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Set up an FDI insurance company in Vietnam

In light of the State’s efforts to attract foreign investors to invest in Vietnam along with the strong potential development of our country’s economy, establishing companies with foreign capital increase significantly. Foreign direct investment, also known as FDI companies, is popular nowadays. In particular, the insurance business is one of the business fields that is currently receiving a lot of attention from many experts and investors. Understanding this concern, Viet An Law will synthesize current regulations to introduce the conditions to set up an FDI insurance company in Vietnam in the article below.

FDI company

Legal basis

  • Vietnam’s schedule of commitments on trade and services in the WTO;
  • Law on Insurance Business 2022;
  • Law on Investment 2020;
  • Decree 46/2023/ND-CP detailing the implementation of several articles of the Law on Insurance Business;

What is an FDI insurance company?

According to the provisions of Clause 2, Article 4 of the Law on Insurance Business 2022, insurance business activities are activities of insurance enterprises, branches of foreign non-life insurance enterprises, and mutual organizations providing insurance. Micro accepts the risks of the insured, based on the insurance buyer paying insurance premiums to insurance enterprises, branches of foreign non-life insurance enterprises, and mutual organizations to provide micro-insurance for compensation, and insurance payment when an insured event occurs as agreed in the insurance contract.

FDI is an abbreviation of Foreign Direct Investment in English, meaning direct investment from abroad. As stipulated in Clause 22, Article 3 of the Investment Law 2020, economic organizations with foreign investment capital are economic organizations with foreign investors as members or shareholders.

Market access conditions of the insurance business in Vietnam

Foreign investors who want to participate in the insurance business need to meet the following conditions:

Regarding the types of insurance services allowed for business. According to the WTO commitment schedule, foreign investors are only allowed to do business in:

  • Original insurance includes life insurance (except health insurance) and non-life insurance;
  • Insurance and reinsurance; insurance intermediaries (insurance brokers and agents);
  • Insurance support services (such as consulting, calculation services, risk assessment and claim settlement)

Currently, the WTO does not restrict access to the insurance market, however, the establishment of non-life insurance branches by foreign insurance enterprises must be based on prudent management regulations.

Insurance business conditions according to Vietnamese law

According to the provisions of Article 7 and Appendix IV of the Investment Law 2020, insurance business is a conditional business line. Specifically, to do insurance business, investors must fully satisfy the regulations on certain investment and business conditions according to investment laws and insurance business laws in Vietnam.

Form of FDI insurance company in Vietnam

According to the provisions of Article 62 of the Law on Insurance Business 2022, for insurance companies in general and FDI insurance companies in particular, there are the following two forms of organization and operation:

  • Joint stock company;
  • LLC (single-member or multiple-member)

According to the provisions of Article 68 of the Law on Insurance Business 2022, foreign investors are not limited to the capital contribution ratio in insurance FDI enterprises in Vietnam.

General conditions for issuance of License for establishment and operation

Personnel There is a Chairman of the Board of Directors or Chairman of the Board of Members, Director or General Director, legal representative, and Actuarial expert expected to meet the conditions and standards of management capacity and experience. experience and professional expertise specified in Article 81 of the Insurance Business Law 2022.
Capital contribution members Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of Article 17 of the Enterprise Law;

The organization has legal status and is operating legally; In case of contributing 10% or more of charter capital, the business must be profitable for the last 3 consecutive financial years up to the time of applying for the license and meet the financial conditions according to Clause 1, Article 11 of Decree 46/2023/ND-CP;

Insurance enterprises and reinsurance enterprises that have been granted a license to establish and operate in Vietnam must contribute capital to establish a new insurance enterprise or reinsurance enterprise that must be profitable for the last 03 consecutive financial years up to the time of submitting the license application and meeting the capital adequacy ratio according to the provisions of the Insurance Business Law 2022.

Capital Charter capital is contributed in Vietnam Dong and is not lower than the minimum level for each form of insurance business as prescribed in Article 35 of Decree 46/2023/ND-CP;

Shareholders and founding members are not allowed to use loan capital or investment trust capital from other organizations or individuals to contribute capital.

Special conditions for investors

According to the provisions of the Law on Insurance Business 2022, groups of conditions for each form of insurance enterprise are prescribed as follows:

Condition Legal basis Foreign national investors Vietnamese investor
Conditions in the field of activity Articles 64, 65 Being an insurance enterprise, reinsurance enterprise, foreign financial or insurance corporation, or authorized subsidiary.

Confirmed by a foreign competent authority that there has been no serious violation of the law on the insurance business of the country where the head office is located for the last 3 consecutive years up to the time of applying for a license;

Has operated in the field and expected to request licensing for at least the last 7 consecutive years.

Not belonging to one of the subjects who do not have the right to establish and manage an enterprise in Vietnam as prescribed in Clause 2, Article 18 of the Enterprise Law 2020
Resistance conditions​ become a shareholder Article 66 The company expected to be established must have at least 02 institutional shareholders and each shareholder must contribute 10% or more of charter capital;

Shareholders can contribute a maximum of 10% of charter capital.

Financial conditions​ Article 65 Must have a minimum total asset of 02 billion USD in the last year preceding the license application. Have total assets not less than 2,000 billion VND in the year immediately preceding the year of submitting the license application.
Conditions of commitments Point dd Clause 1 Article 65 Commitment to support in finance, technology, corporate governance, risk management, operations, and operations for insurance businesses and reinsurance businesses expected to be established in Vietnam;

Ensure implementation of regulations on financial safety and risk management according to the provisions of the Insurance Business Law 2022.

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Procedures for set up an FDI insurance company in Vietnam

For foreign investors, after completing the procedures for applying for an Investment Registration Certificate, the investor shall carry out the procedures for applying for a license to establish and operate an insurance business similar to domestic investors according to the following procedures:

Step 1: Apply licensing directly at the headquarters of the Ministry of Finance or send it through the postal system or the online public service system

According to the provisions of Article 69 of the Law on Insurance Business 2022, the application file for an establishment and operation license includes the following documents:

  • Document requesting the issuance of establishment and operation license;
  • Draft charter for insurance enterprises and reinsurance enterprises; draft organization and operation regulations for foreign branches in Vietnam;
  • Operational plan for the first 05 years, clearly stating the insurance operations expected to be deployed, risk management model, method of setting up professional reserves, reinsurance program, capital investment, and payment capacity of insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam;
  • Curriculum vitae, police certificate, copies of diplomas and certificates proving the capacity, professional qualifications, and skills of the person expected to be appointed as Chairman of the Board of Directors or Chairman of the Council member, Director or General Director, legal representative, Actuarial expert;
  • Level of capital contribution and method of capital contribution, list of founding organizations and individuals or members and shareholders expected to contribute 10% or more of charter capital and documents proving satisfaction of corresponding conditions for each type of insurance enterprise, reinsurance enterprise, and foreign branch in Vietnam specified in Articles 64, 65, 66 and 67 of the Law on Insurance Business 2022 of those organizations and individuals;
  • List of beneficial owners of insurance enterprises and reinsurance enterprises. The Government regulates criteria for determining beneficial owners of insurance enterprises and reinsurance enterprises.
  • Power of Attorney for Viet An Law.

Step 2: The Ministry of Finance (Department of Insurance Management and Supervision) appraises the dossier and issues a written request to the investor to supplement or amend the dossier (if any).

The Ministry of Finance issues a written notice requesting additions and amendments to documents within 30 days from the date of receipt of the investor’s application for a License.

Step 3: Investor supplies and modifies documents (if any)

  • Investors have a maximum time limit of 06 months to amend and supplement documents from the date the Ministry of Finance issues the notice.
  • The total time for investors to supplement and amend documents is 12 months from the date of initial notification by the Ministry of Finance.
  • In case the investor does not supplement or amend the dossier within the prescribed time limit, the Ministry of Finance will refuse to consider granting the License.

Step 4: The Ministry of Finance appraises the dossier and grants an establishment and operation license to the enterprise

The Ministry of Finance grants or refuses to grant an establishment and operation license to an enterprise within 60 days from the date of receipt of complete and valid documents.

Insurance company establishment service of Viet An Law

  • Consulting on conditions for establishing FDI companies doing insurance business and methods to respond to businesses;
  • Drafting documents to fulfill registration and reporting obligations to state agencies when establishing and operating an insurance business;
  • Authorized representative of the client to carry out related procedures;
  • Regularly consulting for clients after the insurance business goes into operation.

Clients wishing to set up an FDI insurance company in Vietnam, please contact Viet An Law for the best advice and support.

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