance company.

Requirements for licensing and operation of foreign branches in Vietnam

Based on Article 67 of the Law on Insurance Business 2022, the conditions for granting a license to establish and operate a foreign branch in Vietnam include:

• Foreign non-life insurance companies, foreign reinsurance companies:
  • Has its head office in a country that has signed an international treaty with Vietnam regarding the establishment of a branch; the foreign insurance regulatory authority has signed an international agreement with the Ministry of Finance of Vietnam on the management and supervision of the branch.
  • Is permitted by the foreign insurance regulatory authority to establish a branch in Vietnam to operate within the scope of permitted insurance business activities.
  • Has at least 7 years of experience in the field of intended operation in Vietnam.
  • Has total assets that meet the minimum requirements stipulated by law.
  • Has been profitable for the last 3 fiscal years and meets the financial requirements of the Government.
  • Commits to guaranteeing and being responsible for all obligations of the branch in Vietnam.
• Branches of foreign non-life insurance companies and foreign reinsurance companies:
  • Have capital allocated in VND and not lower than the minimum level stipulated by the Government;
  • The capital for establishing the branch must be from legal sources, not using borrowed capital or entrusted investment capital in any form;
  • Have a Branch Director and Actuator who meet the conditions and standards regarding management capacity, experience and professional expertise as stipulated in Article 81 of the Law on Insurance Business 2022.
• Foreign branches in Vietnam, after being granted establishment and operation licenses, are permitted to operate as insurance and reinsurance companies established and operating in Vietnam in accordance with the provisions of the Law on Insurance Business 2022.

Application dossier for establishing an FDI insurance company

Process and dossiers for establishing an FDI insurance company

According to Articles 12, 13, and 14 of Decree 46/2023/ND-CP, the dossier for establishing an FDI insurance company in Vietnam includes the following documents:

Basic documents:

• Application for a license (using the prescribed form);
• Five-year operational plan;
• Key management personnel dossiers (representative, Director/General Director, actuarial expert);
• List of beneficial owners (personal information, nationality, direct/indirect ownership percentage).
• Bank capital verification:
  • Blocked account
  • Minimum capital requirement as per regulations
• Documents from competent foreign authorities (if foreign elements are involved):
  • Permission to establish/operate in Vietnam
  • Confirmation of sound financial status
  • No serious violations of insurance laws in the last 3 years
• A written commitment to meet the licensing requirements under the Law on Insurance Business and Decree 46/2023/ND-CP.
• Documents proving compliance with the statutory capital/minimum capital requirements.

Specific documents for each business type:

Joint stock company

• Draft Charter of company.
• Documents for individual shareholders:
  • Personal identification documents
  • Bank balance confirmation
• Documents for institutional shareholders:
  • Allocation based on: 10% or more of charter capital and less than 10% of charter capital
  • Different requirements for audited financial statements
• Minutes of the shareholder meeting:
  • Agreement to establish
  • Approval of the Charter
• List of shareholders and founding shareholders.
• Power of Attorney to carry out licensing procedures.

Limited liability company

• Draft Charter of company.
• List of contributing members, including:
  • Legal documents of the contributing organization
  • Decision on capital contribution
  • Audited financial statements for 3 years
  • Power of Attorney and commitment to support (for foreign organizations)
• Minutes of the meeting of contributing members:
  • Agreement to establish the company
  • Approval of the Charter
• Document from a competent Vietnamese authority permitting the Vietnamese organization to contribute capital (if required by law).
• Power of Attorney to carry out the licensing procedures.

Foreign insurance business branches in Vietnam

• Draft Regulations on the organization and operation of the branch (approved by the parent company).
• Documents of the foreign insurance company:
  • Establishment license
  • Charter of company
  • Decision to establish the branch
  • Audited financial statements for 3 years
• Commitment letter from the parent company:
  • Taking full responsibility for all obligations of the branch
  • Confirmation of allocated capital (not charter capital).
• Confirmation letter from the foreign insurance regulatory authority.

Some notes when preparing the dossiers

According to Article 15 of Decree 46/2023/ND-CP, when preparing the dossiers for establishing an insurance company, customers should note the following:

• The application dossiers for a license submitted to the Ministry of Finance consists of 2 sets: 1 original and 1 copy.
• The organization or individual preparing the application is responsible for its accuracy; fraudulent applications will result in the license being denied for 5 years.
• For Vietnamese citizen documents with integrated data, the Ministry of Finance will directly access the national database.

Procedures for establishing an FDI insurance company

Based on Article 16 of Decree 46/2023/ND-CP, the procedure for establishing an insurance business company includes the following steps:

Procedures after insurance and reinsurance companies are granted establishment and operation licenses

Before commencing operations:

• Publication: 30 days prior to commencement, publish license information (name, address, scope, capital, representative, license number, business activities) in a newspaper.

After being granted permission:

• Deposit: 60 days, deposit 2% of the registered capital at the bank.
• Completion of procedures (12 months):
  • Capital: Convert frozen capital into charter capital.
  • Organization: Establish structure, management system, control, and risk management; Elect/appoint a representative.
  • Regulations: Issue internal management regulations, risk management regulations, and business procedures.
  • Facilities: Have a suitable headquarters, facilities, technology, and equipment.
  • Compliance: Deposit sufficient funds and publish licenses.

Note: If, after 12 months from the date of issuance of the License, the insurance company, foreign branch, or insurance brokerage firm fails to complete the required procedures to commence operations, the Ministry of Finance will revoke the issued License.

Can foreign insurance companies sell insurance across borders without establishing a company in Vietnam?

Based on Articles 74 and 75 of Decree 46/2023/ND-CP, foreign insurance companies are entitled to provide cross-border insurance services in Vietnam without being required to establish a physical legal entity. Instead, foreign companies will establish branch offices or representative offices in Vietnam to conduct their business activities.

Can foreign investors own 100% of the capital in a Vietnamese insurance company?

As mentioned above, Vietnam has fully opened its insurance market in accordance with WTO and CPTPP commitments, without restricting the percentage of foreign investor capital contribution. Therefore, foreign investors have the full right to establish insurance companies in Vietnam with 100% foreign capital.

For clients seeking guidance on how to set up an FDI insurance company in Vietnam, please contact Viet An Law for the most comprehensive advice and professional support.