Under what circumstances will license for establishment and operation of a mutual microinsurance organization be revoked in Vietnam?

What is a mutual providing microinsurance product?

Pursuant to the provisions of the Law on Insurance Business 2022, it can be understood that mutual providing microinsurance product refers to an entity that has legal personality, independent accounting regime; is founded by members or institutional representatives of members to render not-for-profit microinsurance product in order for members participating in insurance to offer mutual aid or support to each other according to the mechanism of voluntary contribution, financial autonomy and self-responsibility before law if such aid or support is restricted to their assets generated from microinsurance product.

Mutuals providing microinsurance products can only provide microinsurance products for their own members. Members participating in insurance plans must be both owners of mutuals providing microinsurance products and policyholders.

Insurance contracts between mutuals providing microinsurance products and members participating in insurance plans must conform to general regulations on insurance contracts, life insurance contracts, health insurance contracts and property insurance contracts prescribed in Chapter II of the Law on Insurance Business 2022

Under what circumstances will license for establishment and operation of a mutual microinsurance organization be revoked in Vietnam? (Internet image)

Licensing conditions for establishment and operation, suspension of business of mutual microinsurance organizations in Vietnam

Pursuant to the provisions of 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 2022 of which Clauses 2, 3 and 5 in Article 149 of the Law on Insurance Business 2022 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.

Under what circumstances will license for establishment and operation of a mutual microinsurance organization be revoked in Vietnam?

Pursuant to the provisions of Clause 1, Article 14 of Decree 21/2023/ND-CP, the license for establishment and operation of a mutual microinsurance organization shall be revoked in the following cases:

(1) The application for the license contains fraudulent information provided with the aim of satisfying licensing conditions;

(2) It operates against the contents of the issued license for establishment and operation;

(3) It fails to remedy the violation as prescribed in Point b Clause 3 Article 13 of Decree 21/2023/ND-CP;

(4) It fails to increase the number of its members according to the plan submitted to the Ministry of Finance of Vietnam as prescribed in Clause 3 Article 32 of Decree 21/2023/ND-CP;

(5) The organization is dissolved of its own accord;

Procedures for revocation of a license for establishment and operation in the case specified in ) and (2) shall comply with Article 15 of Decree 21/2023/ND-CP.

Procedures for revocation of a license for establishment and operation in the case specified in (3) and (4) shall comply with Article 16 of Decree 21/2023/ND-CP.

Application and procedures for revocation of a license for establishment and operation in the case specified in (5) shall comply with Article 17 of Decree 21/2023/ND-CP.

The mutual microinsurance organization shall cease to operate from the day on which the Ministry of Finance of Vietnam issues a decision to revoke its license for establishment and operation.

Mai Thanh Loi

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