Currently, the trend of investment in service sectors in Vietnam is increasing, in which insurance business is one of the areas of interest of many investors. So what are the conditions for foreign investors to do insurance business in Vietnam? Let’s find out with AMI through the article below.
Based on Vietnam’s Commitments on Trade in Services in the WTO, foreign investors are allowed to establish foreign-invested enterprises for insurance business in Vietnam. In addition, foreign insurance enterprises are allowed to establish non-life insurance branches in Vietnam.
However, in order to do insurance business in Vietnam, foreign investors must meet the conditions stipulated in Decree 73/2016/ND-CP and Decree 151/2018/ND-CP, specifically as after:
General conditions:
According to Article 6 of Decree No. 73/2016/ND-CP, organizations and individuals contributing capital to establishing insurance enterprises must meet the following conditions:
- Investors must actualize their capital contributions in cash, which must not be financed by a loan or investment trust from other entities
- Corporate investors contributing to at least 10% of the charter capital are required to have conducted a profitable business in 03 consecutive years immediately preceding the year in which the application for licensing is submitted
- Corporate investors conducting business lines that require a legal capital must undertake that their owner’s equity less the minimum legal capital is at least equal to the planned amount of investment;
- If a corporate investor is an insurance enterprise, insurance broker enterprise, commercial bank, financial enterprise or securities enterprise, it must fulfill and maintain financial safety conditions and obtain permission by competent authorities to make the said investments as per specialized laws.
- Have applied for licensing in conformity to the Decree No. 73/2016/ND-CP
Conditions for establishment of insurance enterprises:
Conditions for establishing an insurance enterprise are stipulated in Article 7 of Decree No. 73/2016/ND-CP, under which conditions for establishing an insurance limited liability company are as follows:
In addition to the general conditions stipulated in Article 6 of Decree No. 73/2016/ND-CP, capital contributor to establish an insurance limited liability company must be an organization and meet the following conditions:
- Trade in insurance abroad and have been permitted by foreign competent authorities to conduct expected business lines in Vietnam, or act as an outward investing subsidiary of a foreign insurance enterprise and have been mandated by the foreign insurance enterprise to invest in the incorporation of an insurance enterprise in Vietnam;
- Have operated for at least 7 years in the sector of business in which they intend to engage in Vietnam;
- Have total worth of assets of at least 02 billion US dollars in the year immediately preceding the year that the application for licensing is submitted;
- Have not seriously violated any laws on insurance business of the home country for 03 consecutive years immediately preceding the year in which the application for licensing is submitted.
For joint-stock insurance companies, in addition to the general conditions in Article 6 of Decree No. 73/2016/ND-CP, joint-stock companies expected to establish must have at least 2 shareholders who are organizations that meet the conditions as for the establishment of insurance limited liability company and these two shareholders must together own at least 20% of the shares of the insurance joint stock company expected to be established.
Conditions for establishment of foreign branches:
Foreign branch acts as a subsidiary of a foreign non-life insurance enterprise, has no judicial personality and is guaranteed by the foreign non-life insurance enterprise to assume liability for all duties and commitments of such branch in Vietnam.
A foreign non-life insurance enterprise must meet these requirements to establish branches in Vietnam:
- The requirements as stated in Point a, Section 1, Article 7 of Decree No. 73/2016/ND-CP;
- Its head office is based in a country with which Vietnam has signed international trade agreements, particularly on the establishment of branches of foreign non-life insurance enterprises in Vietnam;
- Insurance-regulating authorities in the home country of the foreign non-life insurance enterprise have entered written agreements with Vietnam’s Ministry of Finance for cooperation in administration and supervision of foreign branches’ activities;
- Have undertaken in writing to assume liability for all duties and commitments of the branches in Vietnam;
- Funds for establishment of the foreign branches must be legitimate and not be financed by a loan or investment trust in any manner;
- Have gained profit for 03 consecutive years immediately preceding the year that the application for licensing is submitted and have not incurred cumulative losses prior to the application for licensing.
AMI has introduced to customers the conditions for foreign investors to do insurance business in Vietnam. If you have any questions, please contact us for specific advice.
