Organizational structure and operations of mutual microinsurance organizations in Vietnam​

Conditions for licensing the establishment and operation of mutual microinsurance organization in Vietnam

Pursuant to Article 7 of Decree 21/2023/ND-CP, a mutual microinsurance organization must meet the conditions laid down in Article 149 of the Law on Insurance Business of which Clauses 2, 3 and 5 are elaborated as follows:

(1) The amount of establishment capital in VND shall not be less than VND 10 billion. Sources of establishment capital of a mutual microinsurance organization:

- Capital contributed by individuals that are founding members. Founding members shall not be allowed to contribute borrowed funds or assets held in trust for other entities for capital contribution purposes;

- Financial support given by the institutional representative of members;

- Donations or grants of sponsors, international organizations, programs/projects;

- Other lawful sources of capital as prescribed by law.

(2) Any candidate for the position of Chairperson of the Management Board, General Director (or Director), legal representative or actuary of microinsurance products must meet the conditions and standards laid down in Article 24 and Article 25 of Decree 21/2023/ND-CP.

(3) The draft charter must be in line with business objectives of the mutual microinsurance organization and conform to the provisions of Article 8 of Decree 21/2023/ND-CP.

Organizational structure and operations of mutual microinsurance organizations in Vietnam​ (Internet image)

Operations of mutual microinsurance organizations in Vietnam

Pursuant to Article 19 of Decree 21/2023/ND-CP, the operations of mutual microinsurance organizations are as follows:

- Provision of microinsurance products.

- Use of working capital, compulsory reserve funds and idle capital derived from technical reserves for making investments.

Organizational structure of mutual microinsurance organizations in Vietnam

- The organizational structure of a mutual microinsurance organization of which founding members are individuals as prescribed in Point a Clause 1 Article 149 of the Law on Insurance Business is composed of:

+ General meeting of members (GMM);

+ Management Board;

+ General Director (Director);

+ Board of Controllers or Controllers.

- The organizational structure of a mutual microinsurance organization of which the founding member is the institutional representative of members as prescribed in Point b Clause 1 Article 149 of the Law on Insurance Business is composed of:

+ Institutional representative of members;

+ Management Board;

+ General Director (Director);

+ Board of Controllers or Controllers.

Mai Thanh Loi

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