Conditions for licensing the establishment of mutual microinsurance organizations in Vietnam

Conditions for licensing the establishment of mutual microinsurance organizations in Vietnam (Internet image)

1. Conditions for licensing the establishment of mutual microinsurance organizations in Vietnam

According 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 of Article 149 of the Law on Insurance Business are elaborated as follows:

- 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.

- 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.

- 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.

2. Charter of mutual microinsurance organizations in Vietnam

Charter of mutual microinsurance organizations under Article 8 of Decree 21/2023/ND-CP is as follows:

- The charter of a mutual microinsurance organization shall, inter alia, include the following primary contents:

+ Name and planned location of the head office of the mutual microinsurance organization;

+ Business objectives of the mutual microinsurance organization;

+ Contents, scope, areas and duration of operation;

+ Procedures for recognition or termination of membership, rights and obligations of members. Members of the mutual microinsurance organization must be Vietnamese citizens aged 18 or older, and having full legal capacity; be members of the same organization and meet the conditions laid down in the charter of the mutual microinsurance organization;

+ Names, addresses, rights, obligations and quantity of founding members (at least 07 members) of the mutual microinsurance organization (if its founding members are individuals); name, address, rights and obligations of the institutional representative of members (if its founding member is institutional representative of members);

+ Organizational structure, functions, tasks, powers, term of office and working method of the General Meeting of Members (GMM) (if founding members are individuals), Management Board, Board of Directors, Board of Controllers; procedures for election, dismissal of members or Chairperson of Management Board or Board of Controllers;

+ Cases in which extraordinary GMM is convened (if founding members are individuals);

+ Procedures for convening GMM and ratifying resolutions at GMM; standards and procedures for election of delegates to general meeting of delegates of members (if founding members are individuals);

+ Establishment capital of the mutual microinsurance organization; methods of capital contribution; methods and principles for returning amounts of financial support to the institutional representative of members (if any);

+ Financial regulations; principles for deciding increase/decrease in insurance premiums; methods for using incomes of the mutual microinsurance organization;

+ Rules for settlement of internal disputes;

+ Rules and order of distribution of assets in case the mutual microinsurance organization is dissolved;

- Any revisions to the charter of the mutual microinsurance organization shall be subject to decision of the GMM (if founding members are individuals) or the institutional representative of members (if the founding member is the institutional representative of members).

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