It can be seen that insurance companies or businesses have a lot, but to be able to reach customers, to be able to guide and introduce more clearly about the types of insurance, it is necessary to have another intermediary organization. Therefore, insurance brokerage activities have been developing in the context of increasing demand for insurance services and receiving a lot of special attention today. Therefore, in the article below, Viet An Law Firm will provide full information related to the conditions to set up an insurance brokerage company in accordance with current laws.
Legal basis:
Insurance Business Law 2022;
Enterprise Law 2020;
Decree 46/2023/ND-CP details the implementation of a number of articles of the Law on Insurance Business.
The concept of insurance brokerage activities and insurance brokerage companies in Vietnam
Pursuant to the provisions of Clause 6, Article 4 of the Law on Insurance Business 2022, insurance brokerage activities are the following activities:
Provide information related to the type, conditions, premiums and insurers to the policyholder
Advising the policyholder in risk assessment, selection of insurance type, conditions, terms, premium schedule, appropriate insurer
Negotiating as well as arranging the conclusion of insurance contracts between the insurer and the policyholder
Perform other tasks related to the performance of the insurance contract at the request of the policyholder.
From the above provisions, it can be understood that an insurance brokerage company is a company established, organized as well as operating in accordance with the provisions of the Law on Insurance Business 2022 and other relevant laws to carry out activities such as providing information, advising insurance buyers on the type of insurance, insurance products, insurance programs, conditions, terms, premiums, insurers, reinsurers, foreign branches in Vietnam; activities related to the negotiation, arrangement of conclusion and execution of insurance and reinsurance contracts.
Contents of insurance brokerage enterprises operation
Principal insurance brokerage activities, reinsurance brokerage activities.
Provide insurance ancillary services.
Other activities related to insurance contracts at the request of the policyholder.
Conditions to set up an insurance brokerage company in Vietnam
To establish an insurance brokerage company, you need to apply for a license to establish and operate an insurance brokerage business. Conditions for applying for this license are specified in Article 133 of the Law on Insurance Business 2022. In particular, you need to meet the following conditions:
Conditions for shareholders or capital contributors to establish the company:
Shareholders or capital contributors must be organizations and individuals entitled to establish and manage enterprises in Vietnam
Shareholders or capital contributing members, if they are organizations, must have legal status, be operating legally and must meet the financial conditions specified in Article 63 of Decree 46/2023/ND-CP specifically:
Organizations contributing capital of 10% or more of the total charter capital: must operate their business profitably within 3 years preceding the year of submitting the application for a license. Evidenced by audited financial statements with fully accepted opinions.
For organizations contributing less than 10% of the total charter capital, they will have to have financial statements for the year preceding the year of submission of the application for an audited license with full acceptance.
Organizations participating in capital contributions operating in business lines that require legal capital or minimum charter capital or minimum capital will have to ensure equity according to the audited financial statements of the year preceding the time of submission minus the minimum legal or charter capital or minimum capital greater than or equal to the amount of capital expected to contribute.
In case a capital-contributing organization is an organization established and operating under the provisions of the Law on Credit Institutions, the Law on Insurance Business and the Law on Securities, it must ensure the maintenance and satisfaction of financial safety conditions and be approved by competent agencies to participate in capital contribution. In case relevant laws do not require the competent authority to give written approval, the capital-contributing organization will have to provide written proof of this.
In case an organization established under foreign law contributes capital with a subsidiary performing insurance brokerage activities, it must ensure that the organization established under foreign law does not have accumulated losses up to the time of submitting the application for a license and has total assets not less than 2 million USD in the preceding fiscal year before the year of submission of the application for a license.
Conditions for capital to set up company:
Charter capital will be contributed in Vietnamese Dong and will not be lower than the minimum level specified in Article 35 of Decree 46/2023/ND-CP specifically:
Minimum charter capital of a life insurance enterprise:
Business of life insurance and health insurance except unit-linked insurance, pension insurance with a minimum charter capital of VND 750 billion
Business in life insurance, health insurance and unit-linked insurance or pension insurance with charter capital of VND 1,000 billion
Business in life insurance, health insurance, unit-linked insurance and pension insurance with a minimum charter capital of VND 1,300 billion
Minimum charter capital of non-life insurance enterprises, health insurance and:
The minimum charter capital of health insurance enterprises is VND 400 billion
The minimum charter capital of the reinsurance business and:
Non-life reinsurance transfer: VND 500 billion
Life reinsurance transfer: VND 900 billion
Reinsurance concession of all 3 types of life reinsurance, non-life reinsurance and health reinsurance: VND 1,400 billion
Shareholders or capital contributing members of insurance brokerage companies may not use borrowed capital, investment trust capital of other organizations or individuals to participate in capital contribution.
Conditions on company personnel: An insurance brokerage company must have a Chairman of the Board of Directors or Chairman of the Members’ Council, a Director or General Director, the legal representative is expected to meet the conditions on management capacity, experience as well as professional qualifications as prescribed in Article 138 of the Law on Insurance Business 2022.
The company must have an organizational form of operation in accordance with the Law on Insurance Business and have a draft company in accordance with the provisions of the Enterprise Law 2020.
In addition, an organization established under the provisions of foreign law, if participating in the establishment capital contribution or buying shares, the contributed capital of more than 10% of the charter capital of the insurance brokerage enterprise will also have to satisfy the following conditions:
Must be an organization established under the provisions of foreign law that is directly implementing or having a subsidiary performing insurance brokerage activities within the last 5 consecutive years up to the time of submitting the application for an establishment and operation license
Must obtain permission from a competent authority abroad to establish an insurance brokerage company in Vietnam as well as certify that there is no violation of regulations on insurance brokerage of the country where the organization’s head office is located in the last 3 consecutive years up to the time of submitting the application for an establishment and operation license.
Apply for a license to set up and operate an insurance brokerage business in Vietnam
Dossiers of application to set up and operation licenses of insurance brokerage enterprises
Application to set up and operation license;
A draft of the company’s charter;
The first 5-year operation plan, which clearly states the method of setting up professional provisions, reinsurance programs, capital investment, business efficiency, solvency of the insurer and economic benefits of the establishment of the company;
List, curriculum vitae and diplomas proving the capacity and qualifications of the company’s managers and executives;
The list of shareholders or founding members of the company contributing 10% or more of the total charter capital and accompanying documents include:
For individuals will include:
Notarized/certified copy of Citizen card/ID card/passport;
Bank confirmation of the individual’s deposit balance in Vietnamese dong or freely convertible foreign currency at the bank.
For the organization will include:
Notarized/certified copy of the most recent changed business registration certificate;
Enterprise charter;
Documents issued by competent authorities of capital-contributing organizations deciding on capital contribution to establish insurance brokerage companies in Vietnam;
Notarized/certified copy of Citizen card/ID card or passport of the legal representative;
Financial statements for 3 consecutive years have been audited.
Confirmation of the bank’s charter capital deposited in the blocked account opened at the bank;
Minutes of the meeting of founding shareholders or founding members on the unanimous capital contribution to establish an insurance company;
A written commitment of the organization or individual contributing capital to satisfy the conditions for being granted a license.
Procedures for application for a license for establishment and operation of an insurance brokerage company
Step 1: Prepare your application
Individuals or organizations prepare 3 sets of dossiers, of which 1 dossier is the original and 2 sets of copies.
For dossiers of application for licenses of foreign organizations or individuals, each set will include 1 copy in Vietnamese and 1 copy in English
Step 2: Apply
Organizations or individuals shall submit dossiers of application for establishment and operation licenses of insurance brokerage companies at the Ministry of Finance
Step 3: Application processing
Within 21 working days from the date of receipt of the dossier, in case the dossier is incomplete or invalid, the Ministry of Finance will issue a written notice and request supplementation and modification of the dossier.
The time limit for supplementing and amending dossiers is up to 6 months from the date of notification of competent agencies. If the requesting organization or individual fails to supplement or amend the dossier within the prescribed time limit, the Ministry of Finance shall issue a written refusal to consider granting a license.
Step 4: Grant a license
Within 60 days from the date of receipt of a complete and valid dossier, the Ministry of Finance shall issue an operation license to an insurance brokerage company. In case of refusal to grant a license, the Ministry of Finance must issue a written explanation clearly explaining the reasons.
The Ministry of Finance will only be able to refuse to grant a license when the organization or individual participating in capital contribution or the insurance brokerage company expected to be established does not meet the conditions for issuance of a license as prescribed.
Customers wishing advice on conditions to set up an insurance brokerage company in particular and other types of businesses in general, please contact Viet An Law Firm for the most effective support!
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